A Tennessee taxpayer got a rude awakening when a state court ruled it was liable for ad valorem tax on its leasehold interest in tax exempt property despite having an agreement with local governments to make a payment in lieu of taxes. Creative Label, Inc. v. Tuck, 2011 Tenn. App. LEXIS 238 (May 11
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Everything’s Bigger in Texas, Including Sales Tax Resale Exemptions
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A significant decision by the Texas Court of Appeals clarified the size and scope of the Texas sales tax resale exemption. In Combs v. Health Care Services. Corp., the taxpayer purchased tangible personal property and services for use in administering employee benefit programs for the federal government. After paying sales tax on the…
IRS Addresses Federal Tax Treatment of SALT Incentives
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On March 2, 2011, the IRS released Appeals Settlement Guidelines (ASG) addressing the federal income tax treatment of state and local economic development tax credits and incentives, other than refundable or transferrable credits or incentives.
Many taxpayers have long taken the position that state and local tax credits and incentives (e.g., tax rate reductions, tax…
Ouch! Taxpayer Seeks to Pierce Its Own Veil
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An otherwise ordinary ad valorem property tax case turned interesting when a taxpayer requested that the Tennessee Court of Appeals “pierce the corporate veil.” Alcoa, Inc. v. Tenn. State Bd. of Equalization, No. E2010-00001-COA-R3-CV (Tenn. Ct. App. Feb. 18, 2011). The case arose out of an ad valorem property tax assessment against Alcoa for…
Discrimination Train Has Left the Station: U.S. Supreme Court Remands Alabama Railroad Case
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The U.S. Supreme Court reversed a U.S. Court of Appeals in holding that a railroad may bring suit to challenge the validity of a discriminatory Alabama sales tax exemption. CSX Transp., Inc. v. Ala. Dep’t of Revenue, No. 09-520, 2011 WL 588790 (U.S. Feb. 22, 2011). Alabama imposes its sales and use tax on the use of diesel fuel for off-road use, including fuel used by railroads, but provides exemptions for fuel used by railroads’ direct competitors, commercial truckers and interstate water carriers. CSX sued to challenge the discriminatory scheme under the Railroad Revitalization and Regulatory Reform Act of 1976 (4-R Act).Continue Reading Discrimination Train Has Left the Station: U.S. Supreme Court Remands Alabama Railroad Case
Get Out Your Dustpan: Georgia Bill Proposes Sweeping Tax Reform
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Proposing to significantly overhaul Georgia’s tax code, including an interesting attempt to eliminate sales tax exemptions for “Holy Bibles” and Girl Scout Cookies, H.B. 385 was introduced on February 24. The 127-page bill is intended to be revenue neutral and largely mirrors the recommendations of the Special Council on Tax Reform and Fairness for Georgians (the Council) (see Sutherland Legal Alert, January 10, 2011 for detailed coverage of the Council’s report). H.B. 385 would eliminate most sales tax exemptions and subject certain services to tax, reduce or eliminate most income tax credits and personal deductions, phase in lower personal and corporate income tax rates, and implement a communications services tax. The bill, introduced by the Special Joint Committee on Georgia Revenue Structure (the Committee), is expected to be amended while still in Committee, but will then require an up or down vote when introduced to both houses of the Legislature.Continue Reading Get Out Your Dustpan: Georgia Bill Proposes Sweeping Tax Reform
Massachusetts Supreme Judicial Court Says Tax Exemption Should Be Construed Broadly
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In an interesting development in the ongoing debate surrounding intended tax benefits, the Massachusetts Supreme Judicial Court affirmed the Appellate Tax Board’s ruling that a taxpayer qualified for a use tax exemption and that the Commissioner was not entitled to impose additional requirements on a taxpayer’s eligibility for the exemption. Onex Commc’ns. Corp. v. Comm’r…