Indiana businessman Nick Popovich had been audited by the Indiana Department of Revenue for income tax paid from 2002-04. The Department found that Popovich owed the state additional income tax, as well as interest and penalties on those back taxes. That action provoked Popovich to sue the Department of Revenue claiming that his status as a professional gambler allowed him to deduct certain business expenses.
Brent Auberry, partner at Faegre Baker Daniels who concentrates his practice in state and local taxation, told Indiana Lawyer that the use of deliberative process privilege in Nick Popovich v. Indiana Department of Revenue could impact other Indiana taxpayers. "Every year, tax cases seem to be getting more litigious as taxpayers contest rulings on property taxes and income," Auberry explained. "The guidance given by the Tax Court on this privilege is important as plaintiffs determine what information they want in discovery."
Auberry also said that he expects that the Department of Revenue to push to get the Statehouse to pass statutory language to address the issue of deliberative process privilege.