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."
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North Carolina business law and the day-to-day practice of business litigation
in North Carolina courts.