Justia Tax Law Opinion SummariesArticles Posted in Oregon Supreme Court
Capital One Auto Finance, Inc. v. Dept. of Rev.
Capital One Auto Finance, Inc. (taxpayer) filed consolidated Oregon corporate excise tax returns as part of a group that included two corporate affiliates. Taxpayer disputed the Department of Revenue’s contention that it owed additional taxes. Ultimately, the issue in this case was whether taxpayer’s corporate affiliates, which did not have a physical presence in this state, were subject to either Oregon’s corporate excise tax or its corporate income tax for the tax years 2006-2008. Preliminarily, taxpayer also asserted the department lacked the authority to assert for the first time in the Tax Court that the affiliates were subject to corporate income tax. Ruling on cross-motions for summary judgment, the Tax Court concluded that the affiliates were subject to the corporate income tax and entered judgment in favor of the department. The Oregon Supreme Court concluded: (1) the department timely raised the corporate income tax issue; and (2) the corporate affiliates were subject to the corporate income tax based on “income derived from sources within this state.” View "Capital One Auto Finance, Inc. v. Dept. of Rev." on Justia Law
AAA Oregon/Idaho Auto Source v. Dept. of Rev.
In 2017, the Oregon legislature enacted a law that imposed a tax imposed on each vehicle dealer "for the privilege of engaging in the business of selling taxable motor vehicles at retail in this state.” The issue in this case was whether that tax was subject to Article IX, section 3a, of the Oregon Constitution. As relevant here, Article IX, section 3a, provided that taxes “on the ownership, operation or use of motor vehicles” “shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state.” Petitioners AAA Oregon/Idaho Auto Source, LLC (Auto Source), AAA Oregon/Idaho, and Oregon Trucking Associations, Inc. argued the Section 90 tax fell within paragraph (1)(b) because it was a tax “on the owner- ship *** of motor vehicles.” Specifically, petitioners contended that taxes “on the ownership *** of motor vehicles” included taxes levied on the exercise of any of the rights of ownership, including the rights to sell and use. Petitioners posited that the voters would have understood “the concept of ownership” to include “multiple segregable rights or incidents, principal among which were the rights to sell and to use,” and, therefore, it is likely that the voters would have understood taxes levied “on the ownership *** of motor vehicles” to include taxes levied on the sale or use of motor vehicles. The Oregon Supreme Court disagreed with petitioners' contention: the Section 90 and Section 91 taxes worked together, so that the Section 91 privilege tax could be imposed on in-state vehicle dealers without placing them at a competitive disadvantage to out-of-state vehicle dealers, which supported the conclusion that the Section 90 tax was a business privilege tax. Therefore, the Court held the Section 90 tax was not a tax “on the ownership, operation or use of motor vehicles,” as that phrase is used in Article IX, section 3a. View "AAA Oregon/Idaho Auto Source v. Dept. of Rev." on Justia Law
Ellison v. Dept. of Rev.
In the underlying property tax appeal, the Tax Court rejected a request by the Department of Revenue and the county assessor to increase the real market value of taxpayer’s property, and the court later awarded taxpayer attorney fees against the department under ORS 305.490(4)(a). The department appealed the attorney fee award only. The Oregon Supreme Court determined that even though the Tax Court also rejected the taxpayer’s request for a reduction in real market value, the legal prerequisite for a discretionary attorney fee award under that statute was met. The Supreme Court also concluded that the Tax Court did not err in applying most of the factors on which it relied in making the fee award. However, the Court concluded that the lower court’s use of one factor was erroneous, thus bringing into question the court’s overall exercise of discretion. Accordingly, the fee award was vacated and the matter remanded for the court to exercise its discretion without considering that factor. View "Ellison v. Dept. of Rev." on Justia Law
Delta Logistics, Inc. v. Employment Dept. Tax Section
Delta Logistics, Inc. was a "for-hire carrier" licensed by the federal government to transport goods interstate. Delta did not own any trucks; rather, it leased trucks from owner-operators, who operated, furnished, and maintained the trucks. The Oregon Employment Department assessed Delta unemployment insurance taxes on the funds that Delta paid the owner-operators, on grounds the owner-operators did not come within the exemption in ORS 657.047(1)(b) because the leases that the owner-operators entered into with Delta were not "leases" within the meaning of the statute: to come within the exemption, the owner must be the only person operating the truck. An administrative law judge (ALJ) agreed and issued a final order upholding the assessment. Delta appealed. The Court of Appeals was not persuaded by the Department's arguments and overturned the ALJ's decision, finding ORS 657.047(2) made clear that the exemption included owners who hire employees to help operate their trucks. Considering the text, context, and legislative history of ORS 657.047(1)(b), the Oregon Supreme Court did not agree with the department that Delta owed unemployment taxes on owner-operators who hired employees to help them operate the motor-vehicles they leased to Delta. The Court of Appeals was affirmed that the final of the ALJ was reversed. View "Delta Logistics, Inc. v. Employment Dept. Tax Section" on Justia Law
Boardman Acquisition LLC v. Dept. of Rev.
This case involved ad valorem property taxes: the land at issue had been exempted from some property taxes because it was specially assessed as nonexclusive farm use zone farmland. When that special assessment ends, the property ordinarily has an additional tax levied against it. The question here was whether an exception created by ORS 308A.709(5) applied to excuse the payment of that additional tax. The Tax Court agreed with the Department of Revenue and concluded that the exception was not available. The Port of Morrow appealed. The Oregon Supreme Court concluded that the statutory text on which this case turned, “the date the disqualification [from special assessment] is taken into account on the assessment and tax roll,” meant the date the disqualification became effective on the assessment and tax roll. As a result of that holding, the Supreme Court affirmed. View "Boardman Acquisition LLC v. Dept. of Rev." on Justia Law
Village at Main Street Phase II, LLC II v. Dept. of Rev.
