In re Allcat Claims Service, L.P. and John Weakly

Summary

The Texas Supreme Court considers a mandamus petition challenging Texas franchise taxes paid by a limited partnership and attributable to income allocated but not distributed to natural-person partners. The Court holds that the franchise tax is not facially a tax on the net incomes of individual partners under Article VIII, Section 24 of the Texas Constitution, and that it lacks jurisdiction over the equal-and-uniform taxation challenge.

Holdings

1. Section 24 of the 2006 franchise-tax Act validly conferred limited original and exclusive jurisdiction on the Supreme Court of Texas to consider a constitutional challenge to the Act in determining whether mandamus relief should issue.
2. The Texas franchise tax is imposed on the limited partnership as an entity, not on the net income of its natural-person partners, and therefore does not facially violate Article VIII, Section 24 of the Texas Constitution.
3. The Supreme Court of Texas lacked original jurisdiction over Allcat's as-applied challenge to the Comptroller's assessment, enforcement, and collection of the franchise tax.
4. The Supreme Court lacked jurisdiction over Allcat's claim for attorney's fees under the Declaratory Judgments Act.

Questions Presented

1. Whether the Supreme Court of Texas had original jurisdiction over Allcat's facial challenge to the constitutionality of the franchise-tax amendments.
2. Whether the Texas franchise tax, as applied to a limited partnership's income retained by the partnership, is a tax on the net incomes of the partnership's natural-person partners under Article VIII, Section 24 of the Texas Constitution.
3. Whether the Supreme Court of Texas had original jurisdiction over Allcat's as-applied challenge alleging unequal and nonuniform taxation based on the Comptroller's interpretation and enforcement of the franchise-tax statutes.
4. Whether the Supreme Court had jurisdiction to award attorney's fees under the Declaratory Judgments Act.

Disposition

other