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December 23, 2010

Puppy mills’ tax ills make them targets for state crackdown

INDIANAPOLIS — Indiana Attorney General Greg Zoeller didn’t expect his office to be in the business of “puppy protection.”

But an innovative use of a tax law has put the state in the forefront of a fight to crack down on inhumane dog-breeding operations known as “puppy mills.”

 The approach has been likened to the tax-evasion case that brought down Chicago crime boss Al Capone in the 1930s. It’s also won accolades from animal lovers who contend Indiana’s animal protection laws are weak.

“These operations are inhumane and awful and need to be shut down,” said Indiana State Rep. Linda Lawson, a Democrat from Hammond who has taken the lead on toughening Indiana’s animal cruelty laws.

She describes the approach taken by the Republican Zoeller’s tax chief as “genius.”

The tax chief to whom she refers is Andrew Swain, now head of the Attorney General’s Revenue Division.

When working for Zoeller’s predecessor, Swain came up with the idea of using the state’s tax evasion laws to shut down unlicensed, commercial dog-breeding operations that put profits before animal welfare.   

What he’d discovered was that the suspected puppy mill operators dealt in cash-and-carry transactions on which they they failed to pay income and sales taxes.

When Zoeller took office last year, he approved the continued use of the law.

The squalid conditions of puppy mills concerned him, he said. But the motivation was going after tax cheats.

“They’re scam artists,” Zoeller said.

The latest puppy mill crackdown occurred in early December, when Zoeller’s office  shut down an unlicensed, commercial dog-breeding operation in Bloomfield, Ind.

After filing what’s called a “jeopardy tax assessment” in state court, alleging the Bloomfield breeder owes more than $311,000 in delinquent sales and income taxes, Zoeller’s office seized the breeders taxable assets: 120 puppies and dogs.

Two similar cases filed in the last two years, charging breeders with failing to pay hundreds of thousands of dollars in back taxes, resulted in guilty pleas to various tax charges and the seizure of more than 300 dogs.

The Humane Society has worked with Zoeller’s office to place the dogs for adoption.

In the two last years, other states, including Oklahoma and Missouri, have passed animal-protection laws aimed at curbing puppy mill operations. The laws vary but most require breeders to provide better conditions for the animals; some regulate air quality, temperature and even noise levels inside kennels.

Last year, Indiana imposed additional regulations on commercial dog breeders.

Lawson and other lawmakers doubt if the legislature will take additional steps to crack down on puppy mills given what’s already on their plate: Balancing the state’s biennium budget, fixing an unemployment insurance fund that is $2 billion in the red, as well as a host of other issues including education reform.

Zoeller, though, has pledged to keep up his office’s effort to crack down on the puppy mills.

At an end of the year media briefing last week, he promised continue use of the tax-evasion laws that allow his investigators to go after  off-the-book businesses.

“We reserve the right to see if you’ve scammed the taxpayers,” Zoeller said.

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