Procedure Archives

The Texas Third Court of Appeals Changes Course in Hegar v. El Paso Electric Co.

March 11, 2021 By Stephen Long and Jimmy Lucas 4 Mins Read

In groundbreaking news, the Texas Third Court of Appeals has withdrawn its earlier opinion and issued a new opinion in the Hegar v. El Paso Electric Co. case. In the case, which has attracted widespread attention, El Paso Electric filed a refund claim with the Texas Comptroller for sales taxes that it had paid on transactions involving “telemetry units that are related to step down transformers,” which are pieces of equipment used to transmit electricity. In its initial redetermination request, which is required in Texas to challenge a denied refund claim, El Paso Electric cited the Texas sales tax manufacturing exemption as one of its grounds for challenging the refund denial. Specifically, El Paso Electric cited Texas Tax Code section 151.318(a)(4), which includes the term “telemetry units that are related to the step-down transformers” among a list of around fifty different items that are exempt from sales tax when used as part of the manufacturing process in Texas. The Texas Comptroller argued that, because El Paso Electric did not explicitly tie the telemetry units related to step-down transformers directly to the code section citation, El Paso Electric was barred from raising those claims during its administrative hearing. The administrative law judge agreed and overruled El Paso Electric’s claim that its telemetry units were exempt under Texas Tax Code section 151.318(a)(4). El Paso Electric then sued in Texas District Court, which overruled the administrative law judge and granted El Paso Electric’s refund claim. The Texas Comptroller later appealed, and the Texas Third Court of Appeals once again overturned the district court, ruling for the Texas Comptroller. This latest opinion withdraws the earlier Third Court of Appeals opinion and issues a new opinion.

Something Fishy in the False Claims Act World

October 14, 2020 By Lindsay LaCava and Mark Yopp 5 Mins Read

New York lawmakers recently introduced two bills to expand the application of the New York State False Claims Act (“FCA”). The first intends to require the FCA to apply to non-filers, the second to remove the scienter element (i.e., no longer imposing a “knowing” requirement). Although both bills are retroactive and concerning, removing the scienter element should put all businesses on high alert as enforcement of the tax laws could now be in the hands…

“Majority” Rules: California Court of Appeal Rules that Supermajority not Needed to Pass Voter Initiative Tax Measures

July 22, 2020 By North America SALT Practice 7 Mins Read

In City & County of San Francisco v. All Persons Interested in the Matter of Proposition C, Dkt. A158645 (Cal. App., June 30, 2020), the California Court of Appeal upheld Proposition C—a voter initiative that created a new local business tax in San Francisco. The court upheld the initiative that was enacted by a simple majority of electors. This ruling answers a question that was been heavily debated since the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland, 3 Cal. 5th 924 (Cal. 2017). That is, do special taxes proposed by voter initiative require a supermajority of voters to pass? This decision expressly narrows the supermajority requirement to only those tax measures proposed directly by local governments and will likely trigger more tax initiatives proposed and passed by citizen groups.

State and Local Tax Responses to COVID-19: Corporate Income Tax and Sales and Use Tax Deadline Extensions [Updated May 3, 2020]

May 4, 2020 By Bobby Albaral, Ted Bots, Scott Brandman, Maria Eberle, Lindsay LaCava, Stephen Long, Mark Yopp, Nicole Ford, Dmitrii Gabrielov, Rob Galloway, Drew Hemmings, Jimmy Lucas, Trevor Mauck, Kelsey Muraoka and Michael Tedesco 2 Mins Read

Numerous states have provided tax relief in response to the COVID-19 outbreak, often in the form of tax filing and payment deadline extensions. At this time, 41 states and Washington, D.C. have provided a corporate income tax filing and/or payment deadline extension. Most recently, Florida extended its May 1, 2020 corporate income tax deadlines to August 3, 2020 for filing and June 1, 2020 for payment. Since the payment deadline is sooner than the filing deadline, the Florida Department of Revenue advised corporate taxpayers to submit payments based on their best estimate of the tax that would be due with the return. Some states have also extended income tax deadlines for partnerships and other business entities and many states have extended individual income tax deadlines.