Opinion ID: 2011365
Heading Depth: 1
Heading Rank: 3

Heading: Creation & Jurisdiction of the Tax Court

Text: In an effort to channel tax disputes to a specialized tribunal, the Indiana Legislature created the Tax Court in 1986. See IND.CODE §§ 33-3-5-1 to XX-X-X-XX (1993 & Supp.1996). The Tax Court's enabling statute declares that the Tax Court has exclusive jurisdiction over any case that arises under the tax laws of this state and that is an initial appeal of a final determination of the Department or Board of Tax Commissioners. IND.CODE § 33-3-5-2(a)(1993). Therefore, if two prerequisites are met, the Tax Court has exclusive jurisdiction. [8] First, the case must arise under the tax laws. This is a term with a substantial judicial history. Federal courts have subject-matter jurisdiction over cases arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331 (1994). We recognize that federal doctrine generally follows the well-pleaded complaint rule of Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908), which requires that the claim be based on federal law to confer jurisdiction under § 1331. Or, as Justice Oliver Wendell Holmes concisely stated shortly after Mottley, a suit arises under the law that creates the action. [9] Since Mottley, the U.S. Supreme Court in several decisions has wrestled with when a case arises under federal law. [10] However, as several commentators have remarked, a precise understanding of this term has eluded judicial definition. [11] Assuming the Holmes test is the jurisdictional core of § 1331, the penumbra of federal-question jurisdiction remains somewhat opaque. If we were to apply the Mottley rule here, the Tax Court would not have subject-matter jurisdiction because Sproles' claim is grounded on the United States Constitution, [12] and not on an Indiana tax statute. Although some authority would arguably permit Sproles' constitutional challenge to fit into the outer contours of federal arising under jurisprudence, we need not undertake that exercise. We decline to adopt the more restrictive federal doctrine in construing the Tax Court's jurisdictional statute. As commentators and the Tax Court itself have noted, the policy underlying creation of the Tax Court was to consolidate tax-related litigation in one court of expertise. [13] This legislative purpose dictates a broader construction of the Tax Court's enabling statute than we would reach under federal guidelines. We believe the Legislature intended that all challenges to the tax lawsregardless of the legal theory relied onbe tried in the Tax Court. Accordingly, we hold that for purposes of § 33-3-5-2 a case arises under the tax laws if: 1) an Indiana tax statute creates the right of action; or 2) the case principally involves collection of a tax or defenses to that collection. Although Sproles' claim is based on the Constitution of the United States, his declaratory relief action squarely challenges the validity of an Indiana tax statute as applied. In addition to the arise under test, the exclusive jurisdiction of the Tax Court under IND.CODE § 33-3-5-2(a) has a second requirement. To be governed by that section, the original tax appeal must also be from the Department's final determination that the listed tax is owed. A taxpayer receives a final determination in one of two ways. The taxpayer can pay the tax, request a refund, and sue in the Tax Court if the request is denied. IND.CODE § 6-8.1-9-1 (1993). Alternatively, the taxpayer can protest the listed tax at the assessment stage and appeal to the Tax Court from a letter of findings denying the protest. IND.CODE § 6-8.1-5-1 (1993). Both remedies may be pursued simultaneously. IND.CODE § 6-8.1-9-1(c)(1993). The Legislature codified the latter procedure in 1993 even though the Tax Court commonly adjudicated appeals from a letter of findings before that time. See 1996 Ind. Acts, P.L. 71, § 17, codified at IND.CODE § 6-8.1-5-1(g) & (h) (1993); GasAmerica Services, Inc. v. Dept. of Revenue, 552 N.E.2d 860 (Ind.Tax 1990)(assuming letter of findings was final determination but holding refund statute to be exclusive remedy where tax was already paid). In addition to administrative relief that is ultimately reviewable by the Tax Court, taxpayers who have initiated an appeal can now seek an injunction in the Tax Court to enjoin collection of the listed tax pending the outcome of the original tax appeal. IND.CODE § 6-8.1-9-1 (d)(1993); see also IND.CODE § 33-3-5-11 (1993).