T-Mobile USA, Inc. v. Utah State Tax Commission
2011 UT 28
| Utah | 2011Background
- The Utah State Tax Commission assessed T-Mobile's Utah property for 2003 at $124,577,850; the Commission later reassessed to $117,850,000 using a historic cost approach.
- Counties appealed the Commission's decision to the Utah Supreme Court; T-Mobile requested de novo review in the district court acting as a tax court under Utah Code § 59-1-601 et seq.
- During the tax court proceedings, a motion in limine sought to exclude expert J. Phillip Cook; the court ultimately allowed portions of his testimony and disregarded the Utah-only unit valuation.
- The tax court found most appraisals flawed and relied on two non-erroneous appraisals—Cook's historic cost valuation and Eyre's reworking excluding goodwill—averaging to a value of $74,750,000.
- The court held that accounting goodwill is intangible property exempt from taxation under the Utah Constitution, and it did not defer to the Division's or Commission's prior assessments; the court admitted expert testimony and devised its own valuation approach.
- The Counties and the Commission appeal, challenging the standard of review, the exclusion of goodwill, the admissibility of testimony, and the final valuation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review and burden of proof | T-Mobile: de novo review with no deference; prove value by preponderance. | Counties/Commission: keep some deference and require substantial error. | Tax court properly used de novo review and required preponderance |
| Tax treatment of accounting goodwill | Goodwill should be taxed as property or considered under enhancement value. | Goodwill is either not taxable as property or not taxable as enhancement value. | Goodwill is not taxable as property; exempt under the Utah Constitution |
| Admission of expert testimony | Cook's testimony should be admissible; his unitary experience supports valuation. | Cook lacked sufficient unitary-appraisal qualifications and used improper units. | Tax court did not abuse discretion; Cook qualified and his testimony largely admissible |
| Valuation methodology and final value | Use accepted valuation methods; rely on credible appraisals; unitary method may be appropriate. | Division/Commission valuations or unitary methods should guide final value. | Tax court did not err; averaging credible cost-based valuations within statutory authority |
Key Cases Cited
- Salt Lake City S. R.R. Co. v. Utah State Tax Comm'n, 1999 UT 90 (Utah 1999) (defines intangible property and unitary valuation context)
- Beaver Cnty. v. WilTel, Inc., 2000 UT 29 (Utah 2000) (limits on enhancement value; discusses unitary method and intangible exclusions)
- WilTel, Inc. v. Utah State Tax Comm'n, 2000 UT 29 (Utah 2000) (unitary valuation and treatment of intangible enhancements)
- Utah Railway Co. v. Utah State Tax Comm'n, 2000 UT 49 (Utah 2000) (burden of proof in tax-court de novo review; substantial error concept rejected in de novo context)
- Bernat v. Allphin, 2005 UT 1 (Utah 2005) (defines trial de novo standard and evidentiary review in Utah courts)