ATTORNEY FOR PETITIONERS:              ATTORNEYS FOR RESPONDENT:
G. JAYSON MARKSBERRY                   GREGORY F. ZOELLER
MARKSBERRY LAW OFFICE, LLC             ATTORNEY GENERAL OF INDIANA
Brownsburg, IN                         JESSICA R. GASTINEAU
                                       DEPUTY ATTORNEY GENERAL
                                       Indianapolis, IN
_____________________________________________________________________

                               IN THE
                         INDIANA TAX COURT
_____________________________________________________________________
                                                                     Nov 20 2015, 12:28 pm

J.S. MARTEN, INC., JANICE S. MARTEN,  )
and CHRISTOPHER M. MARTEN,            )
                                      )
     Petitioners,                     )
                                      )
                  v.                  )   Cause No. 49T10-1301-TA-00008
                                      )
INDIANA DEPARTMENT OF STATE           )
REVENUE,                              )
                                      )
     Respondent.                      )
______________________________________________________________________

                 ORDER ON RESPONDENT’S MOTION TO DISMISS

                                FOR PUBLICATION
                                November 20, 2015

FISHER, Senior Judge

      J.S. Marten, Inc., Janice S. Marten, and Christopher M. Marten (the Martens)

have appealed the Indiana Department of State Revenue’s denial of their claim for a

refund of sales tax remitted for the 2004, 2005, and 2006 tax years (“the years at

issue”). The matter, currently before the Court on the Department’s Motion to Dismiss,

presents two issues: 1) whether the Court has subject matter jurisdiction over the

Martens’ appeal; and, if so, 2) whether the Martens have failed to state a claim upon

which relief can be granted.
                        FACTS AND PROCEDURAL HISTORY

      During the years at issue, the Martens operated a retail store and sold tangible

personal property to customers in Indiana. (See Pet’rs’ V. Pet. Judicial Review Final

Determination [Department] (“Pet’rs’ V. Pet.”), Attach. Final Order Denying Refund at 2.)

Between July and October of 2008, the Martens remitted, in five separate payments,

$162,529.11 in sales tax to the Department for the years at issue. (See Pet’rs’ V. Pet.,

Attachs. J.S. Marten IDOR Timeline at 2-3 and Final Order Denying Refund at 2-3.) On

January 1, 2012, the Martens filed a refund claim with the Department seeking to

recover $162,396.34 of those payments.          (See Pet’rs’ V. Pet., Attach. Final Order

Denying Refund at 2.)       On October 26, 2012, after conducting a hearing, the

Department denied the Martens’ refund claim, concluding that it had not been timely

filed under Indiana Code § 6-8.1-9-1. (See Pet’rs’ V. Pet., Attach. Final Order Denying

Refund.)

      On January 24, 2013, the Martens initiated an appeal. On February 27, 2013,

the Department moved to dismiss the Martens’ appeal. On November 5, 2015, after

settlement negotiations failed, the Court conducted a hearing on the motion to dismiss.

Additional facts will be supplied as necessary.

                             DISCUSSION AND ANALYSIS

                            1) Subject Matter Jurisdiction

      The Department first argues that this Court lacks subject matter jurisdiction over

the Martens’ appeal because they failed to comply with a statutory prerequisite for

initiating it: they did not file a timely claim for a refund of sales tax. (See Resp’t Mot.

Dismiss ¶¶ 5-14; Mem Supp. Resp’t Mot. Dismiss.) The Department is mistaken.



                                            2
        “Subject matter jurisdiction ‘refers only to the power of a court to hear and decide

a particular class of cases.’” Marion Cnty. Auditor v. State, 33 N.E.3d 398, 400 (Ind.

Tax Ct. 2015) (quoting Pivarnik v. N. Ind. Pub. Serv. Co., 636 N.E.2d 131, 137 (Ind.

