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Tax

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Overview

Stoll Keenon Ogden's Tax practice advises businesses and individuals on all aspects of local, state and federal taxation, including tax planning, audits, administrative hearings and trials.

Our seasoned attorneys are dedicated to the individual needs of each client, and we work as a team to resolve the often complicated and intimidating tax issues that individuals and businesses face. Several of our tax attorneys have been recognized by The Best Lawyers in America for Tax Law.

We regularly assist clients with:

  • Corporate and individual income taxes
  • Sales and use taxes
  • Property taxes
  • Tobacco excise taxes
  • Insurance premium taxes
  • Natural resource severance taxes
  • License taxes
  • Motor vehicle and real estate transfer taxes
  • Utility gross receipts license taxes
  • Occupational license taxes
  • Lodging taxes
  • Motor & special fuel taxes
  • Section 1031 exchanges
  • Section 1033 tax-deferred condemnations/involuntary conversions
  • ESOP stock purchase transactions
  • Legislative & regulatory changes
  • Tax credits, exemptions and incentives
  • New Markets Tax Credit (NMTC) program
  • Community Development Entity (CDE) certification
  • Incentive planning

Work Highlights

Tax Planning

Represented two major ophthalmology practices in the sale of their Kentucky and Indiana-based practices and associated ambulatory surgery centers to another business based in Missouri. The first $33 million transaction was structured as an asset purchase and the second $30 million transition was structured as a stock purchase.

Related Practices: Business Services, Tax, Healthcare

Property Tax

Successfully represented several coal companies in an appeal of personal property tax assessment thereby reducing their taxes due by $4 million.

Successful resolution in 2016 of litigation before Kentucky Claims Commission  reducing real property tax assessments issued to thoroughbred race track.

Successful resolution in 2016 of tangible personal property tax assessments issued by Kentucky Department of Revenue on computer software and equipment.

Worked with the Kentucky Department of Revenue in 2016 and the landfill industry regarding repeal of the public service company tax on landfills and enactment of a new landfill property tax statutory and regulatory scheme.

Related Practices: Tax

Property Tax

Successfully resolved tangible property tax litigation before the Kentucky Claims Commission for a telecommunications company in 2017.

Related Practices: Tax

Coal Severance Tax

Successful resolution in 2017 of coal severance tax assessments issued by Kentucky Department of Revenue against coal company.

Related Practices: Tax

Public Service Company Tax

Successful resolution in 2016 of litigation before Kentucky Board of Tax Appeals reducing public service company tax assessments issued to landfill companies.

Related Practices: Tax

Limited Liability Entity Tax

Successfully defended client against limited liability entity tax assessment resulting in assessment being set aside.

Related Practices: Tax

Income Tax

Successfully defended audit assessments of corporation income tax resulting in $500,000 refund for client.

Related Practices: Tax

Sales and Use Tax

Successfully defended clients against sales and use tax audit assessments saving clients in excess of $3 million.

Related Practices: Tax

Property Tax

Assisted taxpayer in obtaining multi-million dollar reduction in local property taxes.

Related Practices: Tax

Municipal Law

Berger Family Real Estate, LLC v. City of Covington, et al., 464 S.W.3d 160 (Ky. App. 2015). Holding that the City of Covington, Kentucky’s decision to circulate a petition to form a management decision was not actionable until the requisite signatures were obtained and the City acted on the petition.

Related Practices: Tax

Library Taxing Districts

Campbell County Library Board of Trustees v. Charlie Coleman, et al; Kenton County Library Board of Trustees v. Garth Kuhhein, 475 S.W.3d 40 (Ky. App. 2015); (separate cases decided together) Holding library districts formed by petition when setting ad valorem (property) tax rates are governed by H.B. 44 but are limited by KRS 173.790 if they seek to set a rate that will raise revenue by more than four percent over the prior year.

Related Practices: Tax

Sales and Use Tax

Negotiated settlement in sales tax protest for chemical company reducing assessment by several millions of dollars.

Successful resolution  in 2015 of litigation before Kentucky Board of Tax Appeals reducing assessments imposed upon purchases of computer software used in the electric utility industry.

Successful resolution in 2016 of litigation  before Kentucky Board of Tax Appeals reducing assessments against telecommunications companies by over $3 million.

