Polsinelli Tax practice attorneys work closely with the firm’s Financial Services attorneys to provide tax advice on various issues in the commercial mortgaged-backed securities (CMBS) area. Specifically, we have extensive experience with real estate mortgage investment conduits (REMICs), grantor trusts, and other pass-through finance vehicles. Our attorneys are considered national leaders and have written articles, delivered detailed presentations on REMIC issues and other tax matters relating to the CMBS area as well as being actively involved in groups that have drafted and been responsible for the adoption of legislation and regulatory changes to the REMIC rules.
Polsinelli Tax Practice attorneys’ creative approach for structuring transactions ensures compliance both with the tax and REMIC rules and provides our clients with options when evaluating their business needs. Our attorneys advise lenders, borrowers, and loan servicers on tax matters for all types of transactions, including matters related to loan originations, securitizations, and general servicing matters, such as defeasances and assumptions. In addition, our attorneys work closely with our clients on loan workout matters, including on bankruptcy issues and matters related to “REO” property.
Our State and Local Tax practice has considerable experience advising clients on a variety of state and local tax matters involving income, sales and use, inheritance and property taxes. This includes audits of taxpayers, appeals to administrative agencies, appeals to the courts, and judicial review of agency decisions. Polsinelli has litigated a number of state tax cases, including the following:
Income, Sales & Use Taxes:
- AT&T Communications of the Southwest v. Director of Revenue (Mo AHC 2013). The Missouri Administrative Hearing Commission ruled in favor of the taxpayer and found that passive investment income earned by the taxpayer was no Missouri source income and was not subject to Missouri corporate income tax. The Commission followed the holding in an earlier case handled by the Polsinelli tax team for Medicine Shoppe International (discussed below), by ruling that the Medicine Shoppe International tax treatment of passive investment income was applicable to the taxpayer, which calculated its Missouri taxable income under a different section of the tax law.
- Matter of the Appeal of Chipotle Mexican Grill, Inc. (Kansas COTA 2010). The Kansas Court of Tax Appeals ruled in favor of the taxpayer and held that income earned from the investment of excess cash proceeds was properly treated as non-business income and was not treated as business income that can be apportioned to Kansas for corporate income tax purposes.
- Western Blue Print Co. v. Director of Revenue, 311 S.W.3d 789 (Mo. S. Ct. en banc 2010). The Missouri Supreme Court affirmed the decision of the Missouri Administrative Hearing Commission and ruled that CDs prepared by the taxpayer from printed materials that were scanned, were not taxable. By applying the true object of the transaction test, the computer output produced by the taxpayer was not taxable.
- Cabela's v. Department of Revenue (Kansas BOTA 2007). Represented the taxpayer in an appeal filed with the Kansas Board of Tax Appeals. The issues presented included whether the Internet sales of the taxpayer were subject to sales and use taxes in Kansas. The Department argued that the sales were taxable and that the taxpayer had nexus or physical presence in Kansas, because it had a retail store in the state that was owned and operated by an affiliated company. The appeal was settled by the parties.
- American East Explosives, Inc. v. Director of Revenue (AHC No. 04-0422RS, 2006). The Missouri Administrative Hearing Commission ruled that the penalty assessed by the Department of Revenue could be offset by the amount of over collected taxes remitted to the Department of Revenue by the taxpayer. Considering that the taxpayer had previously remitted the entire amount of taxes over collected, the result was a 'wash' and no further payment by the taxpayer was required.
- Medicine Shoppe International, Inc. v. Director of Revenue. 2005 WL 147585 Mo., 2005. Jan 25, 2005. The Missouri Supreme Court, looking at different years and different issues than were involved in the earlier case, held that income from temporary investments of excess cash is not Missouri source income and is not subject to taxation in Missouri under the Missouri single-factor formula.
- UMB Bank, n.a. v. The City of Kansas City, Missouri, 121 S.W.3d 320 (W.D.Mo 2003). The Missouri Court of Appeals ruled that a City regulation imposing a restriction on taxpayers was contrary to Missouri law and was invalid and unenforceable. The case was remanded to the Circuit Court of Jackson County, Missouri, and the Circuit Court determined that the business expenses were "necessary expenses of operation" and issued a judgment in favor of the taxpayer.
