Statutory Interpretation – Sales Tax

WI Court of Appeals – District I

Case Name: Citation Partners, LLC, v. Wisconsin Department of Revenue

Case No.: 2020AP1683

Officials: Donald, P.J., Dugan and White, JJ.

Focus: Statutory Interpretation – Sales Tax

Citation Partners, LLC is in the business of leasing aircraft. At issue in this case is whether the total amount paid for an aircraft lease is subject to sales tax, or, if portions of a lease payment attributed to aircraft maintenance and engine maintenance are statutorily exempt from sales tax. The Tax Appeals Commission agreed with the Wisconsin Department of Revenue that sales tax applies to the total amount paid on a lease. The circuit court, however, reversed the Commission’s decision and found that portions of a lease payment for aircraft maintenance and engine maintenance are exempt from sales tax.

As discussed below, based on the plain language of the statutes and the particular facts of this case, we conclude that the total amount paid on a lease is subject to sales tax without any deductions for aircraft maintenance or engine maintenance. Sales tax cannot be avoided by dividing up a lease price into categories or affixing labels. We therefore reverse the circuit court’s orders and remand with instructions to affirm the Commission’s decision.

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Derek A Hawkins is Corporate Counsel, at Salesforce.