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Wayne County School District v. Morgan

Supreme Court of Mississippi

March 16, 2017

WAYNE COUNTY SCHOOL DISTRICT
v.
J. ED MORGAN, IN HIS OFFICIAL CAPACITY AS THE COMMISSIONER OF REVENUE OF THE MISSISSIPPI DEPARTMENT OF REVENUE

          DATE OF JUDGMENT: 08/04/2015

         WAYNE COUNTY CHANCERY COURT TRIAL JUDGE: HON. FRANKLIN C. McKENZIE, JR.

          ATTORNEYS FOR APPELLANT: C. TED SANDERSON, JR. LESLIE BOUNDS CHARLES WEIL GOLDBERG, JR.

          ATTORNEYS FOR APPELLEE: JAMES L. POWELL SYLVIE D. ROBINSON

          BEFORE RANDOLPH, P.J., KING AND BEAM, JJ.

          RANDOLPH, PRESIDING JUSTICE.

         ¶1. After this Court held in Jones County School District v. Mississippi Department of Revenue, 111 So.3d 588 (Miss. 2013), that a school district was not liable for oil and gas severance taxes on royalties derived from oil and gas production on sixteenth-section land, the Chancery Court of Wayne County held that Wayne County School District (WCSD) was owed interest by the Mississippi Department of Revenue (MDOR) on its overpayment of severance taxes at the rate of one percent (1%) per month. The chancellor determined, based on Section 27-65-53 of the Mississippi Code, that the payment should start on June 5, 2013, ninety days after this Court's ruling in Jones County. Finding that the chancellor correctly applied the statute, we affirm the judgment of the chancery court.

         STATEMENT OF FACTS AND PROCEEDINGS BELOW

         ¶2. On October 7, 2008, WCSD filed a claim for refund of severance taxes paid to MDOR on oil and gas production from sixteenth-section lands located within the county. WCSD supplemented its claim on June 7, 2011, and on April 10, 2013, for a total refund claim in the amount of $2, 345, 560. MDOR denied WCSD's initial claim for a refund, arguing that no express exemption from taxation was provided for school districts and sixteenth-section lands in the oil and natural gas severance tax statutes of the Mississippi Code.

         ¶3. While WCSD's refund claim was pending, the Jones County School District (JCSD) filed suit against MDOR, after it was denied a similar refund request. On May 5, 2011, the chancery court entered its Final Judgment, reversing MDOR's denial of refund claims to JCSD. On March 7, 2013, this Court issued its opinion finding that school districts were not liable for oil and gas severance taxes on sixteenth-section royalty interests. Jones County Sch. Dist. v. Dep't of Revenue, 111 So.3d 588, 605 (Miss. 2013). This Court also held that no statutes of limitation applied to the school district's refund claims. Id. at 607.

         ¶4. Following this Court's holding, MDOR agreed to pay WCSD's refund claim and began making payments in January 2014. WCSD filed its Complaint for Declaratory Judgment on April 9, 2014, seeking interest on its refund claim at the rate of one percent, beginning ninety days after WCSD filed its application for refund. As of the date of this appeal, MDOR has refunded WCSD $2, 345, 560 for oil and gas severance taxes and $26, 927.02 in interest.

         ¶5. On July 22, 2014, a hearing was held on WCSD's complaint. WCSD argued that Section 27-65-53 of the Mississippi Code mandated that MDOR pay interest beginning ninety days after the application for refund was filed and ending on the date full payment was made. MDOR argued that interest would not begin to accrue until MDOR finalized the amount of refund owed. However, MDOR conceded that the more accurate date would be the date that the Supreme Court made its ruling.

         ¶6. The chancellor held that:

the 90-day time for payment of the refund commenced on the date that the Supreme Court determined that the tax was unlawful. At that point in time, the Department had 90 days to refund to the Wayne County School District the amount of their ...

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