In the court documents, released August 19, 2011 by the Indiana Tax Court, the Garwood’s of Mauckport, Indiana won their case against the Indiana Department of State Revenue.

The Department had issued sixteen jeopardy assessments against the Garwood’s for failure to report and pay state income and state sales tax on dog sales.  The problem with the jeopardy assessments the court determined were that the Department did not meet the criteria for issuing a jeopardy assessment, much less sixteen of them.

Criteria required are:
1) Intent to quickly leave the state-the Garwood’s have been residents for nearly 30 years, operating a dairy farm with substantial property, both real and personal. This would not allow for “quick exit.”
2) Intent to remove property from the state-the Garwood’s property (real property, farm animals and equipment, etc.) would not allow for a quick removal of said property.
3) Intent to conceal property in the state-the Department contends that Mrs. Garwood’s denial of access to the property to an animal control officer was defined as “intent to conceal property.” The court found that the denial to an animal control officer, who is not an emissary of the tax collector, was not adequate evidence of concealment.
4) Intent to do any other act that would jeopardize the collection of taxes-the court found that the Garwood’s were not properly REPORTING their sales; not that they had no intention of not paying the taxes, which was defined as not adequate proof of litmus for the jeopardy assessments.

The Department was contending that the Garwood’s owed just under $285,000.00 in taxes for portions of the 2007 through 2009 tax years. Given the figures in the court documents of sales, this figure seems way out of whack. The Department based their tax figures on “Best Information Available”, not hard figures. Virginia Garwood’s income tax return for 2008 included the income from the sale of her dogs. Virginia stated that because her tax preparer never told her she should be collecting sales tax on her sales of dogs, she assumed, albeit incorrectly, that her sales of dogs, like her sales of livestock, were exempt from sales tax.

Upon the seizure of property, the Department seized $1260 in cash, records showing the Garwood’s received $25,274.31 in dog sales, and uncashed checks totaling $1325.00. The Department and the Office of the Attorney General, assisted by the Indiana State Police and sixty volunteers from the United States and Missouri Humane Societies, seized all 240 dogs on the premises, including the Garwood’s house pets and farm dogs.

In looking at the Indiana Board of Animal Health’s rules for Commercial Dog Breeders, effective January 1, 2010 I do not find anywhere the allowance for any outside entity or organization to cooperate in animal seizures. In fact, Indiana law states that no unit (town, city, or county) may enact any law stricter than the state law. Any Ordinance stricter than the state law must have been in effect prior to January 1, 2010. Why was the H$US there? Why was the Missouri Humane Society there? Following is what the court has to say about this: “The unusual occurrence of this media hype in conjunction with the Department’s sale of the Garwood’s property for a nominal sum demonstrate that 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 Garwood’s purportedly owed.” Indiana law does not define “puppy mill”, nor did the Court. The Court denied the Department’s Motion for Summary Judgment, and granted the Garwood’s Motion for Summary Judgment. The Court further ordered the Department to void all jeopardy assessments and take any other actions necessary to give full effect to the Order.

So what happened to the 240 dogs? The Humane Society of the United States (H$U$) purchased all of them for a total price of $300.00, or just over $1 per dog, the day after the seizure. I don’t care if you call it a sale, an adoption, whatever, does it seem that the H$U$ is now in the business of being a Commercial Pet Retailer? Did they pay the required sales tax on the purchase of the dogs? Wonder if they are licensed and abiding by all rules and regulations? How convenient was it that the Missouri Humane Society was present for the seizure? Or was this a pure and simple set up, orchestrated by the H$U$?

Does it seem that the Garwood’s have one heck of a Civil Suit case against the Department, the State of Indiana, the Missouri Humane Society and the H$U$ for theft of property, sale of stolen property, loss of income potential, harassment, and much more?

Researched and Written by Debi R***