Attorney Matt Howell of Clark & Howell, LLC, a law firm in York, Maine represented James and Janet Welch in a successful challenge to a tax assessment made by Maine’s taxing authority.
The Maine Revenue Service assessed a tax against Welch Oil Company because it claimed the company had violated a statutory provision that allows people to make a tax-free transfer of personal property to a company, so long as they are the majority owner of the company. The state claimed the owner James Welch was not a majority owner.
James Welch purchased a Peterbilt 336 oil truck with the intention of starting an oil delivery business. Shortly after purchasing the truck in his individual capacity, he created a limited liability company - Welch Oil, LLC. James and his wife were listed in the LLC's operating agreement, as owning 51% of the stock as joint tenants, and their son the remaining 49% of the stock solely.
James transferred the ownership of the truck from himself to the LLC. The Maine Revenue Service reasoned that only ONE person can be a majority owner, and determined that James and Janet Welch could not jointly be majority owners assessing a tax and penalties of $4,170.08.
Clark & Howell, LLC successfully contested this assessment and clarified the tax issues involving personal property owned in joint tenancy. The legal arguments against the Maine Revenue Service are described in the judgment. For more details go to Case Studies.