INDIANAPOLIS | A tool used by Indiana officials to shut down an illegal puppy mill has been disapproved by the Indiana Tax Court.
Tax Court Judge Martha Wentworth ruled Friday the Department of Revenue and state attorney general exceeded their authority by using jeopardy tax assessments to seize 240 dogs from the Harrison County property of Virginia and Kristin Garwood.
A jeopardy tax assessment allows the state to recoup unpaid taxes by seizing property immediately without notice or a court hearing.
On June 2, 2009, state revenue and attorney general's officials visited the Garwoods and demanded immediate payment of approximately $142,000 from each woman for unpaid sales taxes, interest and penalties from their puppy sales.
When the women couldn't pay immediately, Indiana State Police and Humane Society members seized the dogs on behalf of the state. The state sold the dogs the next day to the Humane Society for $300.
Wentworth said the state's actions did not conform with Indiana law authorizing jeopardy tax assessments, as the Garwoods were not likely to quickly leave the state, remove property from the state, conceal their property from state officials or impair the collection of taxes.
"The department wielded the power of jeopardy assessments as a sword to eliminate a socially undesirable activity and close down a suspected 'puppy mill,' not to fill the state's coffers with the tax liabilities the Garwoods purportedly owed," Wentworth said, noting the 240 dogs were worth far more than $300.
Bryan Corbin, spokesman for Attorney General Greg Zoeller, said the state plans to appeal the ruling to the Indiana Supreme Court.
In a separate criminal case, the Garwoods pleaded guilty to failure to collect sales taxes.