Justia Tax Law Opinion SummariesArticles Posted in Texas Supreme Court
Galveston Cent. Appraisal Dist. v. TRQ Captain’s Landing
A Foundation, a nonprofit corporation, completely controlled an LLC, which owned and controlled a LP, which owned apartments. The Foundation was a community housing development organization (CHDO), but the LLC and LP were not. The day the LLC acquired the LP, it applied for a tax exemption under Tex. Tax Code Ann. 11.182, which provides exemptions for properties that a CHDO owns. The Galveston Central Appraisal District denied the exemption because the LLC did not own the property. The Foundation and the LP then sued for a declaration that they were entitled to the exemption. The trial court granted summary judgment for the District. The court of appeals reversed, concluding that a CHDO’s equitable ownership of property qualifies for an exemption under section 11.182(b) and that Plaintiffs’ application for an exemption was timely. The Supreme Court affirmed, holding (1) under AHF-Arbors at Huntsville I, LLC v. Walker County Appraisal District, equitable title to property was sufficient for the CHDO in this case to qualify for the tax exemption under section 11.182; and (2) The Foundation’s application was timely. View "Galveston Cent. Appraisal Dist. v. TRQ Captain's Landing" on Justia Law
Combs v. Health Care Servs. Corp.
A government contractor (HCSC) contracted with the federal government to administer two health insurance programs. HCSC incurred expenses while performing the contracts that were reimbursed by the government. After the Comptroller denied HCSC's request for a refund for some of the sales and use taxes it paid on the expenses, HCSC brought tax-refund suits, claiming the purchases it made to administer the health-insurance programs qualified for the Tax Code's sale-for-resale exemption, which grants purchasers of taxable goods and services a sales-tax exemption if they resell the items. The lower courts determined HCSC was entitled to the claimed refunds. The Supreme Court affirmed on all but one issue, holding (1) the exemption applied to HCSC's requested refunds for tangible personal property and taxable services; but (2) the exemption did not apply to HCSC's requested refunds for leases of tangible of personal property. Remanded. View "Combs v. Health Care Servs. Corp." on Justia Law
TracFone Wireless, Inc. v. Comm’n on State Emergency Commc’ns
The Texas legislature enacted two distinct "e911 fee" statutes to help fund the State's 911 emergency networks. The first statute, enacted in 1997, imposed on wireless subscribers a monthly emergency service fee, collected on the customer's bill. The second statute, enacted in 2010, imposed on prepaid wireless subscribers a flat fee collected by the retail seller when a consumer buys prepaid service. Before 2005, prepaid providers paid $2.3 million in e911 fees under the 1997 law. When the prepaid providers concluded that tax-preparation errors caused them erroneously to remit millions, they sought refunds of the amounts already paid. The Commission on State Emergency Communications (CSEC) initiated a case against the providers to determine the 1997 law's applicability to prepaid services. The CSEC adopted the ALJ's proposal for decision, which construed the 1997 law as imposing the e911 fee on prepaid wireless. After the legislature enacted the 2010 statute, the prepaid providers sought review. The trial court ordered refunds, holding that prepaid wireless was not covered by the 1997 law. The court of appeals reversed. The Supreme Court reversed, holding that the pre-2010 statute does not tax prepaid service. View "TracFone Wireless, Inc. v. Comm'n on State Emergency Commc'ns" on Justia Law
Combs v. Roark Amusement & Vending, LP
Roark Amusement & Vending owned and leased coin-operated amusement crane machines found in supermarkets, restaurants, and shopping malls. Roark sought a refund of the sales taxes it paid on the plush toys it purchased to stock its machines for a three-and-a-half year period, arguing that the toys were exempt under the Tax Code's sale-for-resale exemption. The Comptroller of Public Accounts disputed that the exemption applied. The trial court granted the Comptroller's motion for summary judgment and denied Roark's refund request. The court of appeals reversed, concluding that the toys were exempt, and remanded the case for a determination of the refund amount due Roark. The Supreme Court affirmed, holding the toys were "tangible personal property" acquired by Roark "fore the purpose of transferring" the toys "as an integral part of a taxable service", and therefore, Roark qualified for a sales-tax exemption on the toys that filled its crane machines. View "Combs v. Roark Amusement & Vending, LP" on Justia Law
W. Hardin County Consol. Indep. Sch. Dist. v. Poole
A school district (District) obtained an in rem delinquent property tax judgment against an oil and gas lease that Respondent owned and operated. Respondent did not appeal, and the District foreclosed its judgment lien on the leasehold, taking ownership. The Railroad Commission ordered Respondent to plug a well on the lease. Respondent did not comply, and the Commission plugged the well and brought an enforcement action in court to recover the costs of the operation and the penalty. Respondent and the Commission settled. Respondent then sued the District, alleging in part that the District's actions had resulted in a taking of his property requiring compensation. The trial court dismissed Respondent's action for want of jurisdiction, but the court of appeals reversed and remanded with respect to the takings claim. The Supreme Court reversed and dismissed the case, holding that the trial court correctly dismissed Respondent's case, as Respondent did not assert on appeal that the District took his property without compensation. View "W. Hardin County Consol. Indep. Sch. Dist. v. Poole" on Justia Law
Morris v. Houston Indep. Sch. Dist.
