Justia Tax Law Opinion Summaries

The Supreme Court reversed the decision of the court of appeals affirming the judgment of the trial court concluding that Tex. Tax Code 171.1012 permitted a movie theater to subtract exhibition costs as cost of goods sold, holding that film exhibitions are not tangible personal property that is sold, and therefore, the theater was not entitled to include exhibition-related costs in its cost of goods sold.The Comptroller disallowed the movie theater's subtraction of exhibition costs in calculating its franchise tax liability for 2008 and 2009. The theater paid the additional franchise taxes requested by the Comptroller and sued to recover the disputed amount, arguing that its exhibition costs were property subtracted as cost of goods sold (COGS). The trial court concluded that the theater's film exhibitions were tangible personal property and thus goods for sale in the ordinary course of the theater's business under section 171.1012. The court of appeals affirmed. The Supreme Court reversed, holding that section 171.1012 did not permit the movie theater to subtract is exhibition costs as COGS because no tangible personal property was transferred through the film exhibitions. View "Hegar v. American Multi-Cinema, Inc." on Justia Law

The Supreme Court affirmed the judgment of the court of appeals affirming the Texas Comptroller's audit of Sunstate Equipment, a heavy construction equipment renal company, on the grounds that Sunstate was not entitled to subtract certain delivery and pick-up costs as cost of goods sold (COGS) under Tex. Tax Code 171.1012, holding that Sunstate was not entitled to the subtraction it claimed under either section 171.1012(k-1) nor section 171.1012(i).After the Comptroller assessed deficiencies, penalties and interest totaling $140,495 Sunstate brought suit for a refund. The district court ordered a full refund of the amount paid, including interest. The court of appeals reversed, concluding that Sunstate was not entitled to subtract costs under section 171.1012(k-1) and that section 171.1012(i) did not independently authorize the cost subtractions. The Supreme Court affirmed, holding that neither statutory provision authorized Sunstate to subtract its delivery and pick-up costs as COGS. View "Sunstate Equipment Co. v. Hegar" on Justia Law

The Supreme Court reversed the judgment of the court of appeals holding that the federal Foreign-Trade Zones Act's exemption of goods imported from outside the United States and held within a zone for certain purposes from state and local ad valorem taxation did not apply to Petitioner's imported crude oil and refinery products, holding that the exemption did apply in this case.The Act provides for the designation of duty-free areas of operation in or near the United States ports of entry. The court of appeals concluded that the Act's exemption at issue in this case did not apply to Petitioner's products because the zone involved was not activated at the time. Harris County petitioned the appraisal review board for a determination that Petitioner's operations in Subzone 84-N were not tax-exempt. The appraisal board denied relief, and Harris County brought this action for judicial review. The trial court granted summary judgment for Petitioner. The court of appeals reversed, concluding that Petitioner's inventory was not entitled to exemption from ad valorem taxation. The Supreme Court affirmed, holding that Subzone 84-R was activated during the tax years at issue, and therefore, the ad valorem tax exemption applied to Petitioner's inventory. View "PRSI Trading, LLC v. Harris County, Texas" on Justia Law

The Supreme Court dismissed this petition for relief seeking to direct Nueces County and the Nueces County Appraisal District to withdraw and cease from issuing tax assessments to Corpus Christi Liquefaction, LLC (CCL), holding that under the circumstances of this case, the Texas Constitution does not permit the Court to exercise the jurisdiction conferred by Tex. Loc. Gov't Code 72.010.For several years, both Nueces County and San Patricio County have taxed structures that are built on land in San Patricio County and extend over the water into Nueces County. In 2017, the Legislature enacted section 72.010, allowing taxpayers who have paid taxes on the same property to each county to sue in the Supreme Court for relief. In this petition, CCL asserted that it was being taxed in both counties on the same property. The Nueces parties, however, argued that three disputed fact issues precluded the Supreme Court's exercise of section 72.010 jurisdiction in this case. The Supreme Court dismissed the petition without prejudice, holding that the parties' disputes over the nature of CCL's facility in relation to the counties' boundary were significant and required resolution. View "In re Corpus Christi Liquefaction, LLC" on Justia Law

The Supreme Court reversed the judgment of the court of appeals ruling that the Texas Commission on Environmental Quality does not have the discretion to deny an ad valorem tax exemption for heat recovery steam generators (HRSGs), devices the Legislature considers "pollution control property," holding that the Legislature did not exceed its constitutional authority in exempting pollution control property from taxation.Brazos Electric Power Cooperative, Inc. filed for an exemption seeking a positive use determination for the HRSG used in two of its facilities. The Commission's Executive Director issued negative use determinations for the applications on the grounds that HRSGs are not eligible for a positive use determination. The Commission eventually affirmed the determinations as to both facilities. The trial court affirmed. The court of appeals affirmed. The Supreme Court reversed, holding (1) under Texas Tax Code 11.31, property that qualifies as pollution control property, is entitled to a tax exemption, and HRSGs qualify, at least in part, as pollution control property; and (2) thus, assuming the applicant otherwise complies with the statute's requirements, the Executive Director may not issue a negative use determination for HRSGs. View "Brazos Electric Power Cooperative, Inc. v. Texas Commission on Environmental Quality" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the district court's judgment affirming the negative use determinations issued by the Commission on Environmental Quality as to Respondents' applications for tax exemptions for heat recovery steam generators (HRSGs), holding that Texas Tax Code 11.31 does not give the Commission and its Executive Director discretion to deny an ad valorem tax exemption for HRSGs.In Brazos Electric Power Cooperative v. Texas Commission on Environmental Quality, __ S.W.3d __ (Tex. 2019), also issued today, the Supreme Court held that the Legislature has deemed HRSGs to qualify at least in part as "pollution control property" entitled to an exemption. The Court further held in Brazos Electric that the Commission abused its discretion by issuing negative use determinations for two exemption applications involving HRSGs when the applications complied with relevant statutory requirements. In the instant case, the Commission issued negative use determinations for Petitioners' applications for tax exemptions for HRSGs. The court of appeals reversed. The Supreme Court affirmed, holding that the court of appeals correctly held that the Commission may not issue negative use determinations for HRSGs. View "Texas Commission on Environmental Quality v. Brazos Valley Energy, LLC" on Justia Law

