Sales Tax Articles
Sales Tax State Activity Update - May 2008
Jeepers Creepers Mississippi Auditor Neglected to Use Their Peepers
Results of audits have a way of dragging on until finally resolved through negotiation or court action, however sometimes a physical inspection of the taxable transaction is warranted.
In this particular instance, ECO, a management company that operates water and sewer systems for municipalities was audited by the Mississippi State Tax Commission in October 1999 for the period from July 1, 1996 through August 31, 1999.
At issue was the 3.5 % contractor's tax on repairs of real property. The auditor based her findings primarily on the job titles of ECO's employees. It seemed that most of the titles referenced duties that were construction related. While the facts presented in the case did not itemize the titles, they did indicate that the auditor made no attempt to verify the actual activities performed by the employees.
The key aspect of this request for refund turns on the determination of whether the property at issue is real or personal. Regarding the character of the property, the auditor concluded that because she could not pick up and move it, the items were real property.
ECO provided sufficient evidence to the chancery court that the repairs were performed on motors, water panels, and electrical panels, all of which met the definition of personal property. With an on site inspection, the chancellor confirmed that the equipment was, indeed, personal property.
The appeals court affirmed the findings of the chancery court based on the substantial credible evidence relied upon by the chancery court.
The full text can be accessed on the State of Mississippi Judiciary Website. (PDF)
Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.
Call 800.355.3500 to Speak to a Sales Representative.
