Justia Tax Law Opinion Summaries

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Vermont National Telephone Company (VNT) appealed the state Commissioner of Taxes’ determination that, pursuant to Department of Taxes Regulation section 1.5833-1, the capital gain VNT earned from the 2013 sale of two Federal Communications Commission telecommunications licenses was subject to Vermont Tax. Additionally, VNT argued the penalty the Commissioner assessed for VNT's failure to report the 2013 sale violated 32 V.S.A. section 3202(b)(3) and the state and federal Constitutions. Finding no reversible error, the Vermont Supreme Court affirmed the Commissioner. View "Vermont National Telephone Company v. Department of Taxes" on Justia Law

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The appellant property owners (“Taxpayers”) allowed billboards to be placed their lands. The appellee local taxing authorities, Chester-Upland School District and Chichester School District (the “School Districts”), filed 22 assessment appeals relating to the subject properties for tax years 2014 and forward. In their appeals, the School Districts sought to increase the assessed value based on the presence of the billboards. After relief was denied by the county assessment board, the School Districts appealed to the Court of Common Pleas. Separately, four property owners also appealed to that court after their properties were reassessed due to the presence of billboards. The issue presented for the Pennsylvania Supreme Court's review was whether the presence of a billboard on a property could affect the valuation of that property, such as where the landowner was entitled to ongoing payments pursuant to a lease with the billboard company. The Supreme Court found the Pennsylvania General Assembly has directed that billboards and their supporting structures were not real estate for tax assessment purposes. Here, the Court concluded the Commonwealth Court appropriately concluded that, although a billboard’s value may not itself be considered when assessing the underlying real property’s value, any increase in such value attributable to the billboard’s presence could be considered. View "In Re: Consol Apl of Chester-Upland SD, et al -" on Justia Law

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Freed owed $735.43 in taxes ($1,109.06 with penalties) on his property valued at about $97,000. Freed claims he did not know about the debt because he cannot read well. Gratiot County’s treasurer filed an in-rem action under Michigan's General Property Tax Act (GPTA), In a court-ordered foreclosure, the treasurer sold the property to a third party for $42,000. Freed lost his home and all its equity. Freed sued, 42 U.S.C. 1983, citing the Takings Clause and the Eighth Amendment.The district court first held that Michigan’s inverse condemnation process did not provide “reasonable, certain, and adequate” remedies and declined to dismiss the suit under the Tax Injunction Act, which tells district courts not to “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had" in state court, 28 U.S.C. 1341. The court reasoned that the TIA did not apply to claims seeking to enjoin defendants from keeping the surplus equity and that Freed was not challenging his tax liability nor trying to stop the state from collecting. The TIA applied to claims seeking to enjoin enforcement of the GPTA and declare it unconstitutional but no adequate state court remedy existed. The court used the same reasoning to reject arguments that comity principles compelled dismissal. After discovery, the district court sua sponte dismissed Freed’s case for lack of subject matter jurisdiction, despite recognizing that it was “doubtful” Freed could win in state court. The Supreme Court subsequently overturned the "exhaustion of state remedies" requirement for takings claims.The Sixth Circuit reversed without addressing the merits of Freed’s claims. Neither the TIA nor comity principles forestall Freed’s suit from proceeding in federal court. View "Freed v. Thomas" on Justia Law

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The Supreme Court reversed the judgment of the Board of Tax Appeals (BTA) and the court of appeals affirming the decision of the tax commissioner that gross receipts earned by Defender Security Company between January 2011 and December 2013 were Ohio-taxable receipts under the commercial activity tax (CAT) law, holding that Appellant was entitled to relief on its statutory claim.The receipts at issue consisted of payments made to Defender by ADT Security Services, Inc. Defender filed a refund claim seeking the return of $73,334 for commercial activity tax paid on gross receipts for approximately three years. The tax commission denied the refund claim. The BTA agreed with the tax commissioner's conclusion that the proper situs of ADT funding should be Ohio and affirmed. The court of appeals affirmed. The Supreme Court reversed, holding that, under Ohio Rev. Code 5751.033(I), the situs of ADT funding receipts is ADT's physical location outside Ohio. The Court remanded the case to the tax commissioner with instructions that he issue refunds in the amount set forth in the refund claim, plus interest. View "Defender Security Co. v. McClain" on Justia Law

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The Supreme Court affirmed in part and reversed in part the judgment of the circuit court granting Isle of Wight County's motion to strike International Paper Company's application for correction of a machinery and tools tax assessment that International Paper claimed was nonuniform, invalid, and illegal, holding that the court erred in sustaining the County's motion to strike as to counts 4 and 5 regarding uniformity.International Paper owned a paper production facility in the County that utilized paper-making machinery for its manufacturing operations. International Paper filed an application for a correction of the County's "nonuniform, invalid & illegal" assessment of International Paper's machinery and tools taxes for tax year 2017. The refund action had five counts. After a bench trial, the County moved to strike International Paper's evidence and claims. The circuit court granted the motion to strike and dismissed the refund action with prejudice. The Supreme Court reversed in part and remanded this case for further proceedings, holding (1) the circuit court did not err in sustaining the County's motion to strike as to three counts regarding vested rights, separation of powers, and the County's alleged lack of statutory authority; but (2) the circuit court erred in sustaining the County's motion to strike as to two counts regarding uniformity. View "International Paper Co. v. County of Isle of Wight" on Justia Law

