Etter v. Department of Revenue
360 Or. 46
| Or. | 2016Background
- Taxpayer (Washington resident) worked as an aircraft dispatcher for Horizon Air at its Portland operations center; primary duties were ground-based dispatching in Oregon.
- FAA regulation (14 C.F.R. § 121.463) required dispatchers to complete at least 5 hours annually of in-flight observation per airplane group; taxpayer performed two such flights in 2000 (≈10 hours), paid by employer.
- Taxpayer sought an Oregon income tax refund for 2000, claiming exemption under 49 U.S.C. § 40116(f)(2) for air carrier employees with “regularly assigned duties on aircraft in at least 2 States.”
- The Department of Revenue denied the refund; the Magistrate Division and then the Tax Court granted summary judgment for the Department.
- The Tax Court concluded taxpayer’s observational flights were infrequent, de minimis, and not “regularly assigned duties” across states; Oregon Supreme Court reviews the Tax Court’s summary judgment ruling.
Issues
| Issue | Plaintiff's Argument (Etter) | Defendant's Argument (Dept. of Rev.) | Held |
|---|---|---|---|
| Whether taxpayer is an “employee of an air carrier having regularly assigned duties on aircraft in at least 2 States” under 49 U.S.C. § 40116(f)(2) | “Regularly” requires only recurring assignment at flexible intervals; two required observation flights/year suffice. | “Regularly” requires duties that are normal, typical, routine, or scheduled; brief, infrequent observation flights are de minimis and not regularly assigned. | Held for Dept. of Rev.: observational flights (≈10 hrs, ~0.5% of annual hours) are not regularly assigned duties; no exemption. |
| If statute applied, whether Oregon could still tax because taxpayer earned >50% of pay in Oregon | (Alternate) Counts only scheduled flight time for 50% calculation; might preclude Oregon taxing. | Oregon may tax if taxpayer’s earnings are derived from work performed in Oregon; 50% test not reached. | Court did not decide this issue because taxpayer failed the “regularly assigned duties” threshold. |
Key Cases Cited
- Dept. of Revenue of Or. v. ACF Industries, 510 U.S. 332 (1994) (federal-law interpretation governs federal tax statutes)
- State v. Sarich, 352 Or. 601 (2012) (consider state-law consistency before federal when appropriate)
- Julian v. Dept. of Rev., 339 Or. 232 (2005) (federal law governs interpretation of federal tax statutes)
- Kohring v. Ballard, 355 Or. 297 (2014) (word usage context guides statutory meaning; “regular” has dual senses)
- Burkhart v. Farmers Ins. Co., 144 Or. App. 594 (1996) (distinguishes qualitative vs. quantitative senses of “regular”)
- Fink v. Commissioner of Revenue, 71 Mass. App. Ct. 677 (2008) (interpreting analogous railroad-employee regular-duty language; considered but not persuasive)