590 S.W.2d 455 | Tenn. | 1979
OPINION
This appeal presents the issue: Is Excise Tax Rule and Registration No. 1320-6-1.-22(a) (1974), as promulgated by the Commissioner of the Department of Revenue for the State of Tennessee, inconsistent with T.C.A. § 67-2701 (Supp.1975), so that excise taxes collected pursuant to the regulation were erroneously assessed? The chancellor answered the issue in the affirmative, and awarded the respondent taxpayers a refund of excise taxes and interest paid under protest. We affirm the chancellor’s decree.
The parties stipulated that Union Planters National Bank of Memphis paid Tennessee excise taxes in the sum of $192,030.00 for the calendar year of 1975 together with interest in the amount of $3,200.50, and that Memphis Bank & Trust Company paid $21,301.00 in excise taxes and $101.93 in interest for the calendar year 1975. The parties further stipulated that the taxes and interest paid by the banks were assessed and collected by the commissioner pursuant to T.C.A. § 67-2701 (Supp.1975) and Regulation No. 1320-6-1.22(a), and were paid by the banks under protest.
T.C.A. § 67-2701 (Supp.1975) provides that all corporations and all national banks doing business in Tennessee shall pay an annual excise tax equal to six percent of its net earnings for the next preceding fiscal year from business done within the State. Net earnings subject to tax are subject to certain adjustments — those pertinent to this action being paragraphs (B) and (C) of Section 67-2701, which are as follows:
(B) All entities enumerated hereinabove and taxable under this section may carry their current year’s losses forward two (2) years in computing net earnings subject to said tax.
(C) There shall be excluded from “net earnings” any income derived from bonds or other such obligations of the state of Tennessee, its instrumentalities or political subdivisions, including but not limited to counties, municipalities, utility districts, school districts and public authorities.
With the exception of exclusions set forth in the statute, such as in (C) above, the phrase “net earnings” is not defined. Neither is the term “losses,” as used in (B) above defined.
Tennessee Code Annotated § 67-2721 (Supp.1975) provides:
The commissioner of finance and taxation is authorized to make and promulgate rules and regulations, not inconsistent with this chapter, for the purpose of carrying out the provisions of this chapter, which rules and regulations, when approved by the attorney general, and when promulgated and published, shall have the force and effect of law.
The Department of Revenue promulgated Excise Tax Rule and Regulation No. 1320-6-4.22(a) (1974) applicable to the tax years in question, which addresses loss carryovers in the following language:
The term “losses” as used in Section 67-2701, T.C.A. is hereby defined as the excess of allowable deductions over total income for the taxable year. The amount of “losses” that may be carried forward will be subject to the following adjustments:
(a) There shall be added to the net loss as determined for excise tax purposes . all interest . . . excluded from net earnings pursuant to Subsection[s] . . .(C) of Section 67-2701, T.C.A.
The decree entered in the Chancery Court of Shelby County is affirmed.