National Grid USA Service Company, Inc. v. Commissioner of Revenue (Lawyers Weekly No. 11-065-16)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 14-P-1861 Appeals Court NATIONAL GRID USA SERVICE COMPANY, INC. vs. COMMISSIONER OF REVENUE. No. 14-P-1861. Suffolk. December 11, 2015. – June 8, 2016. Present: Cypher, Carhart, & Blake, JJ. Taxation, Abatement, Corporate excise. Public Utilities. Appeal from a decision of the Appellate Tax Board. John S. Brown (Donald-Bruce Abrams with him) for the taxpayer. Brett M. Goldberg for Commissioner of Revenue. CYPHER, J. National Grid USA Service Company, Inc. (NGUSA) appeals from a decision of the Appellate Tax Board (board) denying its motion for summary judgment and allowing a motion to dismiss brought by the Commissioner of Revenue (commissioner) concerning the effect of a closing agreement between National Grid Holdings, Inc. (NGHI)[1] and the Internal Revenue Service (IRS) on interest deductions under G. L. c. 63, § 30(4). The board rejected National Grid’s position that the closing agreement, which allowed a Federal deduction for a portion of the disputed interest payments, is binding on deductions allowed for State tax purpose. Background. For background we refer to our decision in National Grid Holdings, Inc. v. Commissioner of Rev., 89 Mass. App. Ct. (2016) (National Grid Holdings, Inc.). Briefly, that case dealt with the question whether certain deferred subscription arrangements (DSAs), among various entities related to National Grid plc, the parent company located in the United Kingdom, constituted true indebtedness, whereby payments made pursuant to the DSAs could be deducted as interest in calculating Massachusetts corporate excise tax. The commissioner disallowed the deductions for the 2002 tax year and National Grid appealed to the board. This separate action arose when the board, in hearing the first appeal, declined to admit the closing agreement in evidence. Relevant here, we add the following undisputed facts from the board’s September 19, 2014, findings of fact and report. National Grid’s tax returns for the 2002 tax year were audited by both the commissioner and the IRS. On May 1, 2007, National Grid entered into a closing agreement with the IRS, pursuant to 26 U.S.C. § 7121 of the Internal Revenue Code (code), in connection with National Grid’s Federal tax return.[2] As part of that agreement, the IRS allowed a Federal deduction for a portion of the amount claimed by National Grid as interest on the DSAs. As to National Grid’s 2002 Massachusetts tax return, the commissioner determined that the DSAs were […]