Schlumberger Technology Corporation & Subsidiaries v. State, Department of Revenue, 031812 AKTAX, 3AN-10-7367 CI

Docket Nº:3AN-10-7367 CI
Opinion Judge:Danial Schally Superior Court Judge
Party Name:SCHLUMBERGER TECHNOLOGY CORPORATION & SUBSIDIARIES, Appellant, v. STATE OF ALASKA, DEPARTMENT OF REVENUE, Appellee. OAH No. 08-0577-TAX
Case Date:March 18, 2012
Court:Superior Court of Alaska
 
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SCHLUMBERGER TECHNOLOGY CORPORATION & SUBSIDIARIES, Appellant,

v.

STATE OF ALASKA, DEPARTMENT OF REVENUE, Appellee.

No. 3AN-10-7367 CI

OAH No. 08-0577-TAX

Superior Court of Alaska, Third Judicial District, Anchorage

March 18, 2012

DECISION & ORDER

Danial Schally Superior Court Judge

Schlumberger Technology Corporation & Subsidiaries appeals the State of Alaska, Office Of Administrative Hearings decision affirming the State of Alaska, Department of Revenue's informal conference decision approving proposed tax assessments for 1998-2000.

BACKGROUND & CASE HISTORY

Schlumberger Technology Corporation and Subsidiaries ("Schlumberger") is a Texas company that provides oil field services.1 Schlumberger filed Alaska corporate income tax returns for the tax years 1998-2000 on a unitary combined basis with its domestic subsidiaries.2 The State of Alaska, Department of Revenue ("DOR") audited the returns and concluded that income from Schlumberger's foreign parent corporation, - Schlumberger- Limited- ("Limited") should have been included.3 The DOR then issued corporate tax assessments that included Limited in Schlumberger's unitary business group. The DOR applied Alaska's deduction for 80% of foreign dividends and then added the remaining foreign dividends to derive taxable income for Alaska.

Schlumberger protested the DOR's proposed tax assessments through an informal conference the result of which was the September 17, 2008 decision levying a proposed tax assessment for 1998-2000 of $377, 779.4Schlumberger appealed to the Office Of Administrative Hearings ("OAH") and filed a motion for partial summary judgment seeking to strike down the DOR's proposed tax assessment.5

The OAH administrative law judge ("ALJ") denied Schlumberger's motion for partial summary judgment on December 30, 2009.6 The parties then entered a stipulation in which Schlumberger agreed to withdraw issues not addressed by the ALJ Order.7 Because there were no issues remaining to be decided, the ALJ on February 10, 2 010 denied Schlumberger's appeal and upheld the DOR's proposed tax assessments.8

The instant appeal followed. Oral argument was held on September 28, 2011.

JURISDICTION

The superior court has jurisdiction to hear appeals from final orders in administrative agency proceedings pursuant to AS 22.10.020(d), AS 44.62.560(a), AS 43.05.480, and Alaska Rule of Appellate Procedure 601(b).

STANDARD OF REVIEW

Alaska courts employ four recognized standards to review administrative decisions:9 (1) the substantial evidence test for questions of fact; (2) the reasonable basis test for questions of law or fact involving agency expertise; (3) the substitution of judgment test for questions of law where no expertise is involved; and (4) the reasonable and not arbitrary test for review of administrative regulations.10

The issues presented here are questions of law-statutory and constitutional interpretation—and the parties agree that the court should employ the substitution of judgment standard.11 To the extent the issues are properly before the court for review, 12 the court will employ the...

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