Offshore Drilling Rig Repair Company Granted Franchise Tax Revenue Exclusion for Subcontractor Payments

by Jimmy Martens and Gordon Martens with Martens, Todd, Leonard & Ahlrich

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Apr 14, 2020, 06:17 ET

AUSTIN, Texas, April 14, 2020 /PRNewswire/ -- On April 3, 2020, the Texas Supreme Court held that an offshore rig repair company could exclude from its revenue approximately $80M in payments to subcontractors. The Court also remanded the case to the trial court to determine whether additional costs were available as Costs of Good Sold to reduce the tax base.

Texas law provides for the exclusion of numerous types of payments from revenue, but the Texas Comptroller has consistently interpreted the provisions narrowly against businesses in order to increase taxes collected from businesses. The Texas Supreme Court's holding reverses that course, broadening the scope of many revenue exclusions. This holding affects payments to subcontractors working in both the oilfield services industry and in real property construction.

Gulf Copper was represented by Jimmy Martens and Danielle Ahlrich of Martens, Todd, Leonard & Ahlrich.

About Martens, Todd, Leonard & Ahlrich

Martens, Todd, Leonard & Ahlrich is a trial and appellate law firm headquartered in Austin, Texas, which handles only Texas franchise and Texas sales tax cases. The firm's attorneys have handled cases all the way through the Texas Supreme Court and U.S. Supreme Court. The firm's attorneys speak and write frequently on a variety of Texas franchise and sales tax topics, and have published articles in publications such as The Journal of State Taxation, the Texas Bar Journal, the Texas Lawyer, and the Texas Tech Administrative Law Journal. For more information, please call (512) 542-9898 or visit http://www.textaxlaw.com.

SOURCE Martens, Todd, Leonard & Ahlrich