Pеtitioner Uniden America Corporation (Uniden) appeals the Letter of Findings issued by the Indiana Department of State Revenue (Department) denying in part Uniden’s protest of the Department’s proposed assessment of Indiana gross income *823 tax. The sole issue for consideration in Uniden’s partial motion for summary judgment is whether certain interstate sales of Uniden’s products were subject to the gross income tax.
FACTS AND PROCEDURAL HISTORY
The parties do not dispute thе relevant facts. Uniden was incorporated under the laws of Indiana in 1970. For its fiscal years ending March 31 of 1990, 1991, 1992 and 1998 (the taxable years), Uniden filed Indiana corporate income tax returns on Form IT-20. See Ind.Code Ann. § 6-2.1-1-15 (West 1989) (defining “taxable year” as “the year that a taxpayer uses for purposes of filing his federal income tax return”); Ind. Admin. Code tit. 45, r. 1-1-172 (1996) (stating that form IT-20, used for annual gross income tax returns, is due on or before April 15 each year). During this period, Uniden’s headquarters wеre located in Fort Worth, Texas. Its commercial domicile was also in Texas. The corporation engaged in the interstate sale and distribution of consumer and commercial electronic products such as cellular telephones, pagers, two-way radios, cordless telephones and marine radios.
Sales to Indiana customers during the taxable years totaled $34,317,533. Products were shipped from locations outside of Indianа to in-state customers (Indiana destination sales). Orders for the products were placed by mail or fax with Uniden’s sales office in Texas. Once the orders were received and accepted by the Texas office, products were shipped directly by common carrier from Uniden’s warehouse in Texas to the Indiana customers. The standard sales terms between Uniden and its customers with respect to the Indiana destination sales provided for delivery F.O.B. Uniden’s warehouse, with title and risk of loss passing to the buyer upon delivery by Uniden to the carrier. These sales did not originate from, were not channeled through and were not otherwise associated with or facilitated by any Indiana situs of Uniden. 1
The Department completed an audit of Uniden’s gross income for the taxable years on July 28, 1994. On September 21, 1994, the Department issued four Notices of Proposed Assessment to Uniden — one for each of thе taxable years. The notices indicated that Uniden owed the Department a total of $366,263.89 in gross income taxes, penalties and interest. On November 16, 1994, Uniden filed with the Department a protest against the proposed assessment. The Department conducted a hearing on the proposed assessment on June 29, 1995. On October 31, 1995, the Department issued a Letter of Findings granting the protest in part and denying the protest in part.
Uniden filed this original tax appeal on April 24, 1996. On February 27, 1997, Uniden filed a motion for partial summary judgment, along with a brief in support thereof. 2 The Department filed a memorandum in opposition to the motion for *824 partial summary judgment and a cross-claim for summary judgment on April 14, 1997. On April 28, 1997, the Court held a hearing on the motion. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
On appeal, this Court reviews final determinations by the Department
de novo. See
Ind. Admin. Code § 6 — 8.1—5—1 (h) (West Supp.1998);
Cooper Indus., Inc. v. Indiana Dep’t of State Revenue,
Discussion
“Gross income” is defined in part as “all the gross receipts a taxpayer receives ... from trades, businesses, or com-merce_” Ind.Code Ann. § 6-2.1-1-2(a)(1) (West 1989). However, Ind.Code Ann. § 6-2.1~l-2(c)(6) (West 1989) prоvides the following exclusion from the definition of gross income:
(c) The term “gross income” does not include:
* * *
(6) gross receipts received by corporations incorporated under the laws of Indiana from a trade or business situated and regularly carried on at a legal situs outside Indiana or from activities incident to such trade or business (including the disposal of capital assets or other properties which were acquired and used in such trade or business)!.]
As applied to a taxpayеr, the term “receipts” is defined as “the gross income in cash notes, credits, or other property that is received by the taxpayer or a third party for the taxpayer’s benefit.” Ind. Code Ann. § 6-2.1-1-10 (West 1989 & Supp.1999) (amended 1997). Indiana imposes a gross income tax pursuant to Ind. Code Ann. § 6-2.1-2-2, which provides in relevant part:
(a) An income tax, known as the gross income tax, is imposed upon the receipt of:
(1) the entire taxable gross income of a taxpayer who is a resident or a domiciliary of Indiana; and
(2) the taxable income derived from activities or businesses or any other sources within Indiana by a taxpayer who is not a resident or a domiciliary of Indiana.
A taxpayer’s “taxable gross income” includes all gross income not exempted less all permitted deductions. See Ind.Code Ann. § 6-2.1-1-13 (West 1989).
Uniden contends that the plain language of section 6-2.1-l-2(c)(6) prohibits imposition of the gross income tax upon the Indiana destination sales. “The court’s foremost goal in construing a statute is to give effect to the true intent of the legislature. The true intent of the legislature is best evidenced by the language in the statute.”