Successful resolution in 2016 of assessments issued by Kentucky Department of Revenue against telecommunications companies by $17.5 million.

Related Practices: Tax

Prepaid Wireless Service Charges

Virgin Mobile USA, L.P. v. Commonwealth of Kentucky ex rel. Commercial Mobile Radio Service Emergency Telecommunications Board v. Virgin Mobile USA, L.P., 448 S.W.3d 241 (Ky. 2014) Holding that CMRS service charges did not apply to prepaid wireless telecommunications prior to July 2006.

Related Practices: Tax

Deduction of Foreign Dividends

Caterpillar Inc. v. Indiana Dept. of State Revenue, 15 N.E.3d 1269 (Ind. 2014). Holding that Ind. Code § 6-3-2-12 did not authorize Caterpillar to deduct foreign dividends when calculating a net operating loss and such denial did not violate the dormant Commerce Clause of the U.S. Constitution.

Related Practices: Tax

Reorganization, Refinancing and Acquisition of Major Healthcare Entity

Stoll Keenon Ogden represented a major healthcare services entity, its affiliated upstream and sister companies, its owners and its founding management team in comprehensive reorganization, refinancing and acquisition transactions totaling more than $300 million. The matters resulted in the closing of a senior secured term loan and  revolving credit facilities secured by owned senior care facilities in four states with a 9-member syndicate of commercial banks; the requisition of waivers, consents and estoppels from various property lessors on leased senior care facilities in four states; restructuring of upstream holding companies and combination of two upstream ownership groups and boards of managers; the creation of a management company; the introduction of healthcare facility management agreements; the migration of payroll and benefits for more than 7,000 employees; the related restructuring of multiple lease and debt financing and supplier relationships;  the creation and reorganization of multiple SPE organizations accompanied by extensive non-consolidation analysis and issuance of a substantive non-consolidation opinion to the lending syndicate; the exercise of purchase option and acquisition of multiple senior care facilities; the contribution of additional equity capital from the client’s majority owners; and the amendment and restructuring of multiple Master Lease and inter-creditor agreements.

Presumptive Abandonment Period

American Express Travel Related Services Company, Inc. v. Commonwealth of Kentucky, Kentucky Department of Treasury, et al., 730 F.3d 628 (6th Cir. 2013) Holding that the provisions of the 2008-2010 Executive Branch Budget Bill and subsequent legislation purporting to reduce the presumptive abandonment period for traveler’s checks from 15 years to seven years applied only to checks issued after their enactment but did not violate the Commerce Clause of the U.S. Constitution.

Related Practices: Tax

Personal Property Tax Protest

Department of Revenue, Finance and Administration Cabinet v. Cox Interior, Inc., 400 S.W.3d 240 (Ky. 2013) Holding that a taxpayer’s failure to protest the Department of Revenue’s assessment of tangible personal property taxes does not bar a taxpayer from later seeking a refund of overpaid taxes pursuant to KRS 134.590 (amicus curiae participation).

Related Practices: Tax

Open Records Act Requirements

Dept. of Revenue v. Timothy J. Eifler, 436 S.W.3d 530 (Ky. App. 2013) Holding the Department of Revenue was required by the Kentucky Open Records Act to disclose the names, addresses and dates of registration of all taxpayers registered for the utility gross receipts license tax for schools and rejecting claim that such disclosure is protected by the taxpayer confidentiality provisions of KRS 61.878(1)(l),  131.190(1)(a) and 131.081(15).

Related Practices: Tax

IRS Audit of Estate Tax Return- Family Limited Partnership-Graegin Loan

Represented a multi-million dollar estate in an Internal Revenue Service audit of the Federal estate tax return and a family limited partnership structure. Successfully defended the validity of the family limited partnership, obtained a significant valuation discount and successfully used a Graegin loan to finance the payment of the Federal estate tax.

Related Practices: Business Services, Tax

Reorganization of Equine Business, Insurance Trust and Gift Planning

Represented a husband and wife in planning and implementing the reorganization of a multi-million dollar equine business; in the preparation of multi-generation irrevocable trusts for each of the children and the gifting of interests in the equine business on a discounted basis to the trusts; in planning and implementing a multi-million dollar life insurance trust; and in preparing and implementing a beneficiary defective irrevocable dynasty trust.