In this case concerning where taxes on compressors were due, the Supreme Court affirmed in part and reversed in part the judgment of the court of appeals, holding (1) Tex. Tax Code 23.1241 and 23.1242 controlled the taxable situs of the compressors at issue in this case; and (2) further proceedings were necessary to determine where taxes for the compressors were due.Valerus Compression Services owned and leased out compressor stations used to deliver natural gas into pipelines. Some of those compressors were in use in Reeves and Loving counties. In response to a 2012 amendment to the Tax Code, Valerus began paying taxes to Harris County, Valerus’s principal place of business. Reeves and Loving counties continued placing the compressors on their appraisal rolls at full market value, asserting that the compressors’ presence within the counties fixed taxable situs there. The appraisal review boards agreed with the counties. The trial court also sided with the counties, concluding that sections 23.1241 and 23.1242 were unconstitutional. The court of appeals held (1) the statutes are constitutional, and (2) the compressors’ taxable situses are Reeves and Loving counties. The Supreme Court reversed in part, holding (1) sections 23.1241 and 23.1242 control the taxable situs of the compressors; and (2) remand was necessary to determine where taxes were due. View "Reeves County Appraisal District v. Valerus Compression Services" on Justia Law

In this case concerning where taxes on compressors were due, the Supreme Court affirmed in part and reversed in part the judgment of the court of appeals, holding (1) Tex. Tax Code 23.1241 and 23.1242 controlled the taxable situs of the compressors at issue; and (2) Midland County was the taxable situs of the compressors.EXLP Leasing owned and leased out compressor stations used to deliver natural gas into pipelines. In response to a 2012 amendment to the Tax Code, EXLP began paying taxes on the compressors located in Loving County to Midland County. Loving County continued placing the compressors on its appraisal rolls at full market value, asserting that the compressors’ presence within the counties fixed taxable situs there. The appraisal review board sided with the county. The trial court agreed with the county, concluding that sections 23.1241 and 23.1242 were unconstitutional. The court of appeals held (1) the statutes are constitutional, and (2) the compressors’ taxable situs is Loving County. The Supreme Court reversed in part, holding (1) sections 23.1241 and 23.1242 control the taxable situs of the compressors; and (2) Midland County is the taxable situs of the compressors. View "Loving County Appraisal District v. EXLP Leasing LLC" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the court of appeals, holding that Texas Tax Code 23.1241 and 23.1242 controlled the taxable situs of the compressors at issue in this case and that Midland County, rather than Ward County, was the taxable situs of the compressors.EXLP Leasing owned and leased out compressor stations used to deliver natural gas into pipelines. While some of the compressors were in use in Ward County, EXLP paid taxes on those compressors to Midland County in response to a 2012 amendment to Tax Code sections 23.1241 and 23.1242 that included leased heavy equipment in a statutory formula used to value heavy equipment held by dealers for sale. An appraisal review board agreed with Ward County that the compressors' presence in the county fixed taxable situs there. The trial court concluded (1) sections 23.1241 and 23.1242 are unconstitutional; (2) taxes on the compressors were due to Ward County; and (3) the compressors fell under the challenged statutory framework as “heavy equipment.” The court of appeals concluded that the statues were constitutional but otherwise affirmed. The Supreme Court held (1) the statutes are constitutional; (2) EXLP properly paid taxes on compressors in Midland County; and (3) the compressors met the statutory definition of “heavy equipment.” View "Ward County Appraisal District v. EES Leasing LLC" on Justia Law

In this case challenging where taxes on compressors were due, the Supreme Court affirmed in part and reversed in part the judgment of the court of appeals, holding (1) Tex. Tax Code 23.1241 and 23.1242 controlled the taxable situs of the compressors at issue in this case; and (2) there was no basis to remand the case to determine whether taxable situs in Loving and Reeves counties was proper under the governing statutory provisions.MidCon Compression owned and leased out compressor stations used o deliver natural gas into pipelines. Some of those compressors were in use in Reeves and Loving counties. In response to a 2012 amendment to the Tax Code, MidCon began paying taxes to Ector and Gray counties. Reeves and Loving counties continued placing the compressors on their appraisal rolls at full market value, asserting that the compressors’ presence within the counties fixed taxable situs there. The appraisal review boards agreed with the counties. The trial court also sided with the counties, concluding that sections 23.1241 and 23.1242 were unconstitutional. The court of appeals held (1) the statutes are constitutional, and (2) the compressors’ taxable situses are Reeves and Loving counties. The Supreme Court reversed in part, holding that sections 23.1241 and 23.1242 control the taxable situs of the compressors. View "Reeves County Appraisal District v. MidCon Compression, LLC" on Justia Law