California appeals court grounds JetSuite’s taxation appeal

By David Hutton | Nov 2, 2017

LOS ANGELES (Legal Newsline) – The California Court of Appeal for the 2nd District has upheld a lower court’s ruling in favor of Los Angeles County in its court battle against JetSuite Inc. over personal property taxes.

The case was heard by judges Allan Goodman, Judith Ashmann-Gerst and Brian Hoffstadt. The opinion was filed Oct. 10.

According to the opinion, JetSuite had challenged Los Angeles County’s tax assessment on the company in 2011, which included a tax on six jets at 1 percent of their full value.

In making its assessment, the county reviewed the fleet’s activity in 2010, noting that no other jurisdiction levied a tax against the fleet that year.

JetSuite took exception with the assessment and requested a tax refund of $89,839, maintaining that Los Angeles County shouldn’t have levied the tax on the full value of the jets since they could have been taxed by another jurisdiction, the opinion states.

The Los Angeles County Assessment Board held a hearing in November 2013 and in April 2014 and issued a written ruling rejecting the company’s challenge and argument that the company’s jets had acquired “tax situs” because they had landed in other states.

In October 2014, JetSuite took legal action in an attempt to overturn the board’s decision.

According to court's opinion, JetSuite had asked Los Angeles County Superior Court to consider that Utah had acquired situs over JetSuite’s fleet of jets in 2013.

The trial court ruled that the Utah taxation three years later wasn’t relevant in JetSuite’s case against Los Angeles County.

In its appeal, JetSuite continued to maintain that the board and trial court both were wrong by rejecting claims that the county couldn’t tax the full value of its jets in 2011.

The appeals court noted that its review was limited to examining whether there is sufficient evidence to support the board’s ruling, with the exception being questions of law.

In its opinion, the appeals court noted the California constitution makes all property taxable and requires local governments to “impose and collect property taxes.”

In its decision, the court considered the “home port doctrine,” which denotes that a state where a company’s property is primarily kept can tax all of the property and other states could not tax any of the value.

Even though JetSuite was incorporated in Delaware, it was headquartered in Long Beach, California, and its planes received maintenance work at service locations in Van Nuys, California and in Arizona.

On appeal, JetSuite continued to maintain that Utah’s taxation of its fleet in 2013 amounted to a ruling that Utah also had situs over its fleet in 2010, to which the appeals court disagreed, noting the period to be considered was 2010.

“Nothing in the record indicates that JetSuite’s activities in 2013 have any relevance - let alone any retroactively binding effect - on what its activities were, or where they might have established situs, in 2010,” the court wrote in its opinion.

Moreover, the court noted that the company’s operations had changed during the years between 2010 and 2013, making the argument irrelevant to this case.

As a result, the judgment was affirmed, and the appeals court ruled the county was entitled to its court costs.

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