Justia Kentucky Supreme Court Opinion Summaries

The Supreme Court reversed the opinion of the court of appeals affirming the decision of the circuit court concluding that with Century Aluminum of Kentucky, GP's interpretation of the statutes which categorize tangible personal property as either tax-exempt "supplies" or taxable "repair, replacement, or spare parts" was incorrect, holding that that the Kentucky Claims Commission's final order was supported by substantial evidence.In the proceedings below, the Commission agreed with Century's interpretation of the relevant statutes and rejected the interpretation of the Department of Revenue. The circuit court and court of appeals reversed, agreeing with the Department's interpretation. The Supreme Court reversed, holding (1) a tax-exempt "supply" is consumed within the manufacturing process and has a useful life of less than one year; (2) a taxable "repair, replacement, or spare part" does not necessarily have a known, limited useful life; and (3) the Commission's final order in this case was supported by substantial evidence in the record. View "Century Aluminum of Ky., GP v. Department of Revenue" on Justia Law

The Supreme Court affirmed the judgment of the circuit court prohibiting a vote tabulation regarding a school board tax recall based upon alleged violations of Ky. Rev. Stat. 132.017 and Ky. Rev. Stat. Chapter 369, holding that there was no error.This case involved a tax increase adopted by the Jefferson County Board of Education (JCBE) in 2020. A recall committee was formed to challenge the excess portion of the tax. A recall petition was subsequently certified. JCBE filed suit, seeking review of the county clerk's certification pursuant to section 132.017(2)(i). The recall committee intervened and counterclaimed for failure to comply with Ky. Rev. Stat. 133.185 and the notice requirements of Ky. Rev. Stat. 160.470(7)(b). The circuit court dismissed the counterclaim and ordered no further action regarding the regular ballot votes for the tax recall. The Supreme Court affirmed, holding that the public's right to vote on a tax recall is rendered null by the inadequacy of the recall petition occasioned by the alterations and lack of required information. View "Friedmann v. Honorable Bobbie Holsclaw" on Justia Law

In this action brought by Great Lakes Minerals, LLC against the State of Ohio and Joseph Testa, the Supreme Court reversed the decision of the circuit court denying Ohio's motion to dismiss, holding that Ohio was protected by sovereign immunity and that Testa was immune from suit in his official capacity as Tax Commissioner of Ohio and that Testa, in his personal capacity, was dismissed based on the principle of comity.Great Lakes sued Defendants seeking a declaratory judgment that it was not subject to Ohio's commercial activity tax, monetary relief for the forced collection of taxes not owed, and a determination that it would be inequitable to require Great Lakes to defend an action in a foreign state. Ohio unsuccessfully moved to dismiss the complaint. The Supreme Court reversed, holding (1) the State of Ohio and Testa in his official capacity were protected by sovereign immunity; and (2) under the principle of comity Testa is dismissed in his personal capacity. View "State of Ohio v. Great Lakes Minerals, LLC" on Justia Law

Ky. Const. section 170 does not exempt a qualifying charitable institution from the use tax imposed by Ky. Rev. Stat. 139.310.The Finance and Administration Cabinet’s Department of Revenue, the Board of Tax Appeals, and the circuit court concluded that the section 170 constitutional exemption speaks only to ad valorem property taxes and does not relieve a “public charity” from the use tax imposed by section 139.310. The court of appeals disagreed, ruling that the use tax imposed under section 139.310 is similar enough to an ad valorem tax to render its enforcement on governmental entities unconstitutional under section 170. The Supreme Court reversed, holding (1) section 170 of the Kentucky Constitution provides for exemptions from property taxes only; and (2) the holding in Commonwealth ex rel. Luckett v. City of Elizabethtown, 435 S.W.2d 78 (Ky. 1968), that the section 170 exemption applies to the use tax is not sustainable. View "Commonwealth, Finance & Administration Cabinet, Department of Revenue v. Interstate Gas Supply Inc." on Justia Law

A provision in the Multichannel Video Programming and Communications Services Tax (the Telecom Tax) prohibiting “every political subdivision of the state” from collecting franchise fees or taxes on franchises subject to the Telecom Tax is unconstitutionally void as applied to protesting cities.Four Kentucky cities and the Kentucky League of Cities, Inc. (collectively, Cities) filed a petition for declaratory relief alleging that the Telecom Tax’s Prohibition Provision violated their right to grant franchises and to collect franchise fees as provided in sections 163 and 164 of the Kentucky Constitution. The circuit court dismissed the petition. The court of appeals vacated the judgment of the circuit court and remanded, concluding that the Telecom Tax’s Prohibition Provision violated sections 163 and 164. The Supreme Court affirmed, holding that the Telecom Tax’s Prohibition Provision was unconstitutionally void as applied to the Cities. View "Kentucky CATV Ass’n v. City of Florence" on Justia Law

