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Utah Supreme Court rules against counties over tax revenue from airlines

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Posted at 12:54 PM, May 20, 2020
and last updated 2020-05-20 20:42:38-04

SALT LAKE CITY — The Utah Supreme Court has ruled against a number of counties who challenged the state's tax code and whether recent laws were unconstitutional.

In a unanimous ruling, the state's top court rejected an appeal filed by Salt Lake, Duchesne, Uintah, Washington and Weber counties over how much airlines are taxed for operating here. A lower court previously ruled against the counties.

The issue surrounds a 2015 law passed by the legislature that tweaked the calculation on how airlines were taxed and their obligations, which can be potentially hundreds of millions of dollars. The counties sued, challenging the Utah State Tax Commission's methodology for determining how much those airlines owe as well as the constitutionality of the law itself.

"Because most aircraft do not remain permanently in any one state, Utah imposes property taxes only for the time in which the aircraft is in the state. This tax obligation is calculated as a percentage of the entire value of the airline’s property according to the formula provided by the Allocation law," Chief Justice Matthew Durrant wrote.

But a lower court dismissed the counties' claims, declaring that they had not exhausted other administrative remedies. The counties took it to the Supreme Court. Chief Justice Durrant said there are still similar cases pending, and the Court would not weigh in on "abstract questions" and their appeals were not "ripe."

"Because the complaint is not based on a specific instance where the Challenged laws have been applied (or will imminently be applied), the Counties’ complaint is merely a request for an advisory opinion on the constitutionality of the Challenged laws," he wrote.

The Utah State Tax Commission said it was pleased with the ruling.

"In the case of Salt Lake County v. State of Utah, the Utah Supreme Court made an important ruling on the issue of ripeness and exhaustion of administrative remedies," Tax Commission Chair John Valentine said in a statement to FOX 13. "The ruling did not address the merits of the underlying case which attacked a recent legislative attempt to simplify the method of valuing airlines. The new statute adopted a publication called the Airliner Price Guide as a basis to determine value. The counties challenged the constitutionality of the statute both on its face and as it was being applied. The Supreme Court’s ruling upholds the lower court’s dismissal of the counties’ claims."

The Salt Lake County District Attorney's Office said it was still pursuing actions.

"The statutes in question are important to all taxpayers in Salt Lake County because they collectively result in a shift of tax burden to taxpayers other than airlines. Airline property tax values dropped 39% from 2016 to 2017 from one of the statutes," the office said in a statement.

"The County originally filed this action in district court in the form of declaratory relief in the hopes that an answer would be achieved efficiently and quickly to prevent the compounding tax shift. However, as a precaution, the County also filed substantive appeals before the Commission on the same issues recognizing that the district court may decline to hear them under a declaratory relief action. These appeals are moving forward and the Utah Supreme Court’s decision does not impact these actions."

Read the Court's ruling here: