Title: Indiana Dept. of State Revenue v. Belterra Resort Indiana, LLC
Citation: N/A
Docket Number: 49S10-1010-TA-519
State: Indiana
Issuer: Indiana Supreme Court
Date: February 9, 2011

ATTORNEYS FOR PETITIONER  
 
 
 
ATTORNEYS FOR RESPONDENT 
Gregory F. Zoeller 
 
 
 
 
 
Stephen H. Paul 
Attorney General of Indiana 
 
 
 
 
Jon B. Laramore 
 
 
 
 
 
 
 
 
Brent A. Auberry 
John D. Snethen  
 
 
 
 
 
Fenton D. Strickland 
Deputy Attorney General  
 
 
 
 
Baker & Daniels LLP 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
Matthew R. Nicholson 
Deputy Attorney General  
 
 
 
 
ATTORNEY FOR AMICUS CURIAE 
 
 
 
 
 
 
 
 
INDIANA CHAMBER OF COMMERCE 
Timothy A. Schultz 
 
 
 
 
 
Geoffrey Slaughter 
Deputy Attorney General  
 
 
 
 
Taft Stettinius & Hollister LLP 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
Jennifer E. Gauger 
Deputy Attorney General  
 
 
 
 
ATTORNEYS FOR AMICUS CURIAE 
 
 
 
 
 
 
 
 
COUNCIL ON STATE TAXATION 
Andrew W. Swain 
 
 
 
 
 
Mark J. Richards 
Deputy Attorney General  
 
 
 
 
Brian J. Paul 
Indianapolis, Indiana 
 
 
 
 
 
Ice Miller LLP 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 49S10-1010-TA-519 
 
INDIANA DEPARTMENT OF  
STATE REVENUE, 
 
 
 
 
 
 
 
 
 
 
Petitioner below, 
 
v. 
 
BELTERRA RESORT INDIANA, LLC, 
 
 
 
 
 
 
 
 
 
 
Respondent below. 
_________________________________ 
 
Petition for Review from the Indiana Tax Court, No. 49T10-0605-TA-49 
The Honorable Thomas G. Fisher, Judge 
_________________________________ 
 
ON PETITION FOR REHEARING 
_________________________________ 
 
February 9, 2011 
 
Rucker, Justice. 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Feb 09 2011, 9:05 am
 
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Belterra Resort Indiana, LLC (“Belterra”) seeks rehearing of this Court’s opinion in 
which we determined that capital contributions are not automatically exempt from Indiana use 
tax.  See Ind. Dep’t of State Revenue v. Belterra Resort Ind., LLC, 935 N.E.2d 174 (Ind. 2010).  
The essential facts are these.  The Indiana Department of Revenue (“Department”) imposed upon 
Belterra a use tax assessment in the amount of $1,869,783.00 plus penalty and interest due to 
Belterra’s acquisition of a riverboat from its parent company, Pinnacle Entertainment, Inc.  Id. at 
176.  On appeal the Tax Court granted summary judgment in favor of Belterra, holding that 
under the circumstances Belterra was not subject to use tax.  On review we reversed the Tax 
Court’s decision and entered summary judgment in favor of the Department.  In doing so we 
held the “step transaction” doctrine applied to Pinnacle Entertainment’s capital contribution of 
the riverboat; thus the contribution was a retail transaction subject to Indiana use tax.  Id. at 180. 
 
In its petition for rehearing Belterra argues (a) this Court misapplied the “step 
transaction” doctrine,1 (b) even if the Court properly applied the doctrine conflicting factual 
inferences nonetheless preclude summary judgment in the Department’s favor, and (c) because 
the Tax Court entered summary judgment in favor of Belterra, it did not address the question of 
whether Belterra is subject to a tax penalty.  We grant rehearing to address this latter argument.  
 
