American Airlines, Inc. v. State ex rel. Oklahoma Tax Commission

Summary

The Oklahoma Supreme Court reviewed the denial of American Airlines' sales-tax refund claim for electricity and natural gas used at its aircraft maintenance facility during 2006. The Court held that the Services Exemption in 68 O.S. Supp. 2006, § 1357(28), encompasses electricity and natural gas utility services employed in aircraft repair and maintenance, and it reversed and remanded the Oklahoma Tax Commission's order for further proceedings.

Holdings

1. The term "services" in 68 O.S. Supp. 2006, § 1357(28), includes electricity and natural gas utility services employed in aircraft repair and maintenance. American Airlines was therefore entitled to a sales-tax exemption for those utility services purchased and used during 2006.
2. The Services Exemption does not require American Airlines to be the vendor of the services employed in aircraft repair and does not preclude the exemption when the repairs are performed on American Airlines' own aircraft.
3. The 2012 amendment to 68 O.S. § 1357(20) did not eliminate or negate the 2006 Services Exemption for electricity and natural gas utility services.
4. The Court did not decide the appropriate methodology for calculating the amount of the utility-services refund because the Tax Commission had made no specific finding on that issue.

Questions Presented

1. Whether the 2006 Services Exemption in 68 O.S. Supp. 2006, § 1357(28), exempted sales tax paid on electricity and natural gas utility services employed in aircraft repair and maintenance.
2. Whether the Services Exemption required American Airlines to be the vendor of the services or limited the exemption to services used to repair aircraft belonging to others.
3. Whether the 2012 amendment to the Parts Exemption rendered the 2006 interpretation of the Services Exemption impermissible or redundant.
4. What methodology should be used to determine the amount of the utility-services refund.

Disposition

reversed_and_remanded