1994)). Subject matter jurisdiction does not depend upon the sufficiency or correctness

of the averments in the petition, the stating of a good cause of action, or the validity of

the petitioner’s demand or right to relief. Id. (citing In re Adoption of H.S., 483 N.E.2d

777, 780 (Ind. Ct. App. 1985)).      “Rather, ‘[t]he only relevant inquiry in determining

whether any court has [] subject matter jurisdiction is to ask whether the kind of claim

which the [petitioner] advances falls within the general scope of the authority conferred

upon [the] court by the constitution or by statute.’” Id. (quoting Pivarnik, 636 N.E.2d at

137).

        The Tax Court has exclusive subject matter jurisdiction over all “original tax

appeals.” IND. CODE §§ 33-26-3-1, -3 (2015). A case is an original tax appeal if it arises

under the tax laws of Indiana and is an initial appeal of a final determination made by

the Department regarding the listed taxes. See I.C. § 33-26-3-1(1).

        Here, the Martens’ appeal arises under the tax laws of Indiana because an

Indiana tax statute, Indiana Code § 6-8.1-9-1, created their right of action. See State ex

rel. Zoeller v. Aisin USA Mfg., Inc., 946 N.E.2d 1148, 1152 (Ind. 2011) (explaining that a

case “arises under” Indiana’s tax laws if an Indiana tax statute creates the right of

action). Moreover, the Martens received a final determination from the Department

when, on October 26, 2012, the Department denied their refund claim.                   The

Department’s claim that the Martens’ appeal should be dismissed because the Court

lacks subject matter jurisdiction is therefore DENIED.



                                             3
                                 2) Failure to State a Claim

       Next, the Department argues that the Martens’ appeal should be dismissed

because they failed to state a claim upon which relief can be granted. (See Resp’t Mot.

Dismiss ¶¶ 8-17.) See also Putnam Cnty. Sheriff v. Price, 954 N.E.2d 451, 453 (Ind.

2011) (explaining that a petition may be dismissed for failure to state a claim when it is

apparent that its factual allegations are incapable of supporting relief under any set of

circumstances).        More specifically, the Department claims that the Martens are not

entitled to a refund because there is no dispute that the Martens paid sales tax in 2008,

but did not file their refund claim until 2012. (See Resp’t Mot. Dismiss ¶¶ 8-17; Hr’g Tr.

at 6.) See also IND. CODE § 6-8.1-9-1(a) (2004) (providing that “in order to obtain [a]

refund, [a] person must file [a] claim [for a refund of tax] with the [D]epartment within

three (3) years after the latter of the following: (1) [t]he due date of the return[ or] (2)

[t]he date of payment”) (emphasis added).

       Despite the untimely filing, the Martens have asked the Court to allow their

appeal to proceed because they have presented a plausible, alternative basis for relief:

that the Department should be estopped from raising a statute of limitations defense

based on its hearing officer’s statements that their refund claim was timely filed. (See

Pet’rs’ Resp. Mot. Dismiss (“Pet’rs’ Br.”) at 3-4; Hr’g Tr. at 6, 9-12.) Moreover, the

Martens contend that their case should proceed given its “extraordinary procedural

history” that “involves document production issues with [the Department] and a potential

breakdown of policy and procedure at every step of the administrative process.” (See

Pet’rs’ Br. at 3-5.)

       Equitable estoppel is a doctrine under which a person may be precluded - by his



                                              4
act, conduct, or silence when it is his duty to speak - from asserting a right that he

otherwise would have had.      Izaak Walton League of Am. v. Lake Cnty. Prop. Tax

Assessment Bd. of Appeals, 881 N.E.2d 737, 743 (Ind. Tax Ct. 2008). Previously, this

Court explained:

          The elements of equitable estoppel are: (1) a representation or
          concealment of material fact; (2) made by a person with knowledge
          of the fact and with the intention the other party act upon it; (3) to a
          party ignorant of the fact; (4) which induces the other party to rely
          or act upon it to his detriment.

          Equitable estoppel cannot ordinarily be applied against government
          entities. The reason for this general rule is twofold. If the
          government could be estopped, then dishonest, incompetent or
          negligent public officials could damage the interests of the public.
          At the same time, if the government were bound by its employees’
          unauthorized representations, then government itself, could be
          precluded from functioning.

