Wisconsin court refuses to refund airlines’ property taxes
MADISON, Wis. (AP) — A state appeals court refused Tuesday to refund $4.2 million that two airlines paid in Wisconsin property taxes.
Wisconsin law grants property tax exemptions for airlines that operate as so-called hub facilities. Airlines must fly at least 45 departing flights every weekday to qualify as a hub facility.
Southwest Airlines Co. and Air Tran Airways Inc. merged in 2011, although AirTran continued flying under its own name until the end of 2014. The two airlines filed separate tax assessment reports with the state Department of Revenue for 2013 and 2014. The agency uses the reports to assess the airlines’ total property value and what percentage of that value is located within Wisconsin.
Neither airline sought the exemption in the 2013 and 2014 assessments.
The Department of Revenue later audited both airlines, launching a review of Southwest in 2014 and of AirTran in 2016. While going through the audits, the airlines reviewed flight data and came to believe that together they had enough departing flights to qualify for the exemption for tax years 2013 and 2014. They asked the department to refund the $4.2 million they had collectively paid for those tax years. The department refused, prompting the airlines to sue in 2017.
Dane County Circuit Judge Richard Niess refused to grant the refund, finding that the airlines didn’t fly enough departing flights to qualify for the exemption.
The airlines conceded that they didn’t meet the minimum number of departing flights on six days in 2012 but said the shortfall was due to holidays and bad weather. They argued that they met the flight minimum for the second year based on the average number of department flights scheduled.
They maintained that they substantially satisfied the criteria for the exemption based on the “strict but reasonable” interpretation of tax exemption statutes. That doctrine states that courts are allowed leeway when interpreting the statutes.
The 1st District Court of Appeals disagreed. The court found that state law plainly says an airline has to physically fly 45 departing flights daily to qualify for the exemption. The statutes don’t provide exceptions for holidays or bad weather and don’t allow using the average number of flights or the number of scheduled flights in the calculations.
The airlines’ attorney, listed in court documents as Douglas Pessefall, had no immediate comment.