1/26/2024 0 Comments Texas gross receipts tax![]() The Court also ordered briefing on the merits. In a rare move, the Texas Supreme Court granted Citgo’s Motion for Rehearing and withdrew its prior denial of Citgo’s Petition for Review. On this point, Citgo relied heavily upon amici briefs filed by the Council on State Taxation and the Texas Taxpayers and Research Association. Citgo also implored the high court to hear the case due to the importance and reach of the issue. Citgo then filed a Motion for Rehearing, which asserted that the Court of Appeals’ opinion was contrary to recent Texas Supreme Court precedent and overly deferential to the Texas Comptroller. The Texas Supreme Court denied Citgo’s Petition for Review in September 2022. ![]() ![]() Hegar 1 that receipts from the sale of non-inventory securities, which the taxpayer elected to be treated as inventory using mark-to-market accounting for federal income tax purposes under Internal Revenue Code (“IRC”) Sections 475(e) and 475(f), were properly included in the company’s franchise tax apportionment factor at net rather than at gross. As discussed in our October 2022 Client Alert, the Texas Third Court of Appeals held in Citgo Petroleum Corp v. For additional information about this topic, please contact us at. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. Grain Sorghum Producers Bd., 519 S.W.2d 620, 624 (Tex. 2012) See also, Conlen Grain & Mercantile, Inc. ![]() App.-Corpus Christi-Edinburg November 10, 2022, pet. Please reach out to one of the experts below with any questions.ġ Swift Transportation Co. We will keep you updated as this case progresses through the court system and how this could impact your business. The Supreme Court has yet to determine if it will allow a full review of this case. In its argument against the second issue raised, the state draws a distinction between “gross receipts” and “total revenue,” as the franchise tax is based on taxable margin, which starts with “total revenue.” It argues that the adjustments made to the starting point under Tax Code § 171.1011 further remove the tax from the typical gross receipts tax regime. Other occupation taxes apply to only specific professions, while the franchise tax applies generally to all business entities. The state asserts that the legislative intent is clear and unambiguous, and the Legislature has not treated the two taxes in the same manner. In its response to the petition, the state asserts that the franchise tax is neither an occupation tax nor is it measured by gross receipts. that “‘ranchise tax’ refers to a tax levied on the value of the privilege to conduct business in this state.and is also a type of occupation tax.” 3 Following Tax Code § 171.101(a)(1)(A), taxable margin can be determined by multiplying total revenue by 70%, which is multiplied by an apportionment factor comprised of gross receipts under Tax Code 171.106(a), both of which were used to support its position that the franchise tax is measured by gross receipts. It relies on the Texas Supreme Court’s discussion in Nestle that “ Black’s Law Dictionary defines each the same way: a ‘tax imposed the privilege of carrying on a business.’” 2 In addition, the Third Court of Appeals has stated in United Servs. Swift maintains that both the franchise tax and an occupation tax are imposed for or on the privilege of carrying on a business. Swift contends the appellate court did not apply the plain and ordinary meaning of the statute’s terms and ignored caselaw and dictionary definitions in determining that the franchise tax was not a type of occupation tax. 1 Subsequently, Swift petitioned the Texas Supreme Court for review on the two issues. The Transportation Code statute exempts motor carriers from “any occupation tax measured by gross receipts.”Īfter the trial court denied its requested partial summary judgment, Swift filed an appeal that was transferred to the Thirteenth Court of Appeals, which promptly held that the Texas franchise tax is not an occupation tax but did not address whether it is measured by gross receipts. Swift filed a refund request for Texas franchise tax paid for report years 2013 through 2016, contending they were exempt from the franchise tax under Texas Tax Code § 171.081 and Transportation Code § 20.001. of Arizona, LLC (“Swift”) is the reporting entity for a combined group of affiliated motor carriers that transport property for hire.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |