Indiana Department of State Revenue v. Caterpillar, Inc.
15 N.E.3d 579
| Ind. | 2014Background
- Indiana corporate taxpayers can deduct foreign source dividend income in AGI; Caterpillar sought to use that deduction to increase Indiana NOL carryforwards.
- Caterpillar, an Indiana filer with loss years 2000–2003, wrote in the foreign source dividend deduction into its NOL calculations.
- In 2004–2005 Caterpillar amended 1996–1999 Carryback Years to reduce AGI by NOLs and sought refunds; the Department partially denied refunds and rejected the foreign source dividend deduction in NOLs.
- Tax Court granted Caterpillar summary judgment reversing the Department; the Department petitioned for review.
- Statutory framework centers on AGI (I.C. 6-3-1-3.5), foreign source dividend deduction (I.C. 6-3-2-12), and NOL (I.C. 6-3-2-2.6).
- Court holds the NOL statute does not reference or incorporate the foreign source dividend deduction and denies Caterpillar’s argument.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Indiana’s NOL statute incorporate the foreign source dividend deduction? | Caterpillar: NOL Modifications include all AGI adjustments, including foreign dividends. | Department: NOL statute references only Section 3.5 modifications and excludes foreign dividends. | No; NOL statute does not incorporate foreign source dividend deduction. |
| Does withholding the foreign source deduction in NOLs violate the Foreign Commerce Clause? | Caterpillar: discriminates against foreign commerce by excluding the deduction in NOLs while allowing it in AGI. | Department: statutes presumptively constitutional; Kraft is distinguishable; no facial discrimination in NOL context. | Caterpillar fails to show unconstitutional discrimination; statute constitutional. |
Key Cases Cited
- Kraft Gen. Foods, Inc. v. Iowa Dep’t of Revenue & Fin., 505 U.S. 71 (1992) (foreign-source dividend deduction issue in taxable income context; distinguishable from NOLs)
- Colgate-Palmolive Co. v. Fla. Dep’t of Revenue, 988 So. 2d 1212 (Fla. Dist. Ct. App. 2008) (no unconstitutional discrimination in similar domestic/foreign treatment)
- Endress & Hauser, Inc. v. Ind. Dept. of State Revenue, 404 N.E.2d 1173 (Ind. Ct. App. 1980) (statutes read as written; cautious deference in tax matters)
- Miller Brewing Co. v. Ind. Dep’t of Revenue, 975 N.E.2d 800 (Ind. 2012) (deference to agency expertise; plain meaning controls when unambiguous)
- Loparex, LLC v. MPI Release Techs., LLC, 964 N.E.2d 806 (Ind. 2012) (statutes should be read as a whole)