MidAmerica sues Neb. for refund

LINCOLN — MidAmerican Energy is suing the state after state officials grounded a $1.1 million sales tax refund the company expected on the purchase of a corporate jet.

Under Nebraska’s 1987 economic development act, LB 775, companies can get sales tax refunds for such aircraft.

But the Nebraska Department of Revenue rejected the refund because MidAmerican’s multimillion-dollar Falcon 50EX jet, purchased in 2004, was used to transport U.S. Sen. Ben Nelson, D-Neb., on a trip between Albany, Ga., and Omaha on Nov. 28, 2006.

Using such planes for fundraising or transporting an elected official disqualifies a company from getting the sales tax benefit, State Tax Commissioner Doug Ewald ruled, citing prohibitions in LB 775.

MidAmerican, an Iowa-based energy firm headed by Omaha businessman David Sokol, is appealing.
The company is asking the Lancaster County District Court to overturn the department’s March ruling.

MidAmerican argued that a single trip taken by Nelson should not be enough to deny the refund. It also maintained that the state, under LB 775, should have based its ruling on the intended purpose of the airplane and can test that use only when the plane is purchased.

The state, after an administrative hearing, rejected those arguments.

The tax commissioner’s ruling states that the exemption should be based on the actual use of the plane, not the intended use.

It also states that the State Legislature did not intend to allow the department to test the use only once, upon the plane’s purchase. Such an interpretation, the ruling stated, could lead to “repeated and unlimited violations” as long as a company claimed it had a “pure heart and clean hands.”

The state also rejected MidAmerican’s argument that a one-time violation was not enough to deny the tax refund. Tax laws, the ruling stated, should not be subjectively interpreted, in order to avoid unfair application.

Nelson’s campaign committee reimbursed the company $475 for the flight, which the state’s tax ruling indicated was less than the $1,475 operating cost of the trip.

Ewald and an official with MidAmerican both said Thursday they could not comment on a pending lawsuit.

Jake Thompson, a spokesman for Nelson, said that the senator had been unaware of the lawsuit and that the issue involved how state tax laws should be interpreted.

He said Senate rules require a lawmaker to pay the cost of a first-class commercial ticket when using a corporate jet. But since there were no first-class tickets available from Albany, Nelson reimbursed the cost of a coach ticket, which Thompson said complies with Senate rules.

Nelson, who sits on the Senate’s Rules Committee, was on a fundraising trip, his aide said.

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