Zimmer, Inc. v. Indiana Department of State Revenue
72 N.E.3d 1031
| Ind. T.C. | 2017Background
- Zimmer, an Indiana-based manufacturer, used and stored exhibition booth components for out-of-state trade shows (not used in Indiana) during 2009–2011; some components were repeatedly shipped to shows and returned to an Indiana warehouse.
- Zimmer contracted an Illinois exhibit house (Catalyst) to design/manufacture annual AAOS booths, incorporating some previously used components; about 15 semitrucks transported components to/from shows.
- Returned components were inspected, sorted, repaired (minor repairs by Zimmer’s in‑house carpenter; major repairs sent to Catalyst), stored for reuse or retirement.
- Department audited Zimmer, assessed $523,890.93 in use tax on exhibition booth components, partly offsetting a refund claim; Zimmer appealed to the Indiana Tax Court.
- Cross-motions for summary judgment focused on whether in‑state storage/activities constituted taxable “use” or excluded “storage for subsequent use solely outside Indiana.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether repeated storage in Indiana between out‑of‑state uses is taxable | Zimmer: storage in Indiana for subsequent use solely outside Indiana is excluded from use tax even if components rotate between storage and out‑of‑state use | Dept.: revolving storage + repeated returns to Indiana disqualify the statutory storage exclusion; requires permanent out‑of‑state use | Court: Not taxable — repeated storage between out‑of‑state uses qualifies for exclusion (storage can be returned to Indiana) |
| Whether in‑state planning/decision‑making about booths constitutes taxable use | Zimmer: planning and decisions are incidental and do not constitute a taxable exercise of ownership | Dept.: Zimmer’s Indiana headquarters functioned as the ‘‘central hub’’ exercising ownership rights that amount to taxable use | Court: Not taxable — mental decision‑making alone, without disqualifying physical acts, does not trigger use tax |
| Whether incidental in‑state activities (meetings, inspections, logistics, insurance) are taxable | Zimmer: such activities are incidental to storage and transport for out‑of‑state use and are excluded | Dept.: these activities are critical to prepare components for out‑of‑state use and show exercise of ownership | Court: Not taxable — incidental handling/transport/administration tied to storage for out‑of‑state use are excluded |
| Whether repairs performed in Indiana are taxable | Zimmer: repairs were minor and incidental to storage, preserving components during storage | Dept.: repairs are an exercise of ownership in Indiana and therefore taxable | Court: Taxable — designated evidence showed repairs (regardless of extent) occurred in Indiana and were not proven to be necessary solely for storage; repairs constitute taxable use |
Key Cases Cited
- USAir, Inc. v. Indiana Dep’t of State Revenue, 623 N.E.2d 466 (Ind. Tax Ct. 1993) (incidental exercises of ownership related to storage and removal for out‑of‑state use are not taxable uses)
- Indiana Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870 (Ind. 1994) (courts must not read into statutes beyond legislative intent)
- Miles, Inc. v. Indiana Dep’t of State Revenue, 659 N.E.2d 1158 (Ind. Tax Ct. 1995) (discusses storage exclusion scope and warehouse location considerations)
- Asplundh Tree Expert Co. v. Indiana Dep’t of State Revenue, 38 N.E.3d 744 (Ind. Tax Ct. 2015) (taxability found where tangible property was registered/licensed in Indiana; acts following choice mattered)
- Fresenius USA Mktg., Inc. v. Indiana Dep’t of State Revenue, 56 N.E.3d 734 (Ind. Tax Ct. 2016) (summary judgment standard in tax cases)
- Horseshoe Hammond, LLC v. Indiana Dep’t of State Revenue, 865 N.E.2d 725 (Ind. Tax Ct. 2007) (cross‑motions for summary judgment do not change standard of review)