Indiana Code section 6-8.1-10-2.1(a)(3) provides in relevant part that if a taxpayer 
“incurs, upon examination by the department, a deficiency that is due to negligence . . . the 
person is subject to a penalty.”  However, “[i]f a person subject to the penalty imposed under this 
section can show that the failure to . . . pay the deficiency determined by the department was due 
to reasonable cause and not due to willful neglect, the department shall waive the penalty.”  I.C. 
§ 6-8.1-10-2.1(d).  The Department’s rule defines “negligence” as “the failure to use such 
reasonable care, caution, or diligence as would be expected of an ordinary reasonable taxpayer.”  
45 Ind. Admin. Code 15-11-2(b).  Negligence “shall be determined on a case by case basis 
according to the facts and circumstances of each taxpayer.”  Id.  To establish reasonable cause 
                                                 
1 In support of this argument Belterra contends, among other things, “this Court’s decision creates 
confusion in Indiana tax law by applying the use tax to a capital contribution.”  Belterra’s Pet. for Reh’g 
at 7; accord Br. Amicus Curiae of Ind. Chamber of Commerce at 2.  As we noted in our original opinion 
several states expressly provide by statute that capital contributions are excluded from use tax.  See 
Belterra, 935 N.E.2d at 178 n.1 (providing examples).  In this jurisdiction the Legislature has not 
excluded capital contributions from the reach of Indiana use tax.  Of course the Legislature may certainly 
do so if it so desires.  
 
 
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for not paying the tax, the taxpayer “must demonstrate that it exercised ordinary business care 
and prudence” in failing to remit the tax. 45 I.A.C. 15-11-2(c).  “Reasonable cause is a fact 
sensitive question and thus will be dealt with according to the particular facts and circumstances 
of each case.”  Id. 
 
In its appeal to the Tax Court, Belterra sought summary judgment on various grounds 
including that it was not subject to the penalty.  To support its motion Belterra designated several 
documents including affidavits, the pleadings and attached exhibits, joint stipulations of the 
parties, and excerpts from Revenue Rulings regarding the application of sales and use tax to 
capital contributions.  Belterra’s Supplemental App. at 1, 22-26.  The Department designated no 
evidence in response.  Instead it filed a Motion for Judgment on the Pleadings, which the Tax 
Court treated as a cross motion for summary judgment.  See Petitioner’s App. at 69-70. 
 
Here Belterra argues that its position on capital contributions was consistent with prior 
Indiana law, see Grand Victoria Casino & Resort, LP v. Indiana Department of State Revenue, 
789 N.E.2d 1041, 1045 (Ind. Tax Ct. 2003), and that the Department had previously ruled that 
capital contributions were not subject to tax.  Thus, according to Belterra, it has demonstrated 
that in failing to pay the use tax it was not negligent; rather, failing to pay the use tax was based 
upon the exercise of reasonable care.  In any event, Belterra insists, that even if it is subject to the 
penalty, the penalty should be waived because its failure to pay was based on reasonable cause 
and not due to willful neglect.   The Department counters that Belterra’s argument is untimely in 
that “Belterra never submitted any evidence that it exhausted its administrative remedies with 
respect to the penalty.”  Resp. in Opp’n to Reh’g at 4.  
 
We are of the opinion that this issue is not ripe for review.  The Indiana Tax Court was 
established to develop and apply specialized expertise in the prompt, fair, and uniform resolution 
of state tax cases.  State Bd. of Tax Comm’rs v. Indianapolis Racquet Club, Inc., 743 N.E.2d 
247, 249 (Ind. 2001).  This Court extends cautious deference to decisions within the special 
expertise of the Tax Court.  Ind. Dep’t of State Revenue v. Safayan, 654 N.E.2d 270, 272 (Ind. 
1995).  We extend the same presumption of validity to Tax Court rulings on summary judgments 
and apply the same standard of review.  Ind. Dep’t of State Revenue v. Bethlehem Steel Corp., 
639 N.E.2d 264, 266 (Ind. 1994).  That is, when a summary judgment involves a question of law 
 
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within the particular purview of the Tax Court, cautious deference is appropriate.  Id.  Applying 
this deference here, we remand this matter to the Tax Court to determine the timeliness of 
Belterra’s argument and if timely whether Belterra is subject to the penalty and if so whether the 
penalty should be waived.  
 
We grant rehearing and modify our original opinion as set forth herein.  In all other 
respects the original opinion is affirmed.  
 
Shepard, C.J., and Sullivan and David, JJ., concur. 
Dickson, J., concurs in result, believing that rehearing should also be granted to revisit the 
Court’s decision on the “step transaction” issue.