- Medicine Shoppe International, Inc. v. Director of Revenue. 76 S.W.3d 731 (Mo. S. Ct. 2002). The Missouri Supreme Court affirmed the rule that income from some passive investment sources is not subject to taxation in Missouri, but held that income from loans to franchisees did not meet this exemption.
- Kansas City Power & Light Company v. Director of Revenue. 83 S.W.3d 548 (Mo. S. Ct. 2002). The Missouri Supreme Court ruled in a leading case involving intangible property that electricity is resold to hotel customers and is, therefore, not subject to sales tax when purchased by hotels.
- Judy Tillis et al. v. City of Branson, Missouri. 945 S.W.2d 447 (Mo. S.Ct. 1997); 975 S.W.2d 949 (Mo. App. 1998). Local tourism sales tax was held to be unconstitutional by the Supreme Court, but refunds of taxes collected by vendors were not granted by the Court of Appeals.
- Galamet v. Director of Revenue. 915 S.W.2d 331 (Mo. S. Ct. en banc 1996). Recycling equipment was held to be exempt from sales taxes.
- Dean Machinery v. Director of Revenue. 918 S.W.2d 244 (Mo. en banc 1996). Replacement parts were held to be exempt from sales taxes.
- Hyde Park Housing Partnership v. Department of Revenue. 850 S.W.2d 82 (Mo. S.Ct. en banc 1993). Apartment buildings were held to be exempt from sales taxes on electricity utility charges.
- Gannett, Inc. v. Department of Revenue. Appealed to Administrative Hearing Commission (1990). Settled by stipulation of parties, the Missouri General Assembly adopted Sections 143.903 and 144.220.4 to authorize the settlement of taxes assessed for prior years and to provide that an assessment for future years is barred if there is an "unexpected" position taken by the Department of Revenue.
- Hackman v. Department of Revenue. 771 S.W.2d 77 (Mo. S.Ct. en banc 1989). Refunds were granted to taxpayers of income taxes paid on military retirement benefits.
- Nance v. State Tax Commission of Missouri. 18 S.W. 3d 611 (W.D.Mo. 2000). The Missouri Court of Appeals affirmed the rule that the assessed value of property is determined by valuing the fee interest and the leasehold interest separately and upheld the Commission's determination of value.
- In the Matter of the Equalization Appeals of Prairie Commons Lawrence, LP. (Ks BOTA 1999). The Board of Tax Appeals ruled that the assessed value of apartments rented to the elderly and to low-income persons was excessive and ordered the value reduced for property tax purposes.
- In the Matter of the Application of Auction Marketing Institute (Ks BOTA 1999). The Kansas Board of Tax Appeals ruled that a nonprofit organization that provides continuing education courses for professional auctioneers is an educational organization exempt from ad valorem taxation.
- Dean Machinery v. Johnson County, Kansas (Ks BOTA 1998). The Kansas Board of Tax Appeals ruled that equipment leased to customers is exempt from personal property taxes. The case was not appealed by the County.
- Kansas Tax Statutes Amended. Successful in changing provisions in the Kansas statutes that permitted counties to impose an intangibles tax on "money, notes and other evidence of debt" of taxpayers. The provision was repealed by the legislature in 1995 as a result of Polsinelli’s efforts.
- McLane Western, Inc. v. Colorado Department of Revenue, 126 P.3d 21 (Colo. 2005), cert. denied 127 S.Ct. 42 (2006). Represented a taxpayer organization, the Institute for Professionals in Taxation (IPT), in filing an amicus curiae (friend of the court) brief in support of the taxpayer in the U.S. Supreme Court. The constitutional issues presented to the Supreme Court included whether the treatment of the taxpayer by Colorado was in violation of the U.S. Constitution, where an in-state distributor of tobacco products is treated differently than out-of-state or foreign distributors with respect to the state excise tax on tobacco products. The Supreme Court did not accept the appeal of the case, so the decision of the Colorado Supreme Court was upheld.