          However, application of the doctrine against the government is not
          absolutely prohibited. The exception to the general rule exists
          where the public interest would be threatened by the government’s
          conduct.

Id. (quoting Hi-Way Dispatch, Inc. v. Indiana Dep’t of State Revenue, 756 N.E.2d 587,

598-99 (Ind. Tax Ct. 2001)). Thus, to defeat the Department’s motion to dismiss, the

facts alleged in the Martens’ petition must, at the very least, address the elements of

estoppel and offer a public policy reason for application of the doctrine. See, e.g., id.

See also Medco Health Solutions, Inc. v. Indiana Dep’t of State Revenue, 9 N.E.3d 263,

264 (Ind. Tax Ct. 2014) (explaining that in ascertaining the legal sufficiency of a claim,

the Court will look only to the petition and its written attachments and may not resort to

any other evidence in the record).

      The Martens’ petition, in relevant part, provides:

          The facts of the case were ignored and not substantiated. The

                                             5
          questions asked of the [Department] were ignored and not
          answered, the final order denying the refund has many errors and
          incorrect statements[;]

                                          *****

          The colossal incompetence and continued cover up by the
          [Department], [] can be documented and will be presented at trial.
          The [Department] states they are not governed by the State of
          Indiana[;]

                                          *****

          The petitioner[s] initially contacted John Eckart, the [] commissioner
          of the [Department] to request the refund. Commissioner Eckart
          advised the request was being reviewed, after over a 10 month
          period of time then told by Patricia Chen Associate Hearing Officer,
          that the claim was not filed in a timely manner. However, at a face
          to face meeting with Chen and her assistant, Mr. William B. Long,
          also representing the [Department], the Marten’s [sic] and the legal
          counsel for the Marten’s [sic] Mr. Jeff Adams, were repeatedly told
          that the claim was within the statute[;]

          Mr. Doug Klitzke attempts to exercise more power than the
          Commissioner of the [Department]. Mr. Klitzke has consistently
          shown prejudicial behavior and views his decisions above any law
          of the State of Indiana and its citizens. This attitude of Klitzke is
          easily proven through documentation that will be presented during
          the hearing with the Tax Court. Mr. Klitzke[’s] personal bias and
          bullying tactics are not new tactics in the Indiana legal community
          or the state tax arena[; and]

          The [Department] claims a lack of records and documents were
          never provided when in actuality everything ever requested was
          supplied. The true issue is that more than 45 people have
          attempted to have a say in the outcome of this tax matter. NEVER
          at any time was an official audit provided to: J.S. Marten, Marten’s
          [sic] personally, or any legal counsel and more importantly to the
          court and judge in the State of Indiana. J.S. Marten Inc. books
          were prepared by a reputable CPA firm but the [Department’s]
          alleged audit (once again NEVER produced) was reviewed by a
          non-CPA bookkeeper. Documents will be provided in court to
          substantiate statements.

(Pet’rs’ V. Pet. at 1-2.) While the Martens’ petition indicates that their interactions with



                                             6
the Department both during and after the administrative process left them feeling

particularly aggrieved, it neither addresses the elements of equitable estoppel nor

identifies a public policy basis for application of the doctrine.    In fact, the Martens’

petition does not actually present a claim for equitable estoppel at all because it alleges

that the purported act upon which the Martens relied, the hearing officer’s statement

that their refund claim was timely filed, occurred after they filed their refund claim. (See

Pet’rs V. Pet. ¶ 7.) Consequently, the hearing officer’s statement had no bearing on

when the Martens filed their refund claim.

                                      CONCLUSION

       The facts alleged in the Martens’ petition do not rebut the fact that their refund

claim was not timely filed nor do they raise an alternative basis for relief. Accordingly,

the Department’s Motion to Dismiss on the basis that the Martens failed to state a claim

upon which relief can be granted is hereby GRANTED.

       SO ORDERED this 20th day of November 2015.




                                                 Thomas G. Fisher, Senior Judge
                                                 Indiana Tax Court




DISTRIBUTION:
G. Jayson Marksberry, Jessica R. Gastineau

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