Articles Posted in Tax Law

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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

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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

Posted in: Tax Law

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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

Posted in: Tax Law

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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

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In this proceeding under Tex. Loc. Gov’t Code 72.010 authorizing property owners subject to multiple taxation to petition the Supreme Court directly to determine which county is owed taxes, the Court determined that it had original jurisdiction and that taxes on Relators’ property were owed to San Patricio County rather than Nueces County. This dispute concerned shoreline boundary on Corpus Christi Bay. For a decade both Nueces County and San Patricio County have taxed the same piers, docks, and other facilities affixed to land in San Patricio County but extending out into the water in Nueces County. After the statute was enacted and signed into law in 2017, Relators filed an original petition for a writ of mandamus in the Supreme Court praying that the Court determine which county is authorized to tax Relators' piers. The Supreme Court held (1) this case presented a compelling reason for the Court to exercise original jurisdiction; (2) section 72.010 does not violate the Texas Constitution’s prohibition against retroactive laws; and (3) San Patricio County is owed the taxes due on Relators' piers. View "In re Occidental Chemical Corp." on Justia Law

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In this property-tax dispute regarding ownership of tangible personal property the Supreme Court reversed the judgment of the court of appeals determining that Willacy County Appraisal District (WCAD) lacked authority to change the ownership determination to the appraisal roll under Tex. Prop. Tax Code 25.25(b), holding that when, as in this case, an ownership correction to the appraisal roll does not increase the amount of property taxes owed for subject property in the year of correction, an appraisal district’s chief appraiser has statutory authority to make such a correction. WCAD initially listed on the 2009 appraisal roll Sebastian Cotton & Grain Ltd. as the owner of grain inventory stored on its property. WCAD subsequently corrected the appraisal roll to reflect DeBruce Grain as the property owner but ultimately changed the 2009 appraisal roll back to again reflecting Sebastian as the grain’s owner. Sebastian protested. The Supreme Court held (1) the ownership correction was proper; (2) a Tex. Prop. Tax Code 1.111(e) agreement may be rendered voidable if its is proven that the agreement was induced by fraud; and (3) Sebastian was not entitled to attorney’s fees under Tex. Prop. Tax Code 42.29. View "Willacy County Appraisal District v. Sebastian Cotton & Grain, Ltd." on Justia Law

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The Parker County Appraisal District did not employ a facially unlawful means of appraising Taxpayers’ property, which appeared to derive much of its market value from saltwater disposal wells in which wastewater from oil and gas operations could be injected and permanently stored underground. When valuing for tax purposes Taxpayers’ tracts of land in Parker County, the Parker County Appraisal District assigned one appraised value to the wells and another appraised value to the land itself. Taxpayers argued before the trial court that the Tax Code did not permit the County to appraise the wells separately from the land itself where both interests are owned by the same person and have not been severed into discrete estates. The trial court granted summary judgment for Taxpayers. The court of appeals reversed. The Supreme Court affirmed, holding (1) there was nothing improper in the District’s decision to separately assigned and appraise the surface and the disposal wells, which were part of Taxpayers’ real property and contributed to its value; and (2) the Tax Code does not prohibit the use of different appraisal methods for different components of a property. View "Bosque Disposal Systems, LLC v. Parker County Appraisal District" on Justia Law

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In this property-tax dispute regarding ownership of tangible personal property, the Supreme Court held (1) when, as in this case, an ownership correction to an appraisal roll does not increase the amount of property taxes owed for subject property in the year of the correction, an appraisal district’s chief appraiser has statutory authority under Tex. Code Ann. Prop. 25.25(b) to make such a correction even when the correction necessarily alters the taxing units’ expectation of who is liable for payment of property taxes; (2) an agreement under Tex. Code Ann. Prop. 1.111(e) may be rendered voidable if it is proven that it was induced by fraud; and (3) a purported owner challenging ownership on the appraisal roll is not entitled to attorney’s fees under Tex. Code Ann. Prop. 42.29. Accordingly, the Court reversed the judgment of the court of appeals ruling that Willacy County Appraisal District lacked authority to change a property ownership determination under section 25.25(b), without reaching the issue of whether a section 1.111(e) agreement may be voided if it was induced by fraud, and remanding the case for a determination of attorney’s fees consistent with section 42.29. The Supreme Court remanded the case to the court of appeals for further proceedings. View "Willacy County Appraisal District v. Sebastian Cotton & Grain, Ltd." on Justia Law

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Galveston County failed to rebut the presumed constitutionality of a statutory formula determining the taxable value of leased natural-gas compressors located in its jurisdiction. Further, Washington County was the taxable situs for the compressors. The Supreme Court reversed the judgment of the Court of Appeals, which held that the parties failed to produce summary judgment evidence demonstrating, as a matter of law, that the statutory formula was either a reasonable or an unreasonable method of calculating the compressors’ reasonable market value. The court of appeals also held that Galveston County was the taxable situs of the compressors. The Supreme Court held (1) the court of appeals erred by not rendering judgment that the County failed to rebut the presumed constitutionality of the valuation statutes; and (2) the legislature’s statutory taxation scheme sets situs in the county where the dealer does business, and therefore, Washington County was the proper taxable situs for the compressors. View "EXLP Leasing, LLC v. Galveston Central Appraisal District" on Justia Law

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A taxpayer that conducts business in multiple states must apportion its business revenue among the states in which it does business. Texas Tax Code section 171.106 provides for such apportionment under a single-factor formula, which compares the taxpayer’s gross receipts derived from its Texas business to its gross receipts everywhere. Section 141.001, however, adopts the Multistate Tax Compact, which sets out a three-factor formula for apportioning“business income” for an“income tax” and provides that a taxpayer subject to a state income tax may elect to apportion its income “in the manner provided by the laws of such state” or may elect to apportion using the Compact’s three-factor formula. The appeals court affirmed the trial court’s summary judgment, holding that apportionment of the Texas franchise tax is exclusively the province of chapter 171. The Supreme Court of Texas affirmed. Section 171.106 provides the exclusive formula for apportioning the franchise tax and, by its terms, precludes the taxpayer from using the Compact’s three-factor formula.The Compact is severable and contains no unmistakable language waiving the state’s exercise of the sovereign tax power. Nothing in the Compact expressly prohibits the states from adopting an exclusive apportionment method that overrides the Compact’s formula. View "Graphic Packaging Corp. v. Hegar" on Justia Law