RENDERED: JULY 14, 2023; 10:00 A.M.

TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2022-CA-0231-MR

DEPARTMENT OF REVENUE, 

FINANCE AND ADMINISTRATION 

CABINET, COMMONWEALTH OF 

KENTUCKY APPELLANT 

v. 

APPEAL FROM FRANKLIN CIRCUIT COURT

HONORABLE PHILLIP J. SHEPHERD, JUDGE

ACTION NO. 19-CI-00655

CARRIAGE FORD, INC. APPELLEE 

OPINION

AFFIRMING

**   **  **

BEFORE: ACREE, DIXON, AND JONES, JUDGES.

DIXON, JUDGE: The Commonwealth of Kentucky, Finance and Administration

Cabinet, Department of Revenue (KDOR), appeals from the order of the Franklin

Circuit Court entered on January 25, 2022, reversing and remanding the final order 
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of the Kentucky Claims Commission (KCC)

1

issued on May 31, 2019, dismissing 

the claim of Carriage Ford, Inc. (Carriage Ford) against KDOR. Following a 

careful review of the record, briefs, and law, we affirm.

BACKGROUND FACTS AND PROCEDURAL HISTORY

Carriage Ford is an Indiana car dealership whose customers include 

Kentucky residents. Many of its Kentucky customers drove purchased vehicles off 

the lot, while others were delivered in Kentucky. Carriage Ford collected “State 

and local” taxes, using a “Retail Buyer’s Order form” to collect Kentucky’s motor 

vehicle usage tax (MVUT) for its Kentucky customers and deposited the funds into 

its corporate account. It acted as an agent for its customers and delivered assigned 

certificates of title and other documents necessary to register the vehicles to the 

appropriate Kentucky county clerks. Carriage Ford paid for titling, registration, 

and the MVUT out of its account. 

In 2015, the Indiana Department of Revenue (INDOR) audited 

Carriage Ford for tax years 2012 through 2014. INDOR found that Carriage Ford 

owed Indiana sales tax for the transactions where its vehicles were sold to 

Kentucky customers who took possession of the vehicles in Indiana. Rather than 

analyze every transaction for the tax years in question, INDOR and Carriage Ford 

1

 In 2021, KCC was replaced by the Office of Claims and Appeals and the Kentucky Board of 

Claims. See Kentucky Revised Statutes (KRS) 12.020, KRS 13B.020, and KRS 49.010 et seq. 
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agreed to use a “sample methodology” to analyze a few months’ transactions and

extrapolate from them to approximate the tax liability. Under Indiana’s tax 

amnesty program, Carriage Ford satisfied its Indiana tax bill for $183,003 – an 

amount less than the assessed tax – and paid no interest or penalties. 

After Carriage Ford settled with INDOR, it requested a refund from

KDOR. Carriage Ford submitted evidence that it paid $256,862.16 in MVUT but 

only requested a refund of $183,003 – the amount of Indiana sales tax it paid – plus 

interest. KDOR denied Carriage Ford’s request, asserting it was ineligible because 

the MVUT was due when the vehicles were titled and registered in Kentucky and 

there was no evidence a substantially identical tax had been paid at that time. 

KDOR further claimed Carriage Ford was neither the “taxpayer” authorized to 

make the “application or claim for the refund” nor “the person who paid the tax” as 

required pursuant to KRS 134.580(2) and (3). 

Carriage Ford appealed KDOR’s final ruling to the KCC. Both 

Carriage Ford and KDOR moved the KCC for summary judgment. The KCC 

ultimately upheld KDOR’s final ruling, concluding only the Kentucky customers 

are entitled to a credit against the MVUT for taxes paid in another state. 

Carriage Ford appealed the KCC’s final order to the Franklin Circuit 

Court. In its opinion and order, the trial court reversed the KCC’s order, finding 
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substantial evidence supporting the fact that Carriage Ford paid the MVUT even 

though it was not due. This appeal followed. 

STANDARD OF REVIEW

It is well-settled that: 

[t]he basic scope of judicial review of an 

administrative decision is limited to a determination of 

whether the agency’s action was arbitrary. Bobinchuck v. 

Levitch, [380 S.W.2d 233 (Ky. 1964).] If an 

administrative agency’s findings of fact are supported by 

substantial evidence of probative value, they must be 

accepted as binding and it must then be determined 

whether or not the agency has applied the correct rule of 

law to the facts so found. [Kentucky Unemployment Ins. 

Comm’n v. Landmark Cmty. Newspapers of Kentucky, 

Inc., 91 S.W.3d 575 (Ky. 2002).] The Court of Appeals 

is authorized to review issues of law involving an 

administrative agency decision on a de novo basis. 

[Aubrey v. Office of the Att’y Gen., 994 S.W.2d 516 (Ky. 

App. 1998)]. In particular, an interpretation of a statute 

is a question of law and a reviewing court is not bound 

by the agency’s interpretation of that statute. Halls 

Hardwood Floor Co. v. Stapleton, [16 S.W.3d 327 (Ky. 

App. 2000).]

Liquor Outlet, LLC v. Alcoholic Beverage Control Bd., 141 S.W.3d 378, 381 (Ky. 

App. 2004).

LEGAL ANALYSIS

On appeal, KDOR argues the trial court erred in determining Carriage 

Ford was the “taxpayer” under KRS 134.580, rather than its customers. However, 

in pertinent part, KRS 134.580(2) provides, “When money has been paid into the 
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State Treasury in payment of any state taxes . . . the appropriate agency shall 

authorize refunds to the person who paid the tax . . . of any overpayment of tax 

and any payment where no tax was due.” (Emphasis added.) 

