Justia Tax Law Opinion Summaries

by
The Supreme Court vacated the judgment of the circuit court that the solar energy system owned by Springfield Solar 1, LLC was tax-exempt as a "solar energy system not held for resale" pursuant to Mo. Rev. Stat. 137.100(10), holding that the statute is unconstitutional because the Missouri Constitution does not grant the legislature the power to exempt solar energy systems not help for resale from taxation.Springfield Solar appealed the Assessor for Greene County's 2017 assessment of its solar energy system (the equipment), arguing that the equipment was tax-exempt under section 137.100(10), which states that solar energy systems not help for resale are exempt from taxation for state, county, and local purposes. The Commission concluded that the equipment was exempt from taxation under section 137.100(10). The Assessor filed a petition for judicial review, arguing that the Commission's decision was unlawful. The circuit court entered judgment in favor of Springfield Solar, finding that the statute was constitutional. The Supreme Court reversed, holding that the tax exemption created by section 137.100(10) is unconstitutional. View "Johnson v. Icet" on Justia Law

by
Chairman of the Committee on Ways and Means (“the Chairman”) invoked Section 6103(f)(1) in a writing to the Commissioner of Internal Revenue (“the 2019 Request”). The Chairman requested the federal income tax returns of then-President Donald J. Trump and that of his related companies and organizations (collectively “the Trump Parties”). The Department of the Treasury responded that it did not intend to comply with the 2019 Request because it was not supported by a legitimate legislative purpose. Later the Treasury informed the district court and the Trump Parties that it intended to comply with the 2021 Request and provide the Committee with the requested materials. The Trump Parties alleged that Section 6103(f)(1) is facially unconstitutional and that compliance with the Request would be a violation of the First Amendment.The DC Circuit affirmed. The court explained that the 2021 Request seeks information that may inform the United States House of Representatives Committee on Ways and Means as to the efficacy of the Presidential Audit Program, and therefore, was made in furtherance of a subject upon which legislation could be had. Further, the Request did not violate the separation of powers principles under any of the potentially applicable tests primarily because the burden on the Executive Branch and the Trump Parties is relatively minor. Finally, Section 6103(f)(1) is not facially unconstitutional because there are many circumstances under which it can be validly applied, and Treasury’s decision to comply with the Request did not violate the Trump Parties’ First Amendment rights. View "Committee on Ways and Means, United States House of Representatives v. TREA" on Justia Law

by
Donna Fisher lived in a mobilehome located in The Groves mobilehome residential community in Irvine, California. In 2011, Fisher filed a verified assessment appeal application with the Assessment Appeals Board No. 3 (the Board) for the County of Orange (the County) contesting the County Assessor’s assessment of the value of the land upon which her mobilehome was sitting for the 2011-2012 fiscal year. She argued the property had suffered a decline in value. Following extensive hearings, the Board issued its findings of fact and determination denying Fisher’s application. Fisher filed suit against the County to challenge the Board’s decision and sought a refund for overpayment of taxes in the amount of $739 for the underlying real property of her mobilehome. Following trial, the trial court issued a statement of decision rejecting Fisher’s challenges to the Board’s findings of fact and determination and entered judgment in favor of the County. Fisher again appealed, but the Court of Appeal affirmed, finding no reversible error. View "Fisher v. County of Orange" on Justia Law

by
The Alaska Department of Revenue audited a non-resident corporation doing business in Alaska. The Department issued a deficiency assessment based in part on an Alaska tax statute requiring an income tax return to include certain foreign corporations affiliated with the taxpaying corporation. The taxpayer exhausted its administrative remedies and then appealed to the superior court, arguing that the tax statute the Department applied was facially unconstitutional because: (1) it violated the dormant Commerce Clause by discriminating against foreign commerce based on countries’ corporate income tax rates; (2) it violated the Due Process Clause by being arbitrary and irrational; and (3) it violated the Due Process Clause by failing to provide notice of what affiliates a tax return must include, and therefore is void for vagueness. The superior court rejected the first two arguments but ruled in the taxpayer’s favor on the third argument. The Department appealed, claiming the superior court erred by concluding that the statute was void for vagueness in violation of the Due Process Clause. The taxpayer cross-appealed, asserting that the court erred by concluding that the statute did not violate the Commerce Clause and was not arbitrary. After review, the Alaska Supreme Court reversed the superior court’s decision that the statute was facially unconstitutional on due process grounds, and affirmed the court’s decision that it otherwise was facially constitutional. View "Alaska Dept. of Revenue v. Nabors International Finance, Inc. et al." on Justia Law

by
Congress enacted a tax credit to incentivize the production of refined coal, which releases fewer emissions than unrefined coal. AJG Coal, Inc. responded by forming Cross Refined Coal, LLC and recruiting two other investors in that enterprise. Limited-liability companies are taxed like partnerships, so the company’s tax liabilities and credits passed through to its member investors.The IRS asserted that Cross was not a bona fide partnership for tax purposes, in part because it could never have made a profit without the tax credit. The tax court disagreed. The DC Circuit affirmed the tax court’s decision holding that partnerships formed to conduct activity made profitable by tax credits engage in legitimate business activity for tax purposes. The court further concluded that all of Cross’s members shared in its profits and losses, and thus had a meaningful stake in its success or failure. View "Cross Refined Coal, LLC v. Cmsnr. IRS" on Justia Law

by
Appellant made deferred cash payments to his ex-wife, Appellee, pursuant to a marriage termination agreement (MTA) that Appellee “waives any right to . . . permanent spousal maintenance.” At issue is whether those payments were nonetheless “spousal maintenance” payments under Minn. Stat. Section 518.552.The Eighth Circuit concluded that the answer is clearly no and therefore affirm the decision of the United States Tax Court denying Appellant deductions under now-repealed alimony provisions of the Internal Revenue Code for $51M in cash payments he made to Appellee during his 2012 and 2013 federal income tax years.The court concluded that that Minnesota law unambiguously establishes that the MTA was not a spousal maintenance agreement. Rather, it was a contractual division of marital