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Taxation Home : Sections and Committees : Taxation : Tax Talk |
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TAX TALKPublished by the Section of Taxation of the Maryland State Bar Association, Inc. · Jonathan Z. May, Chair ·
Recent Maryland Tax Court Cases Income Oracle Corp. v. Comptroller – On a procedural issue, the Tax Court denied Motions to Dismiss appeals of duplicate assessments that had been erroneously issued by the Comptroller subsequent to the time that the original assessments had become final. The Court found that due to the fact that errors by both parties were made, and since there was no prejudice to the Comptroller, justice demanded that the taxpayer be given its due process hearing rights. Real Property W.F.I. Stadium, Inc. v. Prince George’s County – Redskins Stadium was deemed substantially complete by SDAT and assessed in 1997 but was not issued the final use and occupancy permit until 1999. The County used the initial assessment as the application starting point in denying as untimely the stadium’s claim for the county revitalization credit. The statute allows for application the first year after an improvement is "completed and assessed." The Tax Court determined that since a final use and occupancy permit is required by statute to accompany the tax credit application, despite the fact that the stadium was used for football for two seasons, the stadium was not complete until such permit was issued. Thus, the taxpayer was entitled to apply for the credit based on the higher assessed value. Franchise General Motors Acceptance Corporation v. SDAT – The Tax Court found that the State’s inclusion of foreign dividends in Maryland taxable income for franchise tax purposes, while domestic dividends were not included, amounts to facial unconstitutional discrimination in violation of the Foreign Commerce Clause. Personal Property Maryland Association of Nonprofit Organizations v. SDAT – The Tax Court ruled that the taxpayer organization was not primarily charitable, but was primarily educational in nature and thus entitled to the exemption from personal property tax. However, the Court only ordered a partial exemption that would apply to that property actually contributing to the organization’s educational function and remanded the appeal to the SDAT to determine the appropriate amount. Consolidation Coal Sales Company v. SDAT – The Tax Court decided that personal property used to receive, store, blend and ship coal to customers does not substantially transform - and is not a step in the process of substantially transforming - the coal to warrant the reclassification of the property to exempt manufacturing equipment. While the blending process is sophisticated, the Court noted that there is no transformation of the individual coal nuggets before they are shipped. Recordation Host Marriott Corporation v. Montgomery County – The Tax Court found that a transfer of real property from a corporation to a LLC for nominal consideration for internal restructuring purposes was not exempt from recordation tax pursuant to TP §12-108(p), which only exempts transactions between related corporations. In addition, the exemption under TP §21-108(y) did not apply, as corporations are not included as a "predecessor entity" from which a transfer to a LLC would be exempt. Transfer Baltimore County Employees Credit Union v. Clerk of Circuit Court – The Tax Court found that the federal exemption from the payment of transfer tax afforded a credit union as seller of real property can not be extended to the buyer by contract or otherwise as the legal incidence of the transfer tax falls half on the buyer and half on the seller. The Court also ruled that the credit union is not an instrumentality of the United States for purposes of acquiring and selling real property as it does not perform a government function.
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