Court Opinion

ID: 9645255
Source: CourtListenerOpinion
Date Created: 2023-08-22 21:18:50.169718+00
Date Added: 2024-06-11T18:11:26.121633
License: Public Domain

ORDER ON PETITION TO REHEAR
The Commissioner insists in the petition to rehear that the Court has overlooked or misapprehended material facts and misconstrued the controlling statute. The petition asserts that the definition of “business earnings” adopted by the Court is overly restrictive, unwarranted by the statute, inconsistent with the interpretation of the same provision by other state courts, and “could ultimately impact a significant amount of revenue” collected by the State. Nevertheless, the petition is only a restatement of the State’s original argument.
The Commissioner’s position is that the gains on sales made by the taxpayer are “earnings arising from transactions or activity in the regular course of the taxpayer’s business,” and are therefore “business earnings” subject to allocation; and further, “business earnings,” within the meaning of the statute, include gains on transactions which meet either the transactional test or the functional test developed by court decisions.
As stated in the opinion, the taxpayer’s business could be described in such expansive terms that almost any transaction would be within the regular course of the taxpayer’s business. However, it appears from the record that the taxpayer’s regular business was, as stated in the opinion, “developing, leasing, and managing regional shopping centers.” Federated’s primary business purpose was to provide store facilities for its parent company’s anchor store in each shopping center. Upon the sale of the shopping center properties, facilities needed by the parent company were leased. Consequently, the transactions under review were outside the company’s regular business activity according to the transactional test adopted by the Court in General Care Corporation v. Olsen, 705 S.W.2d 642 (Tenn.1986).
*216In support of the contention that the Court’s construction of “business earnings” impairs “the uniformity of application of UDITPA among Tennessee and its sister jurisdictions,” the Commissioner refers the Court to several decisions in other jurisdictions, in which the transactions under consideration were found to produce “business earnings.” The Commissioner insists that the construction made by this Court “creates uncertainty in the administration and collection of Tennessee’s excise taxes.” The decisions relied upon by the Commissioner reinforce the point made in the opinion — the statute is subject to at least two constructions. However, any uncertainty with regard to the definition of “business earnings” in Tennessee was resolved in 1986 when this Court decided General Care v. Olsen, supra. The opinion in the case before the Court, and also in Union Carbide Corporation v. Huddleston, 1993 WL 137555, released this date, follow General Care meticulously. The Commissioner’s extensive memorandum in support of the petition to rehear does not insist the Court departed from General Care but relies entirely on decisions from other jurisdictions. In fact, the memorandum does not mention the holding of this Court in General Care.
If the Court’s construction of the statute creates uncertainty in the administration and collection of taxes, as asserted by the Commissioner though not shown in the record, that uncertainty has existed since 1986. There has been ample time within which to amend the statute to eliminate any uncertainty or unfairness to Tennessee.
The petition to rehear is denied.
DROWOTA, O’BRIEN, DAUGHTREY, and ANDERSON, JJ., concur.