Related Practices: Business Services, Tax

Trust Reformations- Delaware Directed Trusts

Represented a corporate trustee in amending multiple 1950s trusts to be directed trusts, transferring administration of the trusts to Delaware and obtaining a private letter ruling from the Internal Revenue Service to confirm the continuing applicability of the generation-skipping tax grandfathered exempt status of the trusts.

Related Practices: Tax

Local Hotel Taxes

Successfully defended online travel companies in litigation by three local governments seeking to collect local hotel taxes. Louisville/Jefferson County Metro Govt., Lexington-Fayette Urban County Govt., et al. v. Hotels.com, L.P., et al., 590 F.3d 381 (6th Cir., 2009).

Related Practices: Tax, Class Action

Utility Gross Receipts License Tax

Successfully represented a provider of utility services in an appeal of a utility gross receipts license tax assessment that reduced their liability by $2.5 million.

Related Practices: Tax

Income Tax

Successfully represented taxpayer in refund suit based on unitary income tax filing.

Related Practices: Tax

Sales and Use Tax

Successfully defended an auto parts manufacturer in a sales and use tax audit that saved the company in excess of $5 million.

Related Practices: Tax

Planning

Advised client with respect to like-kind exchanges of multiple properties under Section 1031 of the Internal Revenue Code involving exchange proceeds in excess of $17 million.

Related Practices: Tax

Incentives

Successfully negotiated and implemented incentive packages for a variety of projects involving state income and local occupational tax credits and wage assessments under the Kentucky Business Investment Act program; sales and use tax refunds under the Kentucky Enterprise Initiative Act and Tourism Development Act programs; an up to 30-year state and local ad valorem (property) tax abatement; state grants under the Economic Development Bond and Community Development Block Grant programs; local grants of developable land and credits and power purchase credits and grants from the Tennessee Valley Authority.

Sample projects include the following:

  • Two $19 million hydroponic greenhouse facilities.
  • $35 million bourbon distillery and related visitors’ center.
  • $120 million bourbon maturation warehouse project.
  • $60 million bourbon distillery expansion and related visitors’ center.
  • $123 million tobacco manufacturing and processing facility.
  • $193 million cast iron foundry facility.
  • $120 million steel manufacturing plant.
  • Multiple $50+ million distribution center projects.
Related Practices: Tax

Class Action, Telecommunications and Consumer Protection

SKO acted as counsel for a 175,000-member plaintiff class in U.S. District Court to challenge sales tax collection on broadband Internet access services provided by incumbent local exchange carrier. The Court approved settlement agreement in August 2007 that provided class members full refunds of overpayments plus interest, totaling $8.2 million. Clark v. BellSouth Telecommunications, Inc., 461 F.Supp.2d 541 (W.D. Ky. 2006).

Purchase of Gas/Food Marts

Represented an oil company in the purchase of the assets and business of six gas and food mart locations. 

Mergers & Acquisitions

We have represented a number of clients in the acquisition of thoroughbred farms and related membership interests, including verification of environmental data and private development rights.

Estate Planning & Administration

SKO administers the estates of notable horsewomen and horsemen and is actively involved in planning estates in the shifting economic climate.

Hotel Tax of Online Travel Company

City of Bowling Green  v. Hotels.com, L.P., et al., 357 S.W.3d 531 (Ky.App. 2011) Holding that the City of Bowling Green, Kentucky’s local transient room license taxes did not apply to online travel companies.

Louisville/Jefferson County Metro Govt., Lexington-Fayette Urban County Government et al. v. Hotels.com, L.P., et al., 590 F.3d 381 (6th Cir., Dec. 22, 2009) (Holding that Kentucky local transient room license taxes did not apply to online travel companies and upholding dismissal of putative class action by Metro Government and LFUCG, on behalf of themselves and a class consisting of all local Kentucky governments levying transient room taxes).

Related Practices: Tax

Municipal Property Tax Litigation

St. Matthews Fire Protection District v. John Aubrey, Sheriff, et al., 204 S.W.3d 56 (Ky.App. 2009), disc. rev. den. (2010)
Obtained a ruling that applies the doctrine of sovereign immunity to sheriffs and county clerks in action for failure to properly assess and collect ad valorem (property) taxes.

