The Business Court's First Opinion in 2011

I have been puzzling for the last three days on what to write about the Business Court's first opinion of the year, in Technocomm Business Systems, Inc. v. North Carolina Department of Revenue, 2011 NCBC 1.  It involves an opinion about the sales and use tax and whether the taxpayer (Technocomm) was entitled to a refund.

You might be wondering: what is The Business Court doing writing about sales and use taxes?  The answer is that in 2008, the Business Court became the route of review for tax cases decided in the Office of Administrative Hearings by an Administrative Law Judge.  This was the first opinion from the Court acting in its judicial review capacity in a tax case. 

What standard of review applied?  Since it was a question of law, the standard of review was de novo.  That meant that Judge Tennille could "freely substitute [his] own judgment for the [ALJ's] judgment." Op. ¶28.  And he did that.

Who won?  The Department of Revenue or the taxpayer? Judge Tennille  reversed the determination by an ALJ and remanded the case for the ALJ to determine the amount of a tax credit due Technocomm which the DOR had refused to allow.  Along the way, he condemned the Department's position as "harsh at best and potentially fatal at worst." Op. ¶25 

Read this article in its entirety on North Carolina Business Litigation Report, a blog for lawyers focusing on issues of North Carolina business law and the day-to-day practice of business litigation in North Carolina courts.