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ATTORNEYS FOR APPELLANT Gregory F. Zoeller Attorney General of Indiana Andrew W. Swain Chief Counsel Jennifer E. Gauger Deputy Attorney General Indianapolis, Indiana

ATTORNEYS FOR APPELLEE Phillip R. Scaletta Mark J. Richards Edward P. Steegmann Brian J. Paul Indianapolis, Indiana

______________________________________________________________________________
May 12 2011, 8:34 am

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

Indiana Supreme Court
_________________________________ No. 36S01-1009-CV-469 STATE EX REL. GREGORY F. ZOELLER, ATTORNEY GENERAL OF INDIANA

In the

CLERK

Appellant (Plaintiff below), v. AISIN USA MANUFACTURING, INC., Appellee (Defendant below). _________________________________ Appeal from the Jackson Superior Court, No. 36D01-0905-MI-8 The Honorable Bruce Markel, III, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 36A01-0909-CV-442 _________________________________ May 12, 2011 Sullivan, Justice. The Attorney General sought to recover an erroneously issued "tax refund" of approximately $1,150,000 from Aisin USA Manufacturing, Inc. ("Aisin") in Jackson Superior Court. Aisin argued that the case "arises under" Indiana tax law so that exclusive subject matter juris-

diction rests with the Indiana Tax Court. We hold that this case may proceed in Jackson Superior Court. It does not arise under the tax laws because the "refund" was the result of accounting and clerical errors within the Indiana Department of Revenue ("Department") that were wholly unrelated to any interpretation or application of tax law. Background

The factual issues in this case are unique and complex. But because this is an appeal from a trial court's grant of a pretrial motion to dismiss under Trial Rule 12(B)(1), we accept as true the facts alleged in the State's complaint. Title Servs., LLC v. Womacks, 848 N.E.2d 1151, 1153 n.1 (Ind. Ct. App. 2006) (citation omitted); see also GKN Co. v. Magness, 744 N.E.2d 397, 400-01 (Ind. 2001) (setting out the standard of review).

Aisin filed its Indiana corporate income tax return for tax-year 2000 in October, 2001, reporting its total tax due as $2,121,242 and its total payments as $2,083,241.1 Appellant's App. 4, 28, 195. Because it had underpaid its taxes by $38,001, Aisin remitted payment of $39,331, which included interest. Id. In October, 2002, Aisin filed its tax return for tax-year 2001, reporting its total tax due as $1,300,637 and its total payments as $1,457,000.2 Id. at 6-7, 70. Because it had overpaid its 2001 taxes, Aisin was entitled to a refund of $156,363, which it requested be applied toward its 2002 taxes. Id. at 7, 70. Even though Aisin was neither entitled to nor expecting to receive a refund check for its 2001 taxes, it received a check for $1,146,062 in September, 2003, which it negotiated. Id. at 7-8, 26, 189.

The Department issued the check because of several accounting and clerical errors that had occurred while entering data from paper records into the computerized Revenue Processing System ("RPS"). Id. at 7, 9. There appear to have been three major errors: First, the Depart-

1

The payments derived from six sources: four quarterly tax payments of (1) $360,000; (2) $507,312; (3) $487,000; and (4) $384,436; (5) a carry-forward credit of $44,493 for overpaying its 1999 taxes; and (6) an extension payment of $300,000 paid to extend its filing deadline from April to October. Appellant's App. 28. 2 The payments derived from five sources: four quarterly tax payments of (1) $300,000; (2) $300,000; (3) $300,000; and (4) $200,000; and (5) an extension payment of $357,000. Id. at 70.

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ment had given Aisin an erroneous credit of $967,3353 for an overpayment of its 2000 taxes. Id. at 4-5, 196. Second, a billing clerk in Audit Review had made a number of errors entering information from Aisin's paper return for 2001 into the RPS, which resulted in the RPS miscalc ulating Aisin's 2001 tax as $540,584 (minus a $1,000 college-contribution credit), instead of its actual tax due ($1,301,637 (minus a $1,000 college-contribution credit)). Id. at 7, 191. Third, the Department had failed to give Aisin credit for $657,000 worth of payments made toward its 2001 taxes.4 Id. at 6, 192-93. The combined effect of these three errors was a miscalculation that Aisin had overpaid its 2001 taxes by $1,227,750. Id. at 7-8, 188. The Department applied $156,363 of this total toward Aisin's 2002 tax liability, as requested, which resulted in a refund amount of $1,071,387 plus interest, for a total of $1,146,062. Id. at 7-8, 188-89.

In October, 2005, Aisin filed an amended return for the 2001 tax year, reporting its total tax due as $1,052,369 and its total payments as $1,457,000 (plus a $1,000 college-contribution credit). Id. at 8, 118. Subtracting the $156,363 refund it claimed on its original return, Aisin claimed a refund of $249,268. Id. While processing Aisin's amended return, the Department discovered some of its earlier miscalculations, and in April, 2006, it issued a "Proposed Asses sment" to Aisin stating that Aisin owed $616,0625 for tax-year 2001. Id. at 11, 157, 194. Aisin filed timely protests to the proposed assessment, claiming that the statute of limitations had expired and requesting a hearing. Id. at 11, 159-60, 163-65. Rather than hold a hearing, the De3

This mistake was allegedly the culmination of several different errors. First, the Department recorded Aisin's first-quarter tax payment of $360,000 for 2000 as $830,000, thereby giving Aisin credit for $470,000 more than it actually paid. Id. at 4, 12-13, 196. Second, because of Aisin's election to transition after September 30, 1999, from a fiscal tax year to a calendar tax year, which resulted in a short-year tax period from October 1, 1999, to December 31, 1999, the Department recorded Aisin's carry-forward overpayment of $44,493 from 1999 as $540,980, thereby giving Aisin credit for $496,487 more than it was due. Id. These two amounts ($470,000 + $496,487) sum to $966,487, $848 less than the credit of $967,335. We are unable to account for this discrepancy from the record and leave it for the trial court to resolve on remand if material. 4 The Department did not give credit for one of the $300,000 quarterly payments it made in 2001 or for the $357,000 extension payment, which was mistakenly applied toward 2002. Id. at 6, 192-93. 5 The Department appears to have arrived at this figure as follows: The Department had miscalculated Aisin's credits at $1,768,335 ($1,767,335 + $1,000 college-contribution credit). Aisin's amended tax liability was $1,052,369. The difference between the miscalculated credits and the amended tax liability resulted in an "overpayment" of $715,966. The Department had applied $156,363 of that overpayment to Aisin's 2002 tax liability. Thus, the "overpayment" was $559,603. And since the "overpayment" (based on these numbers) should have been only $559,603, the Department determined that it had issued to Aisin an excessive refund of $511,784 ($1,071,387 - $559,603). This "excessive payment" plus interest of $104,278 equaled the amount shown in the proposed assessment ($616,062). See id. at 9-11, 193-94.

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partment cancelled the proposed assessment because it had finally discovered all of the errors and no longer believed that Aisin had underpaid its taxes. Id. at 179, 192, 195; Appellant's Br. 5; Appellant's Pet. to Transfer 3. Rather, the Department agreed that Aisin had paid the proper amount of taxes. Appellant's App. 7, 9, 12-13, 191-92; Appellant's Br. 5; Appellant's Pet. to Transfer 3. Subsequent efforts by the Department to recover the erroneously issued funds were unsuccessful, so the Department referred the matter to the Attorney General.

The State, on behalf of the taxpayers of Indiana, filed a complaint against Aisin in Jackson Superior Court. The complaint raised claims of unjust enrichment, theft, statutory treble damages, and constructive trust. The State claimed a loss of $1,146,062 (and treble damages of $3,438,186).6 Aisin filed a motion to dismiss for lack of subject matter jurisdiction, Ind. Trial Rule 12(B)(1), and a motion to dismiss for failure to state a claim, T.R. 12(B)(6). The trial court granted Aisin's motion to dismiss for lack of jurisdiction, concluding that this matter fell within the exclusive jurisdiction of the Indiana Tax Court. It reasoned that a statutory remedy existed because the State could have used the Department to collect the money and that the payment arose from the relationship of taxpayer and tax collector.

The Court of Appeals affirmed, holding that whether and to what extent mistakes were made in this case were "quintessentially tax matters" and that the Department could not unilaterally cancel a proposed assessment in an effort to circumvent the jurisdiction of the Indiana Tax Court. State ex rel. Zoeller v. Aisin USA Mfg., Inc., 926 N.E.2d 83, 88-89 (Ind. Ct. App. 2010).

The State sought, and we granted, transfer, State ex rel. Zoeller v. Aisin USA Mfg., Inc., 940 N.E.2d 823 (Ind. 2010) (table), thereby vacating the opinion of the Court of Appeals, Ind. Appellate Rule 58(A).

6

During oral argument before this Court, the State said that it was no longer seeking treble damages.

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Discussion

The only issue in this appeal is whether the Jackson Superior Court has subject matter jurisdiction7 over this case. The Jackson Superior Court has subject matter jurisdiction over all civil and criminal cases, except where exclusive jurisdiction has been conferred by law upon a different court with the same territorial jurisdiction. See Ind. Code

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