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ATTORNEYS FOR PETITIONER: FRANCINA A. DLOUHY BAKER & DANIELS LLP Indianapolis, IN

CRAIG B. FIELDS MORRISON & FOERSTER LLP New York, NY _____________________________________________________________________

ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER ATTORNEY GENERAL OF INDIANA JESSICA E. REAGAN DEPUTY ATTORNEY GENERAL Indianapolis, IN

FILED
of the supreme court, court of appeals and tax court

IN THE INDIANA TAX COURT

Oct 25 2011, 2:46 pm

CLERK

_____________________________________________________________________ ) AE OUTFITTERS RETAIL CO., ) ) Petitioner, ) ) v. ) Cause No. 49T10-1012-TA-66 ) INDIANA DEPARTMENT OF STATE ) REVENUE, ) ) Respondent. ) _____________________________________________________________________ ORDER ON PETITIONER'S MOTION FOR PARTIAL SUMMARY JUDGMENT NOT FOR PUBLICATION October 25, 2011 FISHER, Senior Judge AE Outfitters Retail Co. (AE Outfitters) appeals the final determination of the Indiana Department of State Revenue (Department) that assessed it with an adjusted gross income (AGI) tax liability for the tax years ending on July 31, 2004, July 30, 2005, July 29, 2006, and August 4, 2007 ("the years at issue"). The matter is before the Court on AE Outfitters' motion for partial summary judgment. The issue for the Court to

decide is whether the Department must apply each of the methodologies listed in

Indiana Code sections 6-3-2-2(l) and (m) before it may compel a taxpayer to report its Indiana AGI liability using a combined income tax return under Indiana Code section 63-2-2(p). FACTS AND PROCEDURAL HISTORY The following facts are undisputed. AE Outfitters, a foreign corporation, sells specialty retail apparel to the public through several stores located in the United States, including Indiana. During the years at issue, AE Outfitters reported its Indiana AGI tax liability by filing corporate AGI tax returns. The Department subsequently audited AE Outfitters and concluded that because its separate returns did not fairly reflect its Indiana income, it must report its Indiana AGI liability via a combined income tax return.1 Accordingly, the Department issued eight proposed assessments to AE Outfitters, assessing it with a total AGI tax liability of $2,060,239.41, plus penalties and interest. AE Outfitters timely protested the proposed assessments. On October 29, 2010, the Department issued a Letter of Findings

sustaining the proposed assessments and therefore the use of the combined return methodology. On December 27, 2010, AE Outfitters initiated this original tax appeal. On March 3, 2011, AE Outfitters filed a motion for partial summary judgment. The Court held a hearing on the motion on September 15, 2011. Additional facts will be supplied as necessary.

1

A "combined income tax return" is "any income tax return on which one (1) or more taxpayers report income, deductions, and credits on a combined basis with one (1) or more other entities." IND. CODE

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