Eric P. Light, et al. v. City of Louisville, 248 S.W.3d 559 (2008)
Determined the statutory time requirements governing adoption of local ad valorem (property) tax rates.

City of Somerset v. Bell et al., 156 S.W.3d 321 (Ky.App. 2005)
Holding that taxpayers may bring a class action to obtain ad valorem (property) tax refunds.

City of Bromley v. Smith et al., 149 S.W.3d 403 (2004)
Holding that taxpayers may bring a class action to obtain Kentucky specific property tax refunds under common law).

 

Related Practices: Tax

Occupational Tax Litigation

Paradise Tomato Kitchens, Inc. v. Louisville/Jefferson County Metro Revenue Commission, et al., Ky. Court of Appeals Action No. 2007-CA-000965 (June 30, 2008), disc. rev. den. and ordered de-published (2008)

Determined the extent of right to refund of overpaid local occupational license taxes under common law.

Related Practices: Tax

Amicus Curiae

Barney Jones, et al. v. Jason H. Cross, et al., 260 S.W.3d 343 (Ky. 2008)
Holding that sovereign immunity otherwise enjoyed by sheriffs has been statutorily waived.

Bob Hook Chevrolet Isuzu, Inc. v. Kentucky Transportation Cabinet, 983 S.W.2d 488 (1998)
Participation in action holding customer courtesy cars could not be registered under a U-Drive-It permit.

Related Practices: Tax

Indiana Corporate Income Tax

Caterpillar Financial Services Corporation v. Indiana Dept. of State Revenue, 849 N.E.2d 1235 (Ind. Tax. 2005)

Expanding scope of taxpayers subject to the Indiana financial institutions tax and exempt from Indiana gross income tax, Indiana adjusted gross income tax and Indiana supplemental net income taxes.

Related Practices: Tax

Sales and Use Tax Litigation

Falls City Limb & Brace Co., Inc. v. Kentucky Revenue Cabinet, Franklin Circuit Court (Div. II) Case No. 02-CI-00644 (2003)

Affirming Ky. Board of Tax Appeals holding charges for materials, repair parts and replacements parts used in re-fitting and repair of prosthetic limbs and other devices exempt from Kentucky sales and use taxes.

Related Practices: Tax

Auto Dealer Usage Tax Litigation

Jim Cooke Buick, Inc. v. Kentucky Transportation Cabinet, KBTA Order No. K-17826 (2000)

Holding Transportation Cabinet cannot remove a vehicle from the U-Drive-It program and assess Kentucky motor vehicle usage tax without first voiding taxpayer’s U-Drive-It permit.

Related Practices: Tax

Representative Engagements

Asworth Corp. v. Commonwealth of Kentucky, Finance and Administration Cabinet, Dep’t of Revenue, Nos. 2007-CA-002549 and 2008-CA-000023 (Ky. App. Nov. 20, 2009), rev. den., No. 2009-SC-000816 (Ky. Aug. 18, 2010), cert. den., No. 10-662 (U.S. Jan. 24, 2011), pet. for reh. den. (U.S. March 21, 2011)(Case of first impression in Kentucky regarding whether non-resident corporate partner without physical presence in Kentucky had nexus for purposes of Kentucky corporate income tax)

Freeman v. St. Andrew Orthodox Church, 294 S.W.3d 425 (Ky. 2009) (First impression case holding that real property owned and occupied by a church is exempt from Property Tax, but leased homes located on the property are subject to Property Tax)

DirecTV, Inc. and EchoStar Satellite, LLC. v. Mark Treesh, Comm’r, 290 S.W.3d 638 (Ky. 2009) (Challenge to extension of utility gross receipts license tax for schools to satellite providers)

Miller v. Johnson Controls, Inc., 296 S.W.3d 392 (Ky. 2009), cert. denied, __ U.S. __, 130 S. Ct. 3324, 176 L. Ed. 2d 1240 (2010) (Despite legislative enactment having retroactive effect of 10-14 years, Kentucky Supreme Court held statute did not violate the Due Process Clause)

BellSouth Telecomms., Inc. v. Farris, 542 F.3d 499, (6th Cir. 2008) (State telecommunications tax statute restricted speech in violation of the First Amendment)

