Miller Brewing Company is a Wisconsin corporation engaged in the production and sale of malt beverage products. It is headquartered in Milwaukee and operates breweries in various other states. Under Indiana law, corporations like Miller are liable to Indiana for income tax on the proportion of their total income that was earned from Indiana sales. This case concerns the percentage of Miller’s total income that is subject to Indiana income tax in tax years 1997, 1998, and 1999; specifically, whether Miller’s income from sales to Indiana distributors should be allocated to Indiana if common carriers transported the products from Miller’s out-of-state brewery to the distributors in Indiana.
The sales in question generally proceeded as follows: after an Indiana distributor submitted a product order to Miller headquarters in Milwaukee, Miller arranged for the ordered products to be prepared for transport at one of its breweries. The distributor then determined how to transport the products to Indiana; it could 1) pick up the products from the Ohio brewery and bring them back to Indiana itself (customer pick-up sales), 2) hire a third-party common carrier to pick up the products and deliver them to it in Indiana (customer-arranged carrier pick-up sales), or 3) request that Miller hire a third-party common carrier to pick up the products and deliver them to it in Indiana, later reimbursing Miller for the delivery charge (Miller-arranged carrier pick-up sales).
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According to Indiana Code § 6-3-2-2(e), a sale “of tangible personal property” is deemed to have taken place in Indiana if “the property is delivered or shipped to a purchaser that is within Indiana, other than the United States government.” Ind. Code § 6-3-2-2(e). This is true “[r]egardless of . . . other conditions of the sale.” Id. (emphasis added).
Here, quite clearly, the malt beverage products were taken from Miller’s brewery and “delivered or shipped” to purchasers in Indiana. The statute does not differentiate between goods that were “delivered or shipped” by Miller and goods that were “delivered or shipped” by third-party carriers; rather, it states that all goods “delivered or shipped” to an Indiana customer constitute Indiana sales, and that this rule applies “regardless” of the particular arrangements of the sale. Because the statute is unambiguous, we decline parties’ invitations to consider extraneous evidence of legislative intent, including—but not limited to—legislative history and administrative interpretations of the statute.
Miller argues not only that the statute is ambiguous, but that the ambiguity is clarified by an “example” accompanying a related administrative rule. (Resp.’s Br. at 11–16.) According to that example, “[s]ales are not ‘in this state’ if the purchaser picks up the goods at an out-of-state location and brings them back into Indiana in his own conveyance.” 45 Ind. Admin. Code 3.1-1-53 (Example 7). Miller contends that the term “in his own conveyance” includes not only vehicles owned by the purchaser himself, but also vehicles owned by common carriers hired by either the purchaser or the seller to transport the goods to Indiana. (Resp.’s Br. at 15.)
That interpretation is plainly inconsistent with the language of the example; the ordinary reader would understand “his own conveyance” to mean a conveyance owned by the purchaser, not a conveyance owned by anyone else, such as a third-party common carrier. It is also inconsistent with the way that the Department has used the term in other contexts. The Department has consistently distinguished between a seller’s or buyer’s “own conveyance” and a conveyance belonging to a common or contract carrier. See, e.g., 28 Ind. Reg. 3748 (July 26, 2005) (stating that there is no tax on furniture delivered outside Indiana “by either the taxpayer’s own conveyance or common carrier”); 27 Ind. Reg. 3380 (May 7, 2004) (differentiating between freight charges for delivery “in the seller’s own conveyance” and those “made by common carrier”); 25 Ind. Reg. 575 (Nov. 1, 2001) (stating that there is no tax on sales to goods delivered outside of Indiana regardless of “whether shipment is made by the seller in his own conveyance, by his contract carrier or by common carrier”). Thus, Example 7 does not apply to carrier pick-up sales at all.
Even if Miller’s reading of Example 7 were correct and applicable, it would make no difference. The Department has unequivocally stated that examples are “included in” rules “for illustrative purposes only,” meaning that they are not themselves rules. 45 Ind. Admin. Code 15-3-2(g) (2008). Such illustrations “specifically designated as examples” of how rules apply “are not to be considered as an official part of such rules.” Id. Example 7 appears, along with six other paragraphs, after the text of the rule itself and under the separate heading “Examples.” 45 Ind. Admin. Code 3.1-1-53. Thus, it is “specifically designated” as an example and not a rule, and it does not have the force of law.
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Finally, we acknowledge the Department’s contention that the Tax Court applied the wrong standard of review in this case, reviewing the case de novo when it should have granted deference to the Department’s administrative expertise. (Pet.’s Br. at 1.) The Tax Court did not explicitly identify a standard of review in its opinion. See Miller II, 955 N.E.2d at 867. Nevertheless, we note that where, as here, the taxpayer appeals a proposed assessment and a denied refund, the Tax Court has the authority—indeed, the obligation—to review the Department’s ruling de novo.5 Ind. Code §§ 6-8.1-5-1(i) (2010) (mandating de novo review for appeals of proposed assessments), 6-8.1-9-1(d) (2010) (mandating de novo review for appeals of denied refund claims).
