ILLINOIS DEPARTMENT OF REVENUE MANUFACTURING EXEMPTION (2014)
The taxpayer was an international manufacturing conglomerate. It asserted that liquid nitrogen and hydrogen used in its float glass manufacturing process was exempt from sales and use tax. The taxpayer lost on all of its claims at trial. Scott Browdy argued the case on appeal and obtained a complete reversal for the client. The case subsequently settled on very favorable terms after the Department of Revenue appealed to a separate court.
The taxpayer was a major power generator and challenged income tax assessments issued by the Illinois Department of Revenue. In a case of first impression, the Department of Revenue disputed the situs, or location, of the electricity sales reported on the taxpayer's returns and attempted to collected over $40 million in unpaid tax, interest, and penalties. After a thorough factual investigation and presentation to the Department of Revenue, the case settled shortly before trial with a savings of over $20 million to the taxpayer.
The taxpayer, one of the largest aerospace and defense companies in the world, challenged an audit finding made by the Georgia Department of Revenue. Georgia alleged that the taxpayer owed over $1 million in unpaid sales tax, based on alleged leases of flight simulators near Atlanta. The evidence submitted to the administrative tribunal demonstrated that most of the contested transactions were not taxable leases and the taxpayer settled the case for a small fraction of the amount originally demanded.
FLORIDA DEPARTMENT OF REVENUE USE TAX LITIGATION (2013)
The New Jersey Division of Taxation disallowed over $60 million of the taxpayer's net operating losses for business income purposes on the purported ground that the NOLs had expired during a statutory suspension period. In a case of first impression, the taxpayer filed a motion for summary judgment that demonstrated that, notwithstanding murky statutory language, the Legislature did not intend to allow expiration of the NOLs during the suspension period. The client recaptured over $40 million of the previously disallowed NOLs.
A national paint company filed refund claims, arguing that machinery and equipment used to produce paint in the client's retail stores qualified for Illinois' manufacturing equipment. The case was tried on a stipulated factual record, and the taxpayer obtained an award granting over 95 percent of the requested relief.
Browdy P.C. defended an economic developer and various retailers in three suits alleging that the developer and two Illinois municipalities conspired to deprive the City of Chicago over $100 million in Retailer's Occupation Tax and Use Tax revenue. After five years of litigation, all of Chicago's claims were dismissed with prejudice. The case is now on appeal before the Illinois Supreme Court.
Cases are often won before they begin. Our audit clients, for example, often find that through thorough preparation and a common-sense presentation, we are able to reach a solution before an assessment is issued. Nevertheless, some cases must be tried and then defended on appeal. Some of our recent courtroom successes are shown below.
ILLINOIS TAXPAYER PRIVACY LITIGATION (2011)
NEW JERSEY DIVISION OF TAXATION BUSINESS INCOME LITIGATION (2015)
The taxpayer, an international airline, filed refund claims asserting that it did not owe sales and use tax on thousands of hotel room rentals at three hotels near Newark Airport. After an exhaustive factual analysis, the taxpayer filed a motion for summary judgment that demonstrated that the taxpayer was a permanent resident of the rooms in question and, therefore, did not owe sales and use tax. Shortly before the hearing on the motion for summary judgment, the Division of Taxation agreed to all but a small portion of Browdy P.C.'s requested refund calculation.
The taxpayer, one of the largest retailers in North America, opened a regional distribution center in Florida for the sale of most of its perishable products in the Southeast. The taxpayer purchased a material handling and storage system that, in effect, operated as a mechanized warehouse within the distribution center. Scott Browdy argued that the system was real, rather than personal, property and therefore not subject to use tax. The court ruled that much of the system qualified as real property and ordered a substantial use tax refund.
NEW JERSEY DIVISION OF TAXATION, HOTEL LEASE TAX (2016)
ILLINOIS APPORTIONMENT FACTOR IN CONNECTION WITH ELECTRICITY SALES (2010)
CITY OF CHICAGO SALES AND USE TAX SOURCING LITIGATION (2018)
The taxpayers were three economic developers who filed a constitutional challenge to Illinois' newly amended Freedom of Information Act. Acting under color of the FOIA statute, the Illinois Attorney General demanded access to highly confidential documents relating to the taxpayers' clients, who were enrolled in a Retailer's Occupation Tax incentive program. Following lengthy briefing on the taxpayers' constitutional issues, the Attorney General voluntarily withdrew her demands.
GEORGIA FLIGHT SIMULATOR LEASE PAYMENTS (2010)
ILLINOIS DEPARTMENT OF REVENUE MANUFACTURING EXEMPTION (2015)