Michael W. Troyan and MT Management, LLC v. The Commissioner of the Indiana Department of Revenue , 44 N.E.3d 816 ( 2015 )


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  •                                                                         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
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015   Page 3 of 8
    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
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015   Page 4 of 8
    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
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015   Page 5 of 8
    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
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015     Page 6 of 8
    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.
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015    Page 7 of 8
    [22]   Baker, J., and Crone, J., concur.
    Court of Appeals of Indiana | Opinion 49A02-1411-PL-794 | September 30, 2015   Page 8 of 8
    

Document Info

Docket Number: 49A02-1411-PL-794

Citation Numbers: 44 N.E.3d 816

Filed Date: 9/30/2015

Precedential Status: Precedential

Modified Date: 1/12/2023