S-20-0518 Big Blue Express, Inc. (Appellant) v. Nebraska Department of Revenue; Tony Fulton, Nebraska Tax Commissioner and the State of Nebraska
Lancaster County District Court, Hon. Kevin R. McManaman
Attorneys: Matthew R. Ottemann (McGrath North Mullin & Kratz, PC LLO, for Appellant) – L. Jay Bartel (Office of the Attorney General, for Appellees/Cross-Appellants)
Civil: Notice of deficiency determination; Nebraska use tax
Proceedings Below: In an order dated July 1, 2020, the district court found as follows: 1) that Neb. Rev. Stat. 77-2704.28 did not disqualify the purchase of property from qualifying as a sale for resale transaction; 2) that Appellant’s purchase of the Airplane did not qualify as a nontaxable sale for resale transaction under Neb. Rev. Stat. 77-2701.34 because that purchase did not meet the statutory requirements to constitute a sale for resale transaction; and 3) that Appellant was not entitled to a credit for the Nebraska sales tax paid by lessees of the Airplane under the doctrine of “equitable recoupment,” and thus, affirmed the Notice as issued.
Issues on Appeal: Appellant asserts that the district court erred in its July 1, 2020 order when it concluded that 1) Appellant’s purchase of the Airplane did not qualify as a nontaxable sale for resale transaction under Neb. Rev. Stat. 77-2701.34 because that purchase did not meet all statutory requirements to constitute a nontaxable sale for resale transaction; 2) Appellant did not purchase the Airplane for the purpose of reselling it in the normal course of its “business” as that term is defined under Nebraska law; 3) Appellant did not purchase the airplane with the object of gain, benefit or advantage under Neb. Rev. Stat. 77-2701.07; 4) Appellant did not purchase the Airplane for the sole purpose in renting the Airplane to others at a fair market value; and 5) Appellant was not entitled to a credit for the Nebraska sales tax paid by any lessees of the Airplane under the doctrine of “equitable recoupment.”
Issues on Cross-Appeal: Appellees/Cross-Appellants assert that 1) the district court erred in concluding that a sale for resale is not subject to use tax even if the purchaser later leases the property to a related company; and 2) where property is purchased and leased to a related company, Neb. Rev. Stat. 77-2704.28 provided that the lessor does not qualify for any exemptions from sales and use tax other than those that can be claimed by the lessee had the lessee purchased the property directly.