Southwest Airlines Co. v. DOR (Tax Assessment)

In Southwest Airlines Co. v. DOR (2019AP818), the Court of Appeals District I held that Southwest Airlines and AirTran Airways did not meet the statutory requirements to qualify for a “hub facility” exemption from property taxes. The “hub facility” exemption from property taxes exempts air carriers from paying property taxes if they operate at least 45 common carrier departing flights each weekday, among other requirements (Wis. Stat. § 70.11(42)(a)2.a.).

Southwest and AirTran merged in 2011 but filed separate air carrier reports – not seeking the hub facility exemption – to the Wisconsin Department of Revenue (DOR) for their 2013 and 2014 property tax assessments. While undergoing later audits by DOR, the airlines realized that they believed their flight data showed they collectively had met the requirements for the hub facility exemption for the 2013 and 2014 assessments. The airlines filed this lawsuit seeking the amount they paid in property taxes for those years.

The Court of Appeals agreed with DOR that the airlines did not meet the requirements for the hub facility exemption for the 2013 and 2014 assessments. For the 2013 assessment, there were six weekdays where the airlines did not meet the minimum 45 departing flights requirement. The court rejected the airlines’ argument that those shortfalls should not count because they were caused by holidays or bad weather. For the 2014 assessment, the court rejected the airlines’ argument that they had met the minimum 45 flights based on their average number of departing flights. The court said the statute does not provide an exemption for airlines operating an average of 45 flights per weekday.

Because the airlines did not strictly meet the statutory requirements for the hub facility exemption, the court dismissed the airlines’ case.

 

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