Supreme Court
GEO Grp., Inc. v. Hegar
- Case number: 23-0149
- Legal category: Taxes
- Subtype: Sales Tax
- Set for oral argument: October 30, 2024
Case Summary
The issue is whether companies that own and operate correctional and detention facilities qualify for a sales-tax exemption under state law.
During the relevant tax period, GEO operated correctional and detention facilities in Texas under contracts with both the State of Texas and the United States, providing services such as housing, feeding, monitoring, and transporting detainees held in government custody. The Comptroller later audited GEO’s payment of sales and use tax for the relevant period and assessed a deficiency. GEO requested redetermination, refunds, and audit reductions, but the Comptroller rejected GEO’s contention that certain purchases were exempt from taxation and denied the request. GEO then brought a taxpayer suit for refund.
In the trial court, the parties stipulated that GEO would be entitled to a refund of more than $3 million if it is an entity or organization eligible for exempt status under Rule 3.322(c) in Title 34 of the Administrative Code. So qualifying would then make GEO’s purchases eligible for the exemptions set forth in Section 151.309 of the Tax Code. Following a bench trial, the trial court rendered judgment that GEO is not entitled to the claimed refunds. The court of appeals affirmed.
GEO petitioned for review, arguing that the lower courts applied the wrong evidentiary standard and misconstrued the term “instrumentality” in Rule 3.322(c). The Supreme Court granted the petition.
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