A mother-daughter duo is fighting the state about the seizure and sale of their puppies after officials raided their Harrison County puppy mill to recoup unpaid taxes.
Kristen and Virginia Garwood initially denied owing anything before pleading guilty to tax evasion.
When the Garwoods couldn't immediately pay the $142,000 the state wanted each of them to pay, Indiana State Police and Humane Society members seized their 240 dogs.
The state then sold the dogs the next day to the Humane Society for $300.
The Gardwoods are now asking the state for $120,000 for the seized puppies.
The Garwoods claimed that the 2009 raid at their Breezy Valley Dairy Farm in Mauckport was a conspiracy between public and private groups and violated their rights.
The legal controversy has raised questions about the states process of seizing property for unpaid taxes, RTV6's Rafael Sanchez
The Attorney General's office asked the Indiana Supreme Court to strike down a tax court ruling that invalidated the Gardwoods seizure, saying the state overstepped its authority.
During the hearing, the justices had many questions about how and when property was seized and whether people had a way to stop it and get refunds.
"They have no business getting this inventory back, because it needs to satisfy what they stole from the state, said Andrew Swain, chief counsel for the attorney generals tax division.
Justice Frank Sullivan was critical with the Garwoods' initial stance that they were unaware they had to pay taxes on dog sales.
"There's a bit of unclean hands at operation here, Judge Sullivan said.
Stacy Newton, the Gardwoods' attorney, said her clients believed they owed at least $2,600 in taxes, not the state issued tax bill of $283,000.
"Had the state come in and said You know what? You haven't been paying your sales taxes, the Garwoods would have cooperated with the state and arrived at a realistic figure of what is owed, Newton said.
If the Supreme Court rules in the Garwoods favor, legal analysts said the decision could prompt more people to ask for the return of seized property.
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