Tax Tribunal Issues First Ruling Regarding Scope of Authority of Tax Tribunal Judge

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Chief Judge Bill Thompson of the newly-established Alabama Tax Tribunal ("the Tribunal") issued his first, and a key, ruling involving the scope of his authority when the taxpayer, Stone Bridge Farms of Cullman, Alabama, does not specifically raise a viable argument or defense in its notice of appeal. This raises the question of whether a tax tribunal judge may invalidate an Alabama Department of Revenue (the “Department”) regulation, even though the taxpayer challenging the underlying assessment did not attack the regulation in its pleadings or at the hearing. Stone Bridge Farms, LLC v. State of Alabama Department of Revenue, Ala. Tax Tribunal Docket No. S. 14-510 (January 27, 2015).

The case involves a taxpayer that owns and rents facilities for special events such as weddings, rehearsal dinners, and receptions in rural Cullman County. Initially, the facility included only a wedding chapel, a banquet room, and other buildings. It was undisputed that the rental proceeds from these specific facilities were not subject to the lodgings tax. However, beginning in January 2013, the taxpayer began renting three nearby chalets on the property to overnight guests, typically those involved with a wedding at the adjacent facility. At that point, the taxpayer began filing lodgings tax returns and paying lodgings tax on the chalet rentals.

Originally published in IPT Insider - March 2015.

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