Fresenius USA Marketing, Inc. v. Indiana Department of State Revenue
2016 Ind. Tax LEXIS 31
| Ind. T.C. | 2016Background
- Fresenius USA Marketing, Inc. sold durable medical equipment and supplies to Indiana clinics between Jan 1, 2004 and Oct 31, 2007 and collected/remitted sales tax on those sales.
- Fresenius filed a refund claim on Dec 16, 2007; the Indiana Department of State Revenue denied it on June 7, 2010.
- The statutory exemption at issue (IC § 6-2.5-5-18(a)) exempts sales of durable medical equipment when prescribed by a licensed prescriber.
- The Department had issued a 1998 published revenue ruling interpreting the exemption to cover sales to healthcare providers treating patients with prescriptions; later (post-period) the Department changed its interpretation to cover only direct sales to patients.
- The central dispute: whether the Department is bound by its 1998 published ruling such that Fresenius’s sales to clinics were exempt, entitling Fresenius to a refund.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Department is bound by its 1998 published revenue ruling interpreting the durable medical equipment exemption | Fresenius: the 1998 published ruling is a binding published interpretation under I.C. § 6-8.1-3-3(b), so the Department cannot apply a new interpretation retroactively | Department: § 6-8.1-3-3(b) binds the Department only when it issues a regulation; the 1998 Ruling is not a regulation so it is not binding | Court: § 6-8.1-3-3(b) binds the Department to published interpretations; the 1998 Ruling was published and therefore binding |
| Whether only the original recipient of a ruling may rely on a published ruling | Fresenius: 45 I.A.C. 15-3-2(d)(3) allows other taxpayers with substantially identical facts to rely on publicized rulings; Fresenius’s facts match the 1998 Ruling | Department: its regulation limits reliance to the taxpayer to whom the ruling was issued | Court: the regulation explicitly permits other taxpayers with substantially identical facts to rely on publicized rulings; Fresenius showed substantial factual identity and the Department did not rebut it |
Key Cases Cited
- Mirant Sugar Creek, LLC v. Indiana Dep't of State Revenue, 930 N.E.2d 697 (Ind. Tax Ct. 2010) (explaining that published departmental rulings can be binding and must be published in the Indiana Register to be effective)
- Norrell Servs., Inc. v. Indiana Dep't of State Revenue, 816 N.E.2d 517 (Ind. Tax Ct. 2004) (addressing limits on retroactive application of changed departmental interpretations in Letters of Findings)
- Fresenius USA Mktg., Inc. v. Indiana Dep't of State Revenue, 970 N.E.2d 801 (Ind. Tax Ct. 2012) (procedural prior decision rejecting Department's standing challenge)