Tax Development Sep 27, 2005
Substitute Opinion issued in Home Interiors & Gifts, Inc. v. Strayhorn.
On September 22, 2005, the Third District Court of Appeals (the "Court") issued a substitute Opinion in Home Interiors & Gifts, Inc. v. Strayhorn, No. 03-04-00660-CV, 2005 Tex. App. LEXIS 7788 (Tex. App.--Austin September 22, 2005) reversing the district court's grant of summary judgment in favor of the Comptroller. The Opinion was issued as a result of the grant of the taxpayer's Motion for Rehearing filed in response to the original Opinion issued July 28, 2005. Both versions of the Opinion rule in the taxpayer's favor, but the original Opinion failed to order the Comptroller to refund the more than $15 million in franchise tax involved, which was corrected in the substitute Opinion.
The primary issue involved is whether the earned surplus throwback provision of the Texas franchise tax unconstitutionally burdens interstate commerce as a result of unfairly apportioning the tax base. For more details regarding the Opinion, see the prior release dated August 7, 2005.