Faris Mailing, Inc. v. Indiana Dept. of State Revenue, Sales and Use Tax Div., 49T05-8909-TA-00037

• Decision Date: 29 June 1990
• Docket Number: No. 49T05-8909-TA-00037,49T05-8909-TA-00037
• Citation: 557 N.E.2d 713
• Parties: FARIS MAILING, INC., Petitioner, Taxpayer, v. The INDIANA DEPARTMENT OF STATE REVENUE, SALES AND USE TAX DIVISION, and the State of Indiana, Respondent.
• Court: Indiana Tax Court

Page 713

557 N.E.2d 713

FARIS MAILING, INC., Petitioner, Taxpayer, v. The INDIANA DEPARTMENT OF STATE REVENUE, SALES AND USE TAX DIVISION, and the State of Indiana, Respondent.

No. 49T05-8909-TA-00037.

Tax Court of Indiana.

June 29, 1990.

Stephen K. Miller, James K. Gilday, Miller, Faires, Hebert, Woddell & Baker, P.C., Indianapolis, for petitioner, taxpayer.

Linley E. Pearson, Atty. Gen. by Lynn A. Francis, Deputy Atty. Gen., Indianapolis, for respondent.

FISHER, Judge.

Faris Mailing, Inc., (Faris) appeals the Indiana Department of Revenue's Letter of Findings denying its claim for a refund. Faris claimed a refund for sales and use tax assessed for the years of 1982 and 1983. ¹ This matter is before the Court on the motions for summary judgment filed by each party.

During the assessment period, Faris, an Indiana corporation with its principal place of business located in Marion county, was in the business of processing or preparing items that are to be used for mailing or contained in a mailing for customers. For the years ending on December 31, 1982 and 1983, Faris filed monthly sales and use tax returns with the Department. In December of 1985, the Department issued two "Notices of Tax Due;" one for unpaid sales and use tax for the year of 1982 in the amount of $3,634.61 and the other for the year of 1983 in the amount of $3,938.25. On September 24, 1986, the Department issued a supplemental audit report, which included, inter alia, the form "Adjustments to Sales and Use Tax." This form showed changes to the sales and use tax due in 1982 to $3,537.36 and the sales and use tax due for the year of 1983 to $3,546.23. On October 21, 1986, the Department issued its Letter of Findings denying Faris' protest and issued another "Notice of Tax Due" on November 21, 1986 for the same amount as the Department's previous supplemental audit report. Faris appealed to the Tax Court and filed a petition to enjoin the collection of tax. This Court denied the request for an injunction. ²

Before the issuance of the Court's Order, the Department issued two additional "Notices of Tax Due" on January 2, 1987. The increased liability represented additional interest that had accrued since the assessment notices were issued on November 21, 1986. The total amount, including penalties and interest, totalled $10,609.23. After the Court denied Faris' request for an injunction, Faris paid the assessment in full and filed a claim for refund. In a letter, the Department denied the claim for refund, stating, "The issue resulting in this claim was addressed in the October 21, 1986 Letter of Findings.... Your protest at that time was denied." The 1986 denial provides:

The taxpayer protests that the department is barred by the statute of limitations for assessing sales and use tax because the department did not properly notify the taxpayer of a proposed assessment by signing a 'Notice of Tax Due.' The taxpayer claims that a 'Notice of Indiana Code 6-8.1-3-5 provides that all notices, summons, warrants, waivers, demands, or other documents requiring an authorizing signature by the department must be signed by the Commissioner or his designee, and when that document is signed it is an official departmental document. However, this code cite does not define notice, as to include proposed assessments. Indiana Code 6-8.1-5-1 provides for authority of the department to send a person notice of the proposed assessment through the United States mail and this section does not require a signature. The taxpayer received an authorized proposed assessment that is valid per IC 6-8.1-5-1, and proposed assessments are not included under IC 6-8.1-3-5 therefore, the taxpayer's protest is denied.

Tax Due' is not effective during a statutory period of assessment to begin the process of assessment and collection of unpaid tax [because] the 'Notice of Tax Due' is not signed by the Commissioner or a delegated employee of the department.

October, 1986 Letter of Findings at 2 (emphasis in original).

None of the sales and use tax notices received by Faris were signed. The only basis for which Faris protests the imposition of the tax is that the notices were not signed.

ISSUE

The issue is whether as a matter of law IC 6-8.1-3-5 requires a signature on a 'Notice of Tax Due' and if not, is there a material issue of fact remaining that would preclude the entry of summary judgment. The issue of fact would be whether the Department requires a signature to appear on the notices that were sent to Faris.

