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COA: Ad Valorum Taxes Properly Assessed Against NY Corporation Maintaining Property in NC Half the Year

By Sean E. Andrussier

Today the COA held that a company that maintained property in North Carolina for half the year, had previously declared its principal place of business to be in Pender County, and that employed workers at the site could properly have taxes assessed on the property. The case is In re Amusements Rochester, Inc.

Amusements of Rochester ("ARI") claimed that its its amusement equipment (park rides and the trailers used to keep and transport them) had a tax situs in New York and not Pender County. Pender County assessed ad valorum taxes on the equipment from 2002-2007. The equipment was stored in Pender County for about six months out of the year and was moved around to different states for the rest of the year. ARI was incorporated in New York and claimed to maintain its principal office there. However, ARI listed its Pender County address as its principal place of business on its Certificate of Authority to operate in North Carolina. Further, ARI established maintenance and storage facilities in Pender County, and hired employees to work there. ARI's equipment was assessed at over $24 million for 2002-07, and the Tax Commission affirmed this assessment.

Based on N.C. Gen. Stat. § 105-304(f)(2) (?tangible personal property situated at or commonly used in connection with a business premises hired, occupied, or used by the owner of the personal property...is taxable at the place at which the business premises is situated") and ARI's own admission of its principal place of business, the COA held that ARI statutorily established its "domicile" or business situs in North Carolina. Thus, North Carolina could tax ARI's equipment as long as the same property was not being taxed in another state. ARI presented no evidence that the equipment was taxed anywhere else. The taxpayer has the burden of proving that its tangible personal property acquired a tax situs in another state, and ARI did not present sufficient evidence on this point. The COA further noted that "ARI?s continuous interstate use of its equipment" did not prevent North Carolina from taxing it.

Full post as published by North Carolina Appellate Blog on December 08, 2009 (boomark / email).