Represented by Fredrikson’s Tax Disputes and Litigation attorneys in the Minnesota Tax Court, Alaska Airlines challenged Minnesota’s use of Minnesota receipts when calculating the carrier’s Minnesota Franchise Tax Minimum Fee. This tax is imposed on taxpayers exercising a corporate franchise in the state and calculated based on the taxpayer’s total Minnesota property, payrolls and “sales or receipts.”
Invoking the federal Anti-Head Tax Act (AHTA), which prohibits states from taxing gross receipts from air commerce or transportation, the Fredrikson team argued that the AHTA preempts using Alaska Airlines’ gross receipts when calculating the Minnesota Franchise Tax Minimum Fee. The court agreed with Alaska Airlines that the inclusion of its gross receipts from air commerce and transportation, which were included in “sales or receipts” when computing the Minimum Fee, is indeed preempted by the AHTA.
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