The Department of Revenue assessed additional inheritance taxes on an estate. The court of appeals affirmed the Department’s assessment of tax. At issue on appeal was whether inheritance taxes may be deducted from the value of distributive shares of an estate and whether inheritance tax paid from the estate on behalf of a beneficiary - a bequest of tax - is itself a taxable event. The Supreme Court affirmed, holding (1) a reviewing court does not owe any deference to the Kentucky Board of Tax Appeals as to questions of law; (2) inheritance taxes paid by the estate on behalf of a beneficiary of the estate are not “costs of administration” under a will’s tax-exoneration provision but, rather, are separate bequests that are subject to inheritance taxes; (3) the payment of inheritance tax by an estate on behalf of a beneficiary under a tax-exoneration clause is itself a taxable “bequest of tax”; and (4) like the Department, the court of appeals did not properly apply the law to the facts of this case, but because the end result of the court of appeals’ opinion was to uphold the Department’s assessment of additional tax, its judgment upholding the assessment is affirmed. View "Estate of McVey v. Dep’t of Revenue, Fin. & Admin. Cabinet" on Justia Law

In 2004, AT&T Corp. filed refund claims with the Finance and Administration Cabinet arguing that, under Ky. Rev. Stat. 139.505, AT&T was entitled to refunds for tax years 2002 and 2003. The Cabinet granted a partial refund for AT&T’s 2002 claim. In 2008, AT&T filed refund claims for tax years 2004 through 2008. In 2011, AT&T filed a declaration of rights action bringing administrative and as-applied constitutional challenges to the amendments to section 139.505. The circuit court dismissed the case, determining that AT&T’s challenges must be adjudicated by the Kentucky Board of Tax Appeals (KBTA) before the court would address AT&T’s facial constitutional challenges. The court of appeals reversed, concluding that the facial constitutional issue was one that the KBTA could not decide, but that the other claims were properly dismissed. The Supreme Court reversed the court of appeals’ decision and reinstated the trial court’s order of dismissal, holding that there were several administrative issues that must be resolved prior to addressing the constitutional claims. View "Commonwealth v. AT&T Corp." on Justia Law

Appellants in this case were the Kentucky Horse Racing Commission, the Kentucky Department of Revenue, and eight horse Kentucky racing associations that wished to expand their businesses to include wagering upon historical horse racing. Appellants filed an action for a declaration of rights concerning the operation of mechanical and electronic devices for wagering on previously run horse races, so-called “historical horse racing.” The case ultimately reached the Supreme Court, which held (1) the Commission has the statutory authority to license and regulate the operation of pari-mutuel wagering on historic horse racing; (2) under the present statutory scheme, the Department does not have the authority to tax the wagering upon historical horse races; and (3) whether the licensed operation of wagering on historic horse racing violates the gambling provisions of the Kentucky Penal Code is an issue that depends upon facts not in the record, therefore requiring further proceedings in the circuit court. View "Appalachian Racing, LLC v. Family Trust Found. of Ky." on Justia Law

The Department of Revenue audited Appellant for a three-year period. The Department determined that Appellant had omitted certain tangible personal property from its tax returns during the relevant years and billed Appellant for $151,943 in ad valorem taxes. Appellant paid the new assessments without protest. Appellant later filed a refund claim for a portion of the taxes, that the Department had improperly classified certain machinery, resulting in Appellant's overpayment. The Department denied the refund claim because Appellant had paid without protest. The Board of Tax Appeals reversed, and the circuit court and court of appeals affirmed. The Supreme Court affirmed, holding that Appellant properly followed the appropriate administrative remedies in accordance with the Court's recent decision in Cromwell Louisville Associates, LLP v. Commonwealth. View "Dep't of Revenue v. Cox Interior, Inc." on Justia Law

This case required the Supreme Court to decide whether a mortgage lienholder has standing to an agreed judgment between the property owner and the purchaser of the property owner's delinquent property tax liens. The court of appeals determined that the mortgage lienholder in this case (Appellee, Commonwealth Bank & Trust Company) did have standing to contest the agreed judgment between the property owner (Appellee, Teretha Murphy) and the owner of the owner's delinquent property tax liens (Appellant, Tax Ease Lien Investments 1, LLC). The Supreme Court affirmed, holding that Commonwealth Bank had standing to contest the monetary amount awarded in the agreed judgment. View "Tax Ease Lien Invs. 1, LLC v. Commonwealth Bank & Trust" on Justia Law