IN Tax Court rules in favor of state revenue department in toll road tax dispute

IL file photo

The Indiana Toll Road’s lease established it as a publicly maintained road for the 2016 and 2017 tax years, the Indiana Tax Court ruled Wednesday in denying three motor carriers’ claims that they should be awarded motor fuel tax refunds for those years.

According to court records, B.L. Reever Transport Inc., Charles Paar, doing business as Sandman Services, and Leland Wilkins, doing business as Lost River Trucking, are small business motor carriers.During the 2016 and 2017 tax years, they logged a varying number of miles and, therefore, consumed different amounts of fuel while hauling property on Indiana’s roadways, including the toll road.

The motor carriers each remitted quarterly payments to the Indiana Department of Revenue for motor carrier fuel tax, or MCFT.

On Nov. 8, 2017, Paar and Wilkins each filed separate claims seeking refunds of the portion of MCFT paid with respect to their consumption of fuel on the toll road for one or more of the quarters in 2016.

Just over a year later, B.L. Reever filed a claim for refund of MCFT paid for its consumption of fuel on the toll road during the fourth quarter of 2017.

But the department sent Paar and Wilkins separate letters stating it was “unable to process” their refund claims because “[t]oll [r]oads are not exempt in Indiana.” It also sent B.L. Reever a similar letter.

B.L. Reever, Paar and Wilkins each filed a protest. While their individual protests were pending, they also filed a single, combined appeal with the Tax Court in March 2019.

The Tax Court dismissed that appeal without prejudice.

The department conducted an administrative hearing on the three pending protests and ultimately denied each.

Then in May 2020, the motor carriers initiated an original tax appeal as a small tax case.

The department moved to dismiss the appeal pursuant to Indiana Trial Rule 12(B), and shortly thereafter, the parties filed their first cross-motions for summary judgment.

The Tax Court denied each of those motions.

The parties then filed their second cross-motions for summary judgment, disputing whether the toll road was a “highway” for purposes of the MCFT.

The Tax Court a hearing on the parties’ cross-motions, then granted summary judgment in favor of the department and against B.L. Reever, Paar and Wilkins.

Now-retired Tax Court Judge Martha Wentworth wrote the opinion in B.L. Reever Transport, Inc., Charles Paar, d/b/a Sandman Services, and Leland Wilkins, d/b/a Lost River Trucking v. Indiana Department of State Revenue, 20T-TA-9.

The motor carriers argued they are entitled to judgment in their favor because the undisputed material facts show the toll road was privately maintained during the tax years at issue, and as a matter of law, the MCFT cannot be imposed on fuel consumed when not traveling on a “publicly maintained way.”

But the Tax Court disagreed, holding that the toll road was a publicly maintained way during the tax years at issue, meeting the MCFT’s statutory definition of a “highway.”

“Accordingly, the Motor Carriers are not entitled to judgment as a matter of law on this basis, having failed to demonstrate that the Toll Road was not a ‘highway’ for purposes of the MCFT,” Wentworth wrote.

Wentworth also rejected the motor carriers’ argument that they are entitled to judgment as a matter of law because the department is bound by certain admissions made in a related federal case,  Owner-Operator Independent Drivers Association, et al v. Holcomb, et al., 1:19-cv-00086, concerning the constitutionality of increases to certain toll road tolls.

The motor carriers claimed admissions were made in the defendants’ briefs that the toll road was privately maintained, and, therefore, precluded the department from denying their refunds in this case.

However, the alleged judicial admissions were not made at trial, Wentworth wrote, adding that the statements on which the motor carriers relied could not be considered judicial admissions.

Wentworth concluded by addressing the motor carriers’ claim that the express terms of the 75-year lease of the toll road demonstrate there is no genuine issue of material fact and that, as a matter of law, the toll road was privately maintained during the 2016 and 2017 tax years.

“The Lease, however, was a statutorily authorized public-private agreement that, along with its enabling legislation, established as a matter of law that the Toll Road was a publicly maintained highway throughout the years at issue,” she wrote. “Accordingly, consumption of fuel on the Toll Road during the years at issue was subject to the imposition of MCFT, and the Motor Carriers are not entitled to a refund.”