Asplundh Tree Expert Co. v. Indiana Department of State Revenue
2015 Ind. Tax LEXIS 30
| Ind. T.C. | 2015Background
- Asplundh Tree Expert Co., a Pennsylvania-based private motor carrier, purchased over 500 custom commercial vehicles from out-of-state sellers (2007–2009).
- Vehicles were not delivered to Indiana and most were never driven on Indiana roads, but Asplundh registered, titled, and licensed the vehicles in Indiana under the IRP and paid ~ $2.6 million in Indiana use tax at titling.
- Asplundh filed refund claims with the Indiana Department of State Revenue, which were denied; Asplundh appealed and moved for partial summary judgment in Indiana Tax Court.
- Asplundh argued (1) licensing/titling did not constitute a taxable “use” and (2) imposing use tax when vehicles never entered Indiana violated the Commerce Clause.
- The Tax Court found (a) Asplundh exercised ownership rights by titling/registrating in Indiana, satisfying statutory "use," and (b) the use tax did not violate the Complete Auto Commerce Clause test; it granted partial summary judgment for the Department.
Issues
| Issue | Plaintiff's Argument (Asplundh) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| Whether titling/registration/licensing in Indiana constitutes taxable "use" under Indiana law | Licensing is not a "use"; mere paperwork should not trigger use tax | Registering, titling, and licensing are exercises of ownership and fall within the statutory definition of "use" | Titling/registration/licensing constituted taxable use; use tax properly paid |
| Whether property must be physically present in Indiana for use tax to apply | Use tax cannot apply where vehicles never entered or were operated in Indiana | Indiana statute defines "use" broadly as exercise of ownership rights; physical presence is not required | Physical presence not required; statutory definition covers Asplundh’s acts |
| Whether imposition of use tax violates Commerce Clause substantial nexus prong | No substantial nexus because vehicles were not physically used in Indiana; only paperwork was processed | Asplundh had a physical presence (garaging of some vehicles) and exercised ownership via Indiana registration | Substantial nexus met; Commerce Clause substantial nexus not violated |
| Whether imposition of use tax violates the remaining Complete Auto prongs (apportionment, nondiscrimination, relation to services) | Department should credit other states’ taxes; taxing without corresponding use of state services discriminates and risks multiple taxation | No showing of multiple taxation or discriminatory advantage to local business; Indiana provided services (IRP, judicial access) related to registration | No violation of apportionment, nondiscrimination, or fair-relation prongs; tax is fairly related to state services |
Key Cases Cited
- Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (establishes four‑part Commerce Clause test)
- Quill Corp. v. North Dakota, 504 U.S. 298 (physical presence standard for substantial nexus in use‑tax context)
- Simon Aviation, Inc. v. Indiana Dep’t of State Revenue, 805 N.E.2d 920 (applies Complete Auto framework in Indiana Tax Court)
- USAir Inc. v. Indiana Dep’t of State Revenue, 623 N.E.2d 466 (Indiana Tax Court on breadth of taxable "use")
- SAC Fin., Inc. v. Indiana Dep’t of State Revenue, 24 N.E.3d 541 (statutory/regulatory construction principles applied to tax rules)