Northern Indiana dealer Richardson’s RV, who tried to avoid paying Indiana sales tax on out-of-state transactions by moving RVs into Michigan before handing over the keys to customers, must repay taxes after a divided Indiana Supreme Court entered summary judgment in favor of the Indiana Department of Revenue.
This story by Olivia Covington originally appeared in TheIndianaLawyer.com.
Justice Mark Massa, writing a majority opinion joined by Chief Justice Loretta Rush and Justice Christopher Goff, reversed an August ruling from the Indiana Tax Court on Wednesday in Richardson’s RV, Inc. v. Indiana Department of State Revenue.
The case centers around Middlebury-based Richardson’s RV, which sells RVs both onsite and online.
Customers who lived in Indiana or in one of the 40 states with reciprocal tax exemption agreements with the Hoosier state would take possession of their RVs directly at the dealership. But the remaining out-of-state customers were given the option of either paying Indiana’s sales tax rate or their home state’s rate.
“For the non-reciprocal-state customers choosing to pay their home state’s rate, the delivery method Richardson’s employed was unorthodox,” Massa wrote. Specifically, Richardson’s would drive the RV across the state line into Michigan, a non-reciprocal state, before giving customers their keys, thereby avoiding Indiana sales tax.
After discovering this practice in an audit, the Department of Revenue issued proposed assessments of nearly $250,000 in unpaid taxes. On appeal, the Tax Court granted summary judgment to Richardson’s, but after hearing oral argument in March, the majority of the Indiana Supreme Court reversed.
