Supreme Court of Mississippi holds that school districts are not liable for oil and gas severance taxes on sixteenth-section royalty interests.
This case concerned three main issues: 1) whether a school district is liable for oil and gas severance taxes on its royalty interests derived from oil and gas production on sixteenth-section land; 2) whether the statute of limitations restricts the time period in which a school district can seek a refund of severance taxes that it had paid erroneously; and 3) whether a school district is liable for administrative expense taxes on its royalty interests derived from oil and gas production on sixteenth-section land.
The Supreme Court of Mississippi found that:
- School districts are not liable for oil and gas severance taxes on sixteenth-section royalty interests, as political subdivisions of the state are not included within the definition of “persons” made subject to these taxes.
- Pursuant to Article 4, Section 104 of the Mississippi Constitution, statutes of limitation in civil causes do not run against the state or its subdivisions.
- School districts are liable for administrative expense taxes on sixteenth-section royalty interests. These assessments are “fees,” not “taxes”; the legislature has expressly made the state and its subdivisions subject to these fees; and no constitutional provision or other law is violated by requiring school districts to pay them.