Associated Ins. Cos., Inc. v. Indiana Dep’t of State Revenue,
A рlain and ordinary reading of section 6-2.1-l-2(c)(6) suggests that Uni-den’s income from the Indiana destination sales is not subject to the gross income tax. For purposes of the Court’s analysis, the key issue is whether the “gross receipts” received by Uniden from the Indiana destination sales were derived from a “trade or business situated and regularly carried on at a legal situs outside Indiana.” As noted supra, the Indiana destination sales were not connected with Indiana in any significant manner: (1) Uniden’s corporate headquarters and commercial domicile were in Texas; (2) orders from Indiana customers were sent to Texas by mail or fax (i.e., Uniden had no physical sales presence in Indiana with regard to the Indiana destination sales); and (3) once received and accepted, orders were shipped from out-of-state warehouses to Indiana by common carrier, with title and risk passing at the time the products were picked up by the common carrier. Considered together, these facts indicate that Uniden’s income from the Indiana destination sales was derived from trade or business activities taking place and carried on at a legal situs beyond Indiana’s borders.
The Department insists that Uniden’s' gross receipts from its Indiana destination sales qualify as taxable gross income, because the income is derived from an Indiana source. The Department, in its Lettеr of Findings and in its brief on appeal, relies upon the case
Indiana Department of State Revenue v. Frank Purcell Walnut Lumber Co.,
The Purcell court examined Ind.Code Ann. § 6-2-l-l(m) (Bobbs-Merrill 1971) [hereinafter referred as section l(m)], the predecessor statute to section 6-2.1-1-1. Section l(m) read in relevant part:
That with respect to individuals resident in Indiana and corpоrations incorporated under the laws of Indiana authorized to do and doing business in any other state and/or foreign country, the term “gross income” shall not include gross receipts received from sources outside the state of Indiana in cases where such gross receipts are received from a trade or business situated and regularly carried on at a legal situs outside the state of Indiana, or from activities incident thereto (including the dispоsal of capital assets or other properties which had been theretofore acquired or used in carrying on such trade or business).
The court first noted that, to qualify for the exclusion, “the corporation must be incorporated under the laws of Indiana, doing business in another state, and it must derive income from sources also outside the State of Indiana.”
Purcell,
In 1981, the General Assembly recodi-fied the gross income tax statutes, altering the disputed text of section l(m). See 1981 Ind. Acts, Pub.L. 77. The quoted language from section l(m) has been replaced by section 6 — 2.1—1—2(c)(6), which, as Uni-den emphasizes, does not include the term “sources.” Rather, under section 6-2.1-1-2(c)(6), nontaxable gross receipts are those “from a trade or business situated and regularly carried on at a legal situs outside Indiana or from activities incident tо such trade or business.” Unlike section l(m), section 6-2.1-l-2(c)(6) does not require that the gross receipts qualifying for the exclusion be “received from sources outside the state of Indiana.” Because the Purcell court’s decision was based upon an interpretation of the term “sources” in section l(m) and the term is not used in section 6 — 2.1—1—2(e)(6), the Department’s reliance on the opinion in Purcell is misplaced. 3
The Department contends that the General Assembly, by means of an uncodified savings clause, never intended to make substantive changes to the meaning of section l(m) in recodifying the statute in its present form. Specifically, the savings clause, 1981 Acts, P.L. 77, § 23 provides: “This act is intended to be a codification and restatement of applicable or corresponding provisions of the laws repealed by this act. If this act repeals and reenacts a law in the same form or in a restated form, the substantive operation and effect of that law shall continue uninterrupted.” Therefore, according to the Department, the lack of a specific reference to the term “sources” in section 6 — 2.1—1— 2(c)(6) is not significant. Moreover, the Department believes that Purcell serves as persuasive precedent because “in general the [Purcell ] court found no difficulty with the concept that Indiana should be able to tax the receipts from a sale between an Indiana buyer and an Indiana seller.” (Resp’t Br. at 9).
The Court disagrees with the Depаrtment’s position. As noted previously, thq Court’s objective is to give effect to the true intent of the legislature. As a general principle, “[sjtatutory language is deemed intentionally chosen by the legislature to give effect to the meaning of an act.”
Caylor-Nickel Clinic v. Indiana Dep’t of State Revenue,
The Court presumes that, in recodifying the gross income tax statutes, the legislature was aware of the Court of Appeal’s interpretation of section l(m) in
Purcell.
Interpretation of the phrase “sources outside the state of Indiana” in section l(m) was outcome determinative in
Purcell.
The
Purcell
court focused squarely on the fact that the taxpayer-lumber company, an Indiana corporation, sold its goods to Indiana “sources,” i.e., “customers or buyers” from Indiana.
See Purcell,
This Court’s opinion in
Sangralea Boys Fund v. State Board of Tax Commissioners,
The Court in
Sangralea
first observed that courts had liberally construed the pri- or statute to allow charities flexibility in choosing the best methods for carrying out their missions.
