Jones County School District v. Mississippi Department of Revenue
111 So. 3d 588
Miss.2013Background
- Sixteenth-section lands are trust lands held for township schools; the State holds title and delegates management to local school boards as trustees.
- Jones County School District leased sixteenth-section land to Venture Oil & Gas with a one-eighth royalty; Venture withheld the district’s severance taxes from royalties and remitted them.
- In 2006, AG opinions concluded school-district royalties on sixteenth-section lands were not subject to severance taxes; refund requests were filed for taxes and for maintenance-related administrative-expense taxes.
- The Department of Revenue denied severance-tax refunds; the Oil and Gas Board initially granted, then denied, refunds for maintenance taxes.
- Chancery Court found: (1) severance taxes were not owed by the district, (2) severance taxes were to be treated as fees (administrative expenses) rather than taxes, and (3) ordered refunds and enjoined collection; supplemental ruling limited refund period by a three-year statute of limitations; final judgment was appealed by multiple parties.
- The CourtAffirmed in part, reversed in part: severance taxes on sixteenth-section royalties are not owed by the district; administrative-expense taxes are fees and payable; remanded to consider waiver/estoppel defenses on refunds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether severance taxes apply to sixteenth-section royalties | Jones County argued districts should pay taxes as producers; district seeks refund under prior opinions. | DOR and Oil & Gas Board argued taxes are owed by producers through statutory scheme. | District not liable for severance taxes on sixteenth-section royalties. |
| Whether statute of limitations limits refund claims | Constitutional immunity (Art. IV, §104); possible waiver/estoppel. | State-subdivision disputes governed by standard limitations; state-created rule controls. | Three-year statute applies; waiver/estoppel to be considered on remand. |
| Whether administrative-expense taxes apply to the district | Fees should be regulated as part of trust expenses; district should not pay taxes. | Fees support Oil & Gas Board operations; state/subdivisions may be subject to fees. | District liable for administrative-expense taxes; those are fees, not taxes, but expressly applicable to state/subdivisions. |
Key Cases Cited
- Papasan v. Allain, 478 U.S. 265 (U.S. 1986) (trust/land questions; historical basis for school lands)
- California Co. v. State of Mississippi, 74 So.2d 856 (Miss. 1954) (severance tax levied on royalty owners; tax in first instance on owners)
- Lipscomb v. Columbus Mun. Separate Sch. Dist., 269 F.3d 494 (5th Cir. 2001) (federal perspective on sixteenth-section trusts)
- Hill v. Thompson, 564 So.2d 1 (Miss. 1989) (trust status of sixteenth-section lands)
- Turney v. Marion County Bd. of Educ., 481 So.2d 770 (Miss. 1985) (trust administration of sixteenth-section lands)
- Town of Crenshaw v. Panola County, 115 Miss. 891, 76 So. 741 (Miss. 1917) (Section 104 limitations in intergovernmental claims)