AIRLINES CONTINUE TO CHALLENGE LOCAL TAXES IN CALIFORNIA
May 12, 2017
A California appellate court has held that numerous airlines, including Southwest, United, AirTran Airways, American Airlines, Envoy Air, JetBlue, and SkyWest Airlines, have not exhausted their administrative remedies when it comes to a dispute over claims by the carriers for tax refunds related to the storage of aircraft in the state.
The airlines are attempting to secure refunds for excess taxes allegedly paid on aircraft stored in 11 California counties, including Los Angeles, San Diego and Sacramento counties, and have filed 11 suits against the individual counties alleging that various local assessments on aircraft were void. The airlines unsuccessfully argued that the assessments are void because the local boards of each county do not possess the “special competence to decide” valuation and that the assessors did not have the proper figures to calculate economic obsolescence, or a form of depreciation. The appellate court ultimately ruled against the airlines, holding that they circumvented local tax equalization boards in their bid to avoid the taxes and must comply with the law like any other citizen.
The airlines will now have to plead their case directly to the local boards.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com, 202-659-6622) or Drew Derco (dderco@eckertseamans.com, 202-659-6665).
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