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Tax definition laundry list

Thanks to New York’s highest state court of appeals (hat tip to a Fulbright & Jaworski newsletter), I was able to add a painfully-long laundry list definition of “tax” to the Definitions-General section of the Compendium form book (see the Form book menu item at the top).

I adapted the laundry list from the opinion in Innophos, Inc. v. Rhodia, S.A.. In that case, the court of appeals upheld summary judgment that a $20 million-plus water-usage charge, assessed against a company by a Mexican government entity, was a “tax” within the meaning of the contract, because it was similar to a severance tax.

The court of appeals, quoting a lower appellate court, said that “[i]t is virtually impossible for us to imagine how two sophisticated parties could have made the language [defining ‘tax’] any more sweeping than it is ….” (internal quotation marks and citation omitted).

The definition of “tax” was relevant because, not long before the water-usage charge was assessed, the relevant business operations had been sold to another party. The buyer claimed that, because of the contract language and the expansive definition of “tax,” the seller was required to indemnify the buyer for the amount of the charge. The court of appeals decision confirmed that the buyer was entitled to the indemnity.

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