Itel Corp. lost a legal bid yesterday to recover more than $500,000 in property taxes it claimed were collected illegally by D.C. officials on computers leased by Itel to the federal government. The San Francisco leasing company was one of the fastest-growing firms in U.S. history before it collapsed under massive debts and losses two years ago.
In a tartly worded decision, the District of Columbia Court of Appeals upheld a D.C. Superior Court ruling that Itel was not entitled to a refund of the property taxes it paid to the District from 1978 to 1980.
Itel had argued that the District was a "federal enclave," like a military base, and thus exempt from property taxes levied by local officials. But the appeals court rejected the characterization and said that, in any event, "The tax at issue here was enacted not by an independent sovereign, or even a partially independent governmental unit such as the District of Columbia government, but by Congress itself.
"It can hardly be said that this amounts to an intrusion on federal prerogatives," the court wrote in its ruling.
Itel, which specialized in leasing computers but also offered railroad cars, jet planes and ships, filed for protection under Chapter 11 of the Federal Bankruptcy Act in January 1981 and is being reorganized.