Home/Indiana Court of Appeals/Indiana Department of State Revenue v. Continental Steel Corp.

Indiana Department of State Revenue v. Continental Steel Corp.

399 N.E.2d 754, 73 Ind. Dec. 578, 1980 Ind. App. LEXIS 1274
Indiana Court of Appeals·Decided January 21, 1980·No. No. 2-876-A-316·Published·Cited by 5 cases

Opinion

BUCHANAN, Chief Judge.

CASE SUMMARY

Defendant-appellant, Indiana Department of State Revenue (the State), appeals from a judgment ordering a refund of Indiana adjusted gross income tax to Continental Steel Corporation (Continental), claiming Continental’s activities outside the State of Indiana during 1965 and 1966 amounted to nothing more than solicitation and therefore all of Continental’s sales were sales within the state (Indiana).

We affirm.

FACTS

The evidence most favorable to the judgment reveals:

Continental is an Indiana corporation with its home office and manufacturing facilities located in Kokomo, Indiana. Continental manufactures wire, fencing, nails and other steel products which are sold in fifty states, Canada and the Virgin Islands.

In determining the amount of adjusted gross income tax payable to the State of Indiana for. the years 1965 and 1966, Continental used the statutory three-factor formula,1 a computation for the apportionment [756] and allocation of income based on a taxpayer’s property, payroll and sales.

In computing the sales factor of the formula2 Continental characterized as sales within the state (Indiana) only those sales to purchasers within the State of Indiana. By this method, Continental allocated and apportioned approximately twenty-two percent (22%) of its total sales to Indiana.

In 1968, the State examined Continental’s business records for 1965 and 1966 and concluded that Continental had paid no tax to foreign states based on the sales characterized as sales outside the state (Indiana). The State then determined that the allocation and apportionment of income was improper and characterized all sales as sales within the State of Indiana and Continental was assessed additional tax and interest in the amount of Seventy Thousand, One Hundred Eighty-nine and 26/100 ($70,189.26) Dollars.

Continental filed a protest against the assessment, a hearing was held and the protest was denied. Continental paid the assessment under protest and filed a claim with the State for a refund. After a hearing, the claim for refund was also denied.

Thereafter, Continental brought suit for the refund in the Howard Circuit Court. During the trial, Continental directed its proof for refund of taxes to the sales made in seventeen states.3 Dale Storms, an employee of Continental, testified that either a net income tax or a franchise tax measured by net income was paid in Illinois, Kentucky, Michigan and Ohio. Storms also testified as to the various activities performed by Continental in the seventeen foreign states. His testimony can be summarized by this chart:

[757]

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Indiana Department of State Revenue v. Continental Steel Corp., 399 N.E.2d 754, 73 Ind. Dec. 578, 1980 Ind. App. LEXIS 1274 (Ind. Ct. App. 1980).

399 N.E.2d 754 (Indiana Department of State Revenue v. Continental Steel Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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IND. DEPT. OF STATE v. Continental Steel Corp.
399 N.E.2d 754 (Indiana Court of Appeals, 1980)