See Sangralea,
As it did with the prior statute in San-gralea, the legislature in this case eliminated significant language in the recodified statute and reorganized the wording of the prior statute. Section l(m) was recodified without the phrase deemed outcome determinative in Purcell. Unlike Sangralea, where the Court determined that a recodi-fied property tax exemption had been substantively changed to approve prior case law, in the present case it seems that the legislature’s recodified section l(m) demonstrates disapproval of prior case law, i.e., the Purcell decision. The new language went beyond merely clarifying section l(m) and was not a simple grammatical change. Exclusion of the phrase “sources outside the statе of Indiana” from the new statute, section 6-2.1-l-2(c)(6), substantially al *828 tered the meaning of section l(m) and thus substantively changed the exclusion. In effect, the new language ignores the “source” of a resident Indiana corporation’s gross receipts. It does not matter under the recodified exclusion whether the transaction involves a customer or buyer who is domiciled in Indiana, as long as the income meets the other requirements of the exclusion. 4
“Statutes applicable to the same subject matter should be construed in harmony with one another.”
Sangralea,
In
Indianar-Kentucky Electric Corporation v. Indiana Department of State Revenue,
[T]he court must (1) isolate the transaction giving rise to the income, the critical transaction, (2) determine whether [the out-of-state taxpayer] has a physical presence in the taxing state or has significant business activities within the taxing state, a “business situs,” and (3) determine whether the Indiana activities are related to the critical transaction and are more than minimal, not remote or incidental tо the total transaction, the “tax situs.”
Id. As used in section 6-2.1-2-2(a)(2), the term sources has been intentionally retained by the legislature in the recodified gross income tax imposition statute and its meaning has been refined by this Court. The term’s meaning as articulated in the above test is consistent with prior case law dating before the 1981 recodification. See id. at 662-63 (cases cited therein).
The term sources as interpreted by this Court in
Indiana-Kentucky Electric
is not consistent with the
Purcell
court’s interpretation of the term sources in the section l(m) exclusion, which focuses on the domicile of the сustomer and not the relation of the transaction to the taxpayer’s contacts and business activities within the state. Even if this Court were to read the term sources into the exclusion found in section 6-2.1-1-2(c)(6), the Court would likely interpret the term using the approach identified in
Indiana-Kentucky Electric. See LeSea Broad. Corp. v. State Bd. of Tax Comm’rs,
For all of the above reasons, the Court finds that section 6-2.1-l-2(c)(6) excluded *829 the gross receipts gеnerated by Uniden’s Indiana destination sales from the definition of gross income.
CONCLUSION
The Department erroneously subjected Uniden’s gross receipts from its Indiana destination sales to Indiana’s gross income tax. As to the issue presently before the Court, the Department’s final determination is REVERSED. 5 The Court hereby GRANTS Uniden’s partial motion for summary judgment and DENIES the Department’s cross-claim for summary judgment.
Notes
. Uniden did operate a service center in Indiana during the taxable years. The service center repaired products that had been previously sold to Uniden's customers. However, the service center was not connected to or associated with the Indiana destination sales. Therefore, the presence of the service center does not affect the Court’s analysis of the issue in this case.
. Uniden's petition initiating this original tax appeal raises two additional issues not addressed by the partial mоtion for summary judgment: (1) whether the lower rate of gross income tax should be applied to the sale of repair parts by its service center located in Indiana, see Ind.Code Ann. § 6-2.1-2-3 (West 1989); and (2) whether the Commerce Clause of the United State Constitution, see U.S. Const, art. I, § 8, cl. 3, prohibited application of Indiana’s gross income tax to sales of repair parts or replacement units by Uniden from its Indiana service center to customers located out-of-stаte. According to Uniden's motion for partial summary judgment, the parties have resolved the first issue by means of a supplemental audit. However, the second issue remains in dispute and should be addressed at trial if not resolved prior to a trial date.
. Indiana Admin. Code tit. 45, r. l-l-120(2)(e) (1996) provides, "Sales made by an Indiana resident or corporation incorporated in Indiana, which sales originated from its out-of-state business branch, and where the goods are shipped directly to the buyer from an out-of-state location” are taxable in-shipments. However, the rule relies upon the
Purcell
decision for support. Therefore, to the extent that the holding in
Purcell
is incorrect or inapplicable, the regulation does not control the outcome of the present case.
See Hutchi-son v. Indiana State Bd. of Tax Comm’rs,
. This does not mean that Indiana either could or could not tax the gross receipts in question, only that Indiana has chosen not to do so. As Uniden has pointed out, “The actual statutory language makes it clear that the Legislature has not seen fit to make the place of the customer controlling.” (Pet’r Reply Br. at 4-5).
. Because this case is resolved in Uniden’s fаvor on statutory grounds, the Court need not address Uniden's constitutional claim that the commerce clause, U.S. Const, art. I, § 8, cl. 3, prohibits application of the state’s gross income tax to the Indiana destination sales.
See Harlan Sprague Dawley, Inc. v. Indiana Dep’t of State Revenue,