Here, there is no dispute that Carriage Ford paid Kentucky’s MVUT

and Indiana’s sales tax on the same vehicles. Contrary to KDOR’s arguments, it 

matters not that Carriage Ford was not technically liable for or the “person”

required to pay the MVUT or that it might not be considered a “taxpayer” as 

defined in other statutes. Following such logic would lead to the absurd result that 

Carriage Ford would not receive a refund for payment of the MVUT after it

presented proof that it paid Indiana sales tax for the same vehicles. 

It is a well-established principle of statutory construction that courts 

“should not . . . interpret [a] statute to provide an absurd result.” Commonwealth v. 

Reynolds, 136 S.W.3d 442, 445 (Ky. 2004). The interpretations KDOR urges us to 

follow are patently unfair to Carriage Ford who paid a substantially similar tax 

twice. Long ago, in George v. Scent, 346 S.W.2d 784 (Ky. 1961), Kentucky’s 

highest court denounced interpretations of the MVUT which would require 

payment of two similar taxes on the same purchase. There is no reason to depart

now. 

Unfortunately, however, there is a dearth of law on whether a person 

who pays the MVUT can receive credit after registering a motor vehicle in 
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Kentucky, as occurred in the case herein. Even so, Kentucky’s Office of the 

Attorney General (OAG) has opined that those who pay the MVUT “should 

without exception be credited with the tax paid in the foreign state when 

registering [a] motor vehicle in Kentucky upon proof that the sales tax was in fact 

paid in the foreign state.” 1978-1979 Ky. Op. Atty. Gen. 2-426 (1979). The OAG 

further opined that there are instances where “[a]t first blush, it might seem that 

[one] would not be entitled to credit for the amount of the sales tax paid in the 

foreign state because of a mere procedural quirk.” Id. In the case discussed in that 

opinion, the vehicle was not registered in a foreign state when offered for

registration in Kentucky; thus, it appeared the taxpayer was ineligible for a refund 

under KRS 138.460. However, “[b]ecause such a construction of the statute does 

violence to the legislative intent, [the OAG] specifically decline[d] to adopt such 

an interpretation[.]” OAG 2-426. A similar approach should be followed herein. 

KRS 138.460 pertains to the imposition, rate, collection, and refund of 

the MVUT. KRS 138.460(6)(a), in relevant part, provides that “[w]hen a person 

offers a motor vehicle: . . . [f]or registration . . . in this state which was registered 

in another state that levied a tax substantially identical to the tax levied under this 

section, the person shall be entitled to receive a credit against the tax imposed by 

this section equal to the amount of tax paid to the other state.” 
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Again, KDOR urges our court to engage in a hyper-technical reading 

of this statute that would lead to its desired, but absurd, result. It argues that 

because Carriage Ford did not pay the Indiana taxes until after it registered the 

vehicles in Kentucky, it should not be entitled to receive a credit for payment of 

the Indiana taxes. This runs counter to the guidance of the Supreme Court of 

Kentucky that courts “should not . . . interpret [a] statute to provide an absurd 

result.” Reynolds, 136 S.W.3d at 445. Carriage Ford provided proof that it paid 

the Indiana sales tax; therefore, as the trial court correctly concluded, it “shall be 

entitled to receive a credit” under KRS 138.460(6)(a). 

KDOR further argues that KRS 134.580(3) bars all, or some, of 

Carriage Ford’s claims under its four-year statute of limitations. In pertinent part, 

it states, “No refund shall be made unless each taxpayer individually files an 

application or claim for the refund within four (4) years from the date payment was 

made.” 

Again, this case presents what appears to be a unique situation 

because INDOR did not conduct its audit of Carriage Ford for tax years 2012

through 2014 until 2015. Accordingly, Carriage Ford did not pay Indiana’s sales 

taxes until sometime between 2015 and March 17, 2016, when it made a claim for 

a refund to KDOR. There is little or no guidance in what to do in this situation. 
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Nevertheless, Kentucky’s highest court determined, under a prior 

version of this statute, that the statute of limitations begins to run “after the fee was 

paid into the state treasury.” Dep’t of Conservation v. Co-De Coal Co., 388 

S.W.2d 614, 617 (Ky. 1964), as modified on denial of reh’g (Mar. 26, 1965). 

Based on this, and from the text of the statute, Carriage Ford was not barred from

challenging refunds for payments made after March 17, 2016. Furthermore, since 

Carriage Ford paid $256,862.16 in MVUT over the three-year period and is only 

requesting a refund for $183,003, plus interest, to offset the Indiana sales tax, the 

refund requested is doubtlessly offset by payments made to the Kentucky State 

Treasury during the period not barred by the statute of limitations. (Carriage Ford 

asserts in its brief that the amounts claimed were for tax paid between April 2012 

and June 2014; therefore, the statute of limitations would not bar its claims.) 

Due to our resolution of these issues, we need not address KDOR’s 

further arguments, such as those concerning equitable relief.

CONCLUSION

Therefore, and for the foregoing reasons, the order entered by the 

Franklin Circuit Court is AFFIRMED.

ALL CONCUR.
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BRIEFS FOR APPELLANT:

Bethany Atkins Rice

Kevin Beiting

Frankfort, Kentucky

BRIEF FOR APPELLEE:

Mark A. Loyd

Bailey Roese

Stephanie M. Bruns

Louisville, Kentucky