King Drugs, Inc. v. Commonwealth of Kentucky, 250 S.W.3d 643 (Ky. 2008) (Medical equipment supplier entitled to sales tax exemption for purchases of certain equipment and supplies.) Counsel for Amicus Curiae, The Kentucky Medical Equipment Suppliers Association

Revenue Cabinet v. The Babcock and Wilcox Company, 203 S.W.3d 149 (Ky. App. 2005) (Manufacturer’s contingent liability for asbestos claims had to be reduced by amount of claims to be paid by insurance companies in calculating “surplus” for purposes of Kentucky’s corporation license tax)

Caterpillar Financial Services Corporation v. Indiana Dep’t of State Revenue, 849 N.E.2d 1235 (Ind. Tax. 2005) (Expanding scope of taxpayers subject to the Indiana financial institutions tax and exempt from Indiana gross income tax, Indiana adjusted gross income tax and Indiana supplemental net income tax)

Currently litigating a case before the Indiana Tax Court which will address whether Indiana’s adjusted gross income tax statutes denying deduction of foreign-source dividends when calculating net operating loss carryovers, but allowing deduction of U.S.-source dividends, violates the Commerce Clause. Caterpillar, Inc. v. Indiana Dep’t of State Revenue, Indiana Tax Court No. 49T10-0812-TA-70

Currently litigating a case before the Franklin Circuit Court which will address the constitutionality of the prohibition on local franchise fees enacted by the 2005 Kentucky Tax Modernization Act. City of Florence, Kentucky, et al. v. Lori Hudson Flanery, Secretary of the Kentucky Finance and Administration Cabinet, et al., Franklin Circuit Court Action No. 11-CI-1418 (Div. I)

Currently litigating cases before the Kentucky Court of Appeals and the U.S. Court of Appeals for the Sixth Circuit which will address the constitutionality of retroactively shortening the presumed abandonment period for traveler’s checks under Kentucky’s unclaimed property law. Mary Lassiter, Kentucky State Budget Director v. American Express Travel Related Services Company, Inc., Kentucky Court of Appeals Nos. 2007-CA-908 and 2007-CA-973 (pending); American Express Travel Related Services Company, Inc. v. Commonwealth of Kentucky, Dep’t of Treasury, et al., U.S. Court of Appeals for the Sixth Circuit, Appeal No. 12-6249

Currently litigating an adversarial proceeding before the U.S. District Court (M.D. N.C.) which will address the application of the federal excise tax on large cigars to tobacco buy-out assessments collected from customers by manufacturers and importers.  United States of America, Alcohol and Tobacco Tax and Trade Bureau v. Peter L. Tourtellot, Trustee, U.S. District Court (M.D.N.C.), Civil Action No. 1:12-cv-00413 (Bk. No. 09-50141)

Currently litigating cases before the Kentucky Board of Tax Appeals and the Franklin Circuit Court which will address the calculation of base-year Kentucky provider tax payments and the application of the hospital provider tax to federally-exempted hospital receipts. Jewish Hospital & St. Mary’s Healthcare, Inc. v. Commonwealth of Kentucky, Finance and Administration Cabinet, Dep’t of Revenue, KBTA File No. K10-R-13 and Franklin Circuit Court Action No. 201-CI-723 (Div. I) (pending); St. Joseph Health System, Inc. v. Commonwealth of Kentucky, Finance and Administration Cabinet, Dep’t of Revenue, KBTA File No. K12-R-18

Recently filed an amicus curiae brief in a case before the Kentucky Supreme Court which will address the scope of taxpayers’ right to a refund of overpaid state and local ad valorem (property) taxes. Commonwealth of Kentucky, Finance and Administration Cabinet, Dep’t of Revenue v. Cox Interior, Inc., Kentucky Supreme Court Case No. 2010-SC-000794

Industry Involvement

American Bar Association, Section of Taxation

Council on State Taxation, Practitioners Member

Fayette County Bar Association

Institute for Professionals in Taxation

Kentucky Bar Association, Tax Committee

Kentucky Coal Association, Tax Committee

Kentucky Society of CPAs, Tax Committee

Louisville Bar Association, Taxation Section

Ohio/Kentucky Chapter of the ESOP Association

News

Publications

Mar. 2018