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The Supreme Court held that Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay does not impose an unconstitutional tax on motor vehicles.The Village filed separate criminal complaints against Defendants, who operated businesses that made motorized golf cars available for rent within the Village, for failing to pay the annual license fee on their golf carts. The trial court dismissed the criminal complaints on the basis that section 858.01 is for a similar purpose as the annual state license tax levied on the operation of motor vehicles under Ohio Rev. Code 4503.02 and the local government tax permitted by Ohio Rev. Code 4504.02 and 4504.06. The court of appeals reversed, concluding that section 858.01 was not preempted by state law and did not violate Ohio Const. art. XII, 5a. The Supreme Court affirmed, holding (1) the tax is a constitutional exercise of the municipality's right to tax; and (2) section 858.01 does not impose an unconstitutional tax. View "Put-in-Bay v. Mathys" on Justia Law

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In 2015, the owners of a 13,000-acre tract of land known as 70 Ranch successfully petitioned to include their tract in a special district. After 70 Ranch was incorporated into the district, the district began taxing the leaseholders of subsurface mineral rights, Bill Barrett Corporation, Bonanza Creek Energy, Inc., and Noble Energy, Inc. for the oil and gas they produced at wellheads located on 70 Ranch. The Lessees, however, objected to being taxed, arguing the mineral interests they leased could not be included in the special district because neither they nor the owners of the mineral estates consented to inclusion, which they asserted was required by section 32-1-401(1)(a), C.R.S. (2019), of the Special District Act. The Colorado Supreme Court determined that section 401(1)(a) permitted the inclusion of real property covered by the statute into a special taxing district when (1) the inclusion occurred without notice to or consent by the property’s owners and (2) that property was not capable of being served by the district. The Court answered "no," however, 32-1-401(1)(a) required the assent of all of the surface property owners to an inclusion under that provision, and inclusion was only appropriate if the surface property could be served by the district. "Section 32-1-401(1)(a) does not require assent from owners of subsurface mineral estates because those mineral estates, while they are real property, are not territory. Thus, Lessees’ consent was not required for the inclusion of 70 Ranch in the special district." The Court therefore affirmed the court of appeals on alternate grounds. View "Barrett Corp. v. Lembke" on Justia Law

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New York State appealed from the district court's consolidated judgments invalidating the State's Opioid Stewardship Act (OSA), which requires opioid manufacturers and distributors to make an annual payment to fund statewide opioid-related services but prohibits them from passing the costs of those payments through to their customers.The Second Circuit held that the OSA's opioid stewardship payment is a tax within the meaning of the Tax Injunction Act (TIA), and that the district court should have dismissed plaintiff's challenges to the payment under the TIA for lack of jurisdiction. After considering the factors in Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 737 F.3d 228, 232–33 (2d Cir. 2013), and San Juan Cellular Telephone Co. v. Public Service Commission, 967 F.2d 683, 685 (1st Cir. 1992), the court concluded that the primary purpose of the opioid stewardship payment is to raise revenue, not to punish or regulate plaintiffs and other licensees who are required to make the payment. Accordingly, the court reversed the judgments, except insofar as they relate to the pass-through prohibition, which is not before the court. View "Association for Accessible Medicines v. James" on Justia Law

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The Eleventh Circuit affirmed the bankruptcy court's conclusion that debtors' 2001 tax liability was not dischargeable under 11 U.S.C. 523(a)(1)(C) because debtors "willfully attempted . . . to evade or defeat" that liability. The court found substantial evidence of attempted evasion and concluded that the bankruptcy court did not clearly err in finding that debtors acted willfully when they redirected their funds away from paying their debt and toward their personal luxuries. The court has held that excessive discretionary spending constitutes circumstantial evidence of willfulness. Furthermore, the bankruptcy court also inferred willfulness from debtor's exploitation of the offer-in-compromise process. View "Feshbach v. Department of Treasury Internal Revenue Service" on Justia Law

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Jay Campbell, on behalf of himself and a certified class of "other persons similarly situated," appealed the grant of summary judgment on claims challenging the constitutionality of two municipal taxes adopted in 2013 by the City of Gardendale in connection with Gardendale's planned creation of a municipal school system. After review, the Alabama Supreme Court concluded Campbell did not demonstrate that the Gardendale school taxes were rendered invalid by operation of Local Amendment 14. The Court therefore pretermitted discussion of the alternate arguments for affirmance presented by Jefferson County and Smallwood. The judgment of the trial court was affirmed. View "Campbell v. City of Gardendale" on Justia Law