At issue in this case was whether taxpayers who were sued for nonpayment of property taxes lost their entitlement to contest liability based on non-ownership when the taxing authorities non-suited after the taxpayers paid the disputed taxes under protest. The taxing authorities filed a plea to the jurisdiction, asserting that the district court lacked jurisdiction because the taxpayers failed to exhaust administrative remedies as required by the Tax Code. The district court denied the plea. The court of appeals reversed and granted the plea. The Supreme Court reversed, holding that the taxpayers did not lose their entitlement to contest tax liability on the basis of non-ownership when the taxing units non-suited and the taxpayers were realigned as plaintiffs. View "Morris v. Houston Indep. Sch. Dist." on Justia Law
In re Nestle USA, Inc.
Since first imposing a franchise tax in 1893, the Legislature restructured it several times, drawing various distinctions among taxpayers with adjustments, deductions, and exemptions that became elaborate. Petitioner in this original proceeding contended that the franchise tax bore no reasonable relationship to its object, the value of the privilege of doing business in Texas, and therefore it violated the Texas Constitution's mandate that "taxation shall be equal and uniform," the Fourteenth Amendment's equal protection and due process guarantees, and the U.S. Constitution's Commerce Clause. The Supreme Court denied the petition, holding (1) Petitioner failed to establish that the franchise tax violates the Equal and Uniform Clause; (2) the failure of Petitioner's challenge based on the Equal and Uniform Clause foreclosed its equal protection challenge; (3) the franchise tax does not violate due process; and (4) the manufacturing rate does not discriminate against interstate commerce and is fairly related to the services provided by Texas. View "In re Nestle USA, Inc." on Justia Law
In re Nestle USA, Inc., Switchplace, LLC, and NSBMA, LP, Relators
Petitioners and its affiliates, manufacturers and distributors of food and beverages in the United States, sought a declaration that the Texas franchise tax was unconstitutional, Tex. Tax Code 171.0001-.501, an injunction prohibiting its collection, and mandamus relief compelling the Comptroller to refund the taxes they paid from 2009 through 2011. Petitioners did not pay their taxes under protest or request a refund from the Comptroller, statutory requisites to taxpayers suits in the district court but not, relators contended, for suit in this court. The court disagreed and held that the statutory requisites were conditions on the legislative waiver of the State's immunity from suit. Accordingly, the court dismissed the case for want of jurisdiction. View "In re Nestle USA, Inc., Switchplace, LLC, and NSBMA, LP, Relators" on Justia Law
In re Allcat Claims Service, L.P. and John Weakly
In this original proceeding Allcat, a limited partnership, and one of its limited partners sought an order directing the Comptroller to refund franchise taxes Allcat paid that were attributable to partnership income allocated, but not distributed, to its natural-person partners. Allcat claimed it was entitled to a refund for two reasons. First, the tax facially violated Article VIII, Section 24 of the Texas Constitution because it was a tax on the net incomes of its natural-person partners that was not approved in a statewide referendum. Second, as applied by the Comptroller, to Allcat and its partners, the franchise tax violated Article VIII, Section 1(a) of the Constitution, which required taxation to be equal and uniform. The court held that: (1) the tax was not a tax imposed on the net incomes of the individual partners, thus it did not facially violated Article VIII, Section 24; and (2) the court did not have jurisdiction to consider the equal and uniform challenge.
TGS-NOPEC Geophysical Co. v. Combs, et al.
This appeal arose from a franchise tax dispute involving the apportionment of receipts from the licensing of geophysical and seismic data to customers in Texas. Petitioner, a taxpayer, complained that respondent mischaracterized these receipts as Texas business and thereby had erroneously increased its franchise tax burden. At issue was whether these receipts should be categorized as receipts from the use of a license or as receipts from the sale of an intangible asset. The court held that the court of appeals erred in upholding respondent's franchise tax assessment because petitioner's receipts from licensing its seismic data were not receipts from the use of a license in the state within Tex. Tax Code 171.103(a)(4)'s meaning. Receipts from this intangible asset was not allocated according to its place of use under subsection (4) but rather, were included under subsection (6)'s catch-all provision as a limited sale of an intangible and allocated under the location of the payor rule. Accordingly, the court reversed the judgment and remanded for further proceedings.