Four consolidated property tax appeals returned to the Oregon Supreme Court following remand to the Oregon Tax Court. In "Village I," the Supreme Court addressed whether the Tax Court had erred by denying defendant-intervenor Clackamas County Assessor's (assessor) motion for leave to file amended answers on the ground that the answers contained impermissible counterclaims challenging the value of taxpayers' land. The Supreme Court determined that the assessor should have been allowed to challenge the land valuations, and it reversed and remanded the cases to the Tax Court. Before the assessor filed amended answers, taxpayers served notices of voluntary dismissal of their cases pursuant to Tax Court Rule (TCR) 54 A(1). The Tax Court then entered a judgment of dismissal, over the assessor's objection. The court denied the subsequent motions for relief from the judgment by defendant Department of Revenue (department) and the assessor. On appeal, the Supreme Court addressed whether, as defendants argued, the Tax Court erred by giving effect to taxpayers' notices of voluntary dismissal rather than to the decision in "Village I" concerning the assessor's counterclaims pending in the motions for leave to file amended answers. The Court concluded that the Tax Court erred in dismissing the appeals given the decision and remand in Village I. Accordingly, it vacated the Tax Court's order denying defendants relief from the judgment, reversed the general judgment of dismissal, and remanded for further proceedings. View "Village at Main Street Phase II, LLC II v. Dept. of Rev." on Justia Law
Habitat for Humanity v. Dept. of Rev.
Habitat for Humanity of the Mid-Willamette Valley was a nonprofit corporation. Part of Habitat's mission (as reflected in its articles of incorporation) is that it acquires vacant lots and builds affordable housing on those lots. In this direct appeal from the Regular Division of the Tax Court (Tax Court), the issue was whether Habitat was entitled to an exemption from property taxes assessed on a vacant lot that it owned. During the relevant time, Habitat intended to build a home on the lot but had not yet started construction. The Marion County Assessor (the county) denied Habitat’s application for a tax exemption under ORS 307.130(2)(a), which provided nonprofit institutions with a tax exemption on “such real or personal property, or proportion thereof, as is actually and exclusively occupied or used in the literary, benevolent, charitable or scientific work carried on by such institutions.” The Tax Court affirmed, holding that Habitat was not using the vacant lot to carry out its charitable work at the time of the assessment. The Supreme Court reversed, finding that it was "apparent" that the real property at issue was actually and exclusively "used in the literary, benevolent, charitable or scientific work carried on" by Habitat. As a result, at the time of the assessment, Habitat was entitled to receive the exemption that the county denied. View "Habitat for Humanity v. Dept. of Rev." on Justia Law
Etter v. Dept. of Rev.
Washington resident Stuart Etter was an aircraft dispatcher for Horizon Air Industries, Inc. who worked almost entirely in Portland. To work as a dispatcher, however, he had to spend five hours each year riding along in the cockpit for each aircraft group that he dispatched. Taxpayer argued that, pursuant to 49 USC § 40116(f), that flight time exempted him from paying Oregon income tax in the tax year 2000. The Oregon Tax Court concluded that taxpayer did not meet the requirements of the federal statute and denied his exemption. On appeal, taxpayer renewed his arguments. Finding no reversible error, the Oregon Supreme Court affirmed. View "Etter v. Dept. of Rev." on Justia Law
DIRECTV, Inc. v. Dept. of Rev.
The Oregon Tax Court set aside a determination by the Department of Revenue (the department) that taxpayer DIRECTV’s property in Oregon was subject to central assessment under ORS 308.505 to 308.665. The department argued that, contrary to the Tax Court’s opinion, DIRECTV was a “communications” business whose property is subject to central assessment under ORS 308.515(1). The Supreme Court agreed and, therefore, reversed and remanded. View "DIRECTV, Inc. v. Dept. of Rev." on Justia Law
Oakmont, LLC v. Dept. of Rev.
Oakmont LLC owned an apartment complex built in 1996. Oakmont appealed the assessed value for the 2009-10 tax year for that complex on the ground that structural damages resulting from construction defects had substantially reduced the property’s value. In 2011, the county assessor and Oakmont agreed to reduce the assessed value of the complex from over $21 million to $8.5 million for the 2009-10 tax year. Because the time for appealing the valuation for the 2008-09 tax year had passed, the taxpayer asked the Department of Revenue to exercise its supervisory jurisdiction to correct a “likely error” in the 2008-09 assessment. The department concluded that it had no jurisdiction to consider Oakmont’s request, and the Tax Court reversed. Both the county and the department appealed. After review, the Oregon Supreme Court found the Tax Court correctly held that the department had supervisory jurisdiction over Oakmont’s petition to reduce the assessed value of the property for the 2008-09 tax year. Oakmont had no remaining statutory right of appeal, and the parties to the petition agreed to facts indicating a likely error on the tax rolls. It follows that the department had supervisory jurisdiction to consider whether there was in fact an error on the tax rolls and whether, if there was, the department should exercise its discretion to correct any error. The department did not reach those issues, and the Supreme Court agreed with the Tax Court that the case should have been remanded to the department to consider those issues in the first instance. View "Oakmont, LLC v. Dept. of Rev." on Justia Law