DISCUSSION AND DECISION

Trial Rule 56(C) provides in pertinent part:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, admissions and affidavits, ... together with any testimony show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The signature requirement arises from IC 6-8.1-3-5. The interpretation and construction of a statute is a matter of law, subject to a ruling by summary judgment. See Wechter v. Indiana Dep't of State Revenue (1989), Ind.Tax, 544 N.E.2d 221, aff'd, (1990), 553 N.E.2d 844; Wilson v. Stanton (1981), Ind.App., 424 N.E.2d 1042, 1045.

The Petitioner contends that even if the Court finds that IC 6-8.1-3-5 does not impose a signature requirement, the Department, through its practice of signing some notices and not others, has created an issue of fact of whether the Department should have signed the notices sent to Faris. If this fact is material and is in dispute, entry of summary judgment for either party would be precluded.

IC 6-8.1-3-5 provides:

All notices, summons, warrants, waivers, demands, or other documents requiring an authorizing signature by the department must be signed by the commissioner or his designee; and when that document is signed it is an official department document.

There are at least two possible interpretations of IC 6-8.1-3-5. First, Faris contends that the legislature intended all notices, et cetera, and other documents that require an authorizing signature issued by the Department must be signed by the Commissioner or his designee. This interpretation focuses upon the signature requirement. Second, the Department contends that the legislature intended that those notices, et cetera, that require an authorizing signature, must be signed by the Commissioner or his designee and not by another Department employee who is not the Commissioner or his designee. This interpretation focuses upon who is to sign, rather than a mandate to sign. Pursuant to this interpretation, the signature requirement could arise from another statute regulation, departmental practice, or from another source.

"The fundamental or cardinal rule in the construction of Indiana statutes is to ascertain the legislative intent." Wechter, 544 N.E.2d at 223 (citing Park 100 Development v. Indiana Dep't of State Revenue (1981), Ind., 429 N.E.2d 220). A statute which is clear and unambiguous is not subject to judicial construction. Holland v. King (1986), Ind.App., 500 N.E.2d 1229, 1233. However, when a statute is ambiguous, or subject to more than one interpretation, the court must look to the rules of statutory construction to ascertain the legislature's intent. Id. at 1236. IC 6-8.1-3-5 is ambiguous because it is subject to more than one interpretation.

When construing a statute, the court should interpret the statute to fully affect all of the provisions in the statute to avoid an interpretation that would render any part meaningless. Foremost Life Ins. Co. v. Department of Ins. (1980), 274 Ind. 181, 186, 409 N.E.2d 1092, 1096. Also, the court should "endeavor to give [the statute] a practical application, to construe it so as to prevent absurdity, hardship, or injustice, and to favor public convenience." Baker v. State (1985), Ind.App., 483 N.E.2d 772, 774 (quoting Lake County Beverage Co. v. 21st Amendment, Inc. (1982), Ind.App., 441 N.E.2d 1008, 1014). Likewise, the court must examine the Act as a whole to ascertain the legislature's intent "where adherence to the letter of the law would lead to injustice, absurdity or contradictory provisions." Park 100 Development v. Indiana Dep't of State Revenue (1981), Ind., 429 N.E.2d 220, 223.

Faris also cites to the rule that tax statutes should be construed against the state and in favor of the taxpayer. Id. at 222; Estate of Eberbach v. Indiana Dep't of State Revenue (1987), Ind.Tax, 512 N.E.2d 902, aff'd, (1989), Ind., 535 N.E.2d 1194. The Department contends that this rule of statutory construction is inapplicable to the present statute because IC 6-8.1-3-5 is not a tax imposing statute, but an administrative statute which provides a procedure for the Department to follow. The general rule is that "tax laws in general are strictly construed against the State" unless an exemption statute is being interpreted. Department of Revenue v. Bethel Sanitarium, Inc. (1975), 165 Ind.App. 421, 424, 332 N.E.2d 808, 810-11. This general rule is most often cited when the interpretation of a "tax imposing" statute or an exemption statute is questioned. However, the Court recognizes that IC 6-8.1-3-5 is a tax law, in general, pursuant to the Bethel decision. Yet, as the court held in Park 100, 429 N.E.2d at 222, this rule "must be applied in conjunction with the basic principle that all statutes should be read where possible to give effect to the intent of the legislature."

This is not the first occasion on which the Court has considered the meaning of IC 6-8.1-3-5. In Faris Mailing, Inc. v. Indiana Department of State Revenue (1987), Ind.Tax, 512 N.E.2d 480, 484-85, upon Faris' request for an injunction, in the Order on the motion to reconsider, this Court held that Faris did not have a reasonable opportunity to prevail on the merits because IC 6-8.1-3-5 requires that "those notices, in which an authorizing signature is required, must be signed by the Commissioner or his...