Tax Court: Alleged puppy mill owner wrongly denied refund

The Indiana Department of Revenue improperly denied a refund of the value of 240 dogs seized by the state from an alleged Harrison County puppy mill, the Indiana Tax Court ruled Dec. 31.

In the latest order in a long-running dispute, Senior Judge Thomas Fisher denied the state’s motion for summary judgment from Virginia Garwood’s claim that the state owed her $122,684.50, the value of her dogs, cash and checks seized in 2009. “(T)he Court cannot conclude that the Department properly denied Garwood’s refund claim as a matter of law,” Fisher wrote.

Attorney General Greg Zoeller used tax warrants to seize the animals in what he described at the time as an “Al Capone” method of taking down puppy mills.

The tax warrants demanded more than $142,000 in sales taxes the state claimed were owed by Virginia and Kristin Garwood, but those warrants later were voided.  The Garwoods pleaded guilty in May 2010 to Class D felony charges of failing to pay sales taxes. They later paid taxes and demanded a refund of the value of the seized animals that the state ended up selling to the U.S. Humane Society for $300.

“Garwood subsequently explained that the Department’s allegedly improper ‘closed door’ sale of her animal inventory to the U.S. Humane Society pursuant to invalid jeopardy tax assessments entitles her to relief. … Consequently, even if the Court found that the provision of goods or services does not constitute a tax payment under Indiana Code § 6-8.1-8-1, the Department would not be entitled to an entry of summary judgment because Garwood has presented a claim for which this Court can provide relief. … As such, Garwood’s claim for compensatory damages will be heard in the Tax Court without a jury,” Fisher wrote.

 “The Court will issue, under separate cover, an order scheduling this matter for further proceedings.” The case is Virginia Garwood v. Indiana Department of State Revenue, 82T10-1208-TA-46.