Eunice Prevails in Lawsuit Over Tax Refunds

euniceThe City of Eunice has prevailed in a years-long lawsuit against the Taxation and Revenue Department over erroneous gross receipts tax distributions. The State Supreme Court refused to hear an appeal from an Appeals Court ruling in favor of Eunice, thus ending the legal battle.

In 2013, the Taxation and Revenue Department notified the City that the Department had overpaid Eunice’s gross receipts tax distributions by $2.3 million and wanted the City to return the money. The overpayment was made by a subcontractor for the URENCO  USA nuclear facility. The subcontractor collected the taxes as if it was located within the municipal boundaries and sent the money to Taxation and Revenue. The company later filed for a refund and that’s when the Department told the City they owed the money back.

The City contended the mistake was the Department’s and the taxpayer’s fault and not the city’s. Another argument contended the City, by law, is not privy to taxpayer information and could not have caught any mistake. The Department relied on a specific state statute concerning refunds.

“The Department said that for the section to apply, the error had to be made by the Department,” said League Executive Director William Fulginiti. “We said, ‘No, it doesn’t say that. It says that it applies if there is an erroneous distribution.’ Our opinion was that section should have applied.” Fulginiti helped write that particular section of the tax code several years ago.

Economic implications of having to refund the money were enormous. Mayor Matt White said there would have to be layoffs of between 25 to 30 percent of the municipality’s employees.

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