Court Opinion

ID: 3005945
Source: CourtListenerOpinion
Date Created: 2015-09-30 15:04:57.348749+00
Date Added: 2024-06-11T18:02:17.296903
License: Public Domain

Sep 30 2015, 9:44 am

      ATTORNEY FOR APPELLANTS                                    ATTORNEYS FOR APPELLEES
      Aaron E. Haith                                             Gregory F. Zoeller
      Indianapolis, Indiana                                      Attorney General of Indiana
                                                                 Kyle Hunter
                                                                 Deputy Attorney General
                                                                 Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Michael W. Troyan and MT                                   September 30, 2015
      Management, LLC,                                           Court of Appeals Case No.
                                                                 49A02-1411-PL-794
      Appellants-Plaintiffs,
                                                                 Appeal from the Marion Superior
              v.                                                 Court.
                                                                 The Honorable H. Patrick Murphy,
                                                                 Magistrate.
      The Commissioner of the                                    Cause No. 49D14-1407-PL-023446
      Indiana Department of Revenue,
      et al.,
      Appellees-Defendants.

      Shepard, Senior Judge

[1]   Appellant Michael W. Troyan has contended that the Department of Revenue

      was wrong to assess withholding tax against his limited liability company. A

      trial court denied his request for injunctive relief against the Department. On

      appeal, he contends this denial was an abuse of discretion. We remand with

      Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015             Page 1 of 8
      instructions to dismiss, inasmuch as exclusive jurisdiction rests with the Tax

      Court.

                                                      Issue
[2]   Troyan contends that the trial court abused its discretion by denying his request

      for a temporary restraining order and permanent injunctive relief from unpaid

      tax assessments reduced to judgment. The dispositive issue on appeal,

      however, is whether the Marion Superior Court had jurisdiction over this

      matter in the first place.

                                Facts and Procedural History
[3]   The Indiana Department of Revenue stores records on and interacts with

      companies based on their federal tax identification number (“FEIN”) and the

      corresponding state tax identification number (“TID”). An entity doing

      business in Indiana registers to pay taxes by submitting a Business Tax

      Application on a form known as a BT-1, which identifies the type of tax for

      which it is being registered. The company provides all the information on the

      form except for the TID, which the Department issues after it receives the

      application. Both the state and federal numbers are uniquely issued to only one

      business entity.

[4]   On August 6, 2010, MT Management, LLC was organized as an Indiana

      limited liability company. The articles of organization list Mike Troyan as the

      registered agent and the address as 55 S. State Street, Suite 388, Indianapolis,

      Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015   Page 2 of 8
      Indiana 46201. MT Management’s FEIN is 273215631 and DOR gave it a

      TID of 0140920510.

[5]   On May 5, 2011, a BT-1 was filed electronically with the DOR under MT’s

      FEIN. It listed the business name as “Mount Management” and appears to

      have been filed by Troyan. The form listed a business address of 55 South State

      Avenue, (rather than “Street”), featured MT’s FEIN, Troyan’s contact

      information and social security number, and declared that the company had

      begun withholding taxes from an Indiana resident or employee.

[6]   MT Management was thus obliged to pay withholding taxes and report the

      amount withheld on a form known as a WH-1. If a business does not do that

      on schedule, DOR is authorized to assess a tax based on the best information

      available, such as the national average withholding tax reported by similar

      employers.

[7]   Once a business receives an assessment, it may: (1) pay the amount assessed; or

      (2) file a WH-1 for the period; or (3) file a written protest with DOR requesting

      a hearing. Even if a business paid no wages, it must file a return so indicating,

      known as a “Zero Return,” and it will not be assessed. The duty to report

      withholding continues.

[8]   During the winter of 2011-12 and onward, DOR issued proposed best-

      information withholding tax assessments for the third quarter of 2011, and then

      the fourth quarter of 2011 for the company identified by MT Management’s

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       federal and state ID numbers. In February 2012, a warrant for collection of tax

       was issued for MT Management.

[9]    On October 25, 2012, Troyan went to DOR and filed two Zero Returns for the

       third and fourth quarter of 2011 on behalf of MT Management. Both Zero

       Returns bore the name “Mount Management” and were signed by Troyan.

       The previous assessments were thus cancelled, and collection efforts ceased.

[10]   Of course, MT Management’s duty to report withholding taxes continued. It

       did not, so DOR eventually issued proposed withholding tax assessments

       covering 2012 and 2013. On August 8, 2014, DOR wrote Troyan’s counsel

       notifying him that MT had not filed the necessary returns and saying that if the

       business had not withheld taxes for the past years, he could file Zero Returns as

       before, and if MT Management did not anticipate withholding taxes in the

       future, the company could file a notice that it was closing or no longer required

       to be registered for such taxes.

[11]   In due course, the unpaid assessments converted to a judgment and a collection

       agency placed a levy on MT Management’s funds in Peoples Bank on June 6,

       2014. On July 14, 2014, MT Management and Troyan filed a complaint for

       injunctive relief and damages, requesting the release of the levy.

[12]   The levy on MT Management’s funds was released on July 21, 2014.

       Following a hearing, the trial court denied the request for a temporary

       restraining order and injunction. The court concluded that the request for

       injunctive relief was moot because the levy had been released and the funds

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       were available to the plaintiffs, but went on to evaluate MT’s request in accord

       with the standards applicable to Indiana Trial Rule 65 and concluded that the

       requests for injunctive relief failed on the merits. MT Management and Troyan

       now appeal from this order.

                                     Discussion and Decision
[13]   Troyan and MT Management allege an abuse of discretion on the part of the

       trial court by denying the request for injunctive relief. “The grant or denial of a

       request for a preliminary injunction rests within the sound discretion of the trial

       court, and our review is limited to whether there was a clear abuse of that

       discretion.” City of Gary, Ind. v. Majestic Star Casino, LLC, 905 N.E.2d 1076,

       1082 (Ind. Ct. App. 2009), trans. denied. On appellate review, we must

       determine if the trial court’s findings support its judgment and will reverse only

       when the trial court’s judgment is clearly erroneous. Id.

[14]   Troyan and MT Management summarize their argument in terms of the trial

       court’s failure to recognize that Troyan had established all of the requisite

       elements to obtain injunctive relief. However, the relief sought as expressed in

       the appellants’ brief is resolution of the assessment and collection of a tax

       Troyan and MT Management claim is not owed.

[15]   The Department has responded to the merits of this position, but it has also

       argued here, as it did in the trial court, that under either scenario, it is the

       Indiana Tax Court and not the Marion Superior Court or this Court that has

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       jurisdiction over such claims. The Department is correct, for reasons we set

       forth below.

[16]   The Indiana Code says rather directly: “The tax court has exclusive jurisdiction

       over any case that arises under the tax laws of Indiana and that is an initial

       appeal of a final determination made by: (1) the department of state revenue

       with respect to a listed tax . . .; or (2) the Indiana board of tax review.” Indiana

       Code § 33-26-3-1 (2004). In the act creating the Tax Court, the General

       Assembly reinforced this principle by repealing certain existing laws that

       directed appeals to general jurisdiction trial courts. See P.L. 291-1985 § 2, 1985

       Ind. Acts 2282.

[17]   Our Supreme Court recognized the breadth of this exclusive jurisdiction in State

       v. Sproles, 672 N.E.2d 1353 (Ind. 1996), and recently reiterated its earlier view:

               To give effect to the legislative purpose for the Tax Court, we
               held that a case “arises under” Indiana tax law 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.”
               ....
               We have continued to interpret the Tax Court’s “arises under”
               jurisdiction broadly within the framework established by Sproles.
               For example, any case challenging the collection of a tax or
               assessment arises under the tax laws, whether the challenge is
               premised on constitutional, statutory, or other grounds. See, e.g.,
               [State ex rel. Atty. Gen. v.]Lake Superior Court, 820 N.E.2d at 1247;
               State Bd. of Tax Comm’rs v. Ispat Inland, Inc., 784 N.E.2d 477, 481
               (Ind. 2003); State v. Costa, 732 N.E.2d 1224, 1224-25 (Ind. 2000);
               State Bd. of Tax Comm’rs v. Montgomery, 730 N.E.2d 680, 682-84
               (Ind. 2000). And the challenge need not be to the collection

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               directly—challenges to earlier steps in the taxation or assessment
               process arise under the tax laws. See, e.g., Lake Superior Court, 820
               N.E.2d at 1243-45 (challenging reassessment of property
               valuations on which property-tax calculation would be based);
               Ispat Inland, 784 N.E.2d at 479-80 (challenging audit conducted
               after taxes were paid because the audit might have resulted in a
               deficiency).
       State ex rel. Zoeller v. Aisin USA Manufacturing, Inc., 946 N.E.2d 1148, 1152-53

       (Ind. 2011).

[18]   Here, Troyan and MT Management allege that the tax assessment is improper

       because the DOR is attempting to collect from them a tax obligation of another

       entity, “Mount Management.” This claim clearly involves the challenge to a

       collection of a tax or assessment, which is within the exclusive jurisdiction of

       the Tax Court. “Resort to a court of general jurisdiction to challenge a tax is

       precluded by this grant of exclusive jurisdiction.” State ex rel. Ind. Dep’t of

       Revenue v. Deaton, 755 N.E.2d 568, 571 (Ind. 2001).

[19]   To be sure, when an unpaid tax assessment is reduced to judgment, a circuit or

       superior court acquires jurisdiction for the limited purpose of enforcing the

       judgment, id., but Troyan and MT Management asked the Marion Superior

       Court for relief in excess of that limited power.

                                                 Conclusion
[20]   The trial court may well have been right as a matter of injunction law, but we

       remand this matter for dismissal on jurisdictional grounds.

[21]   Remanded with instructions.

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[22]   Baker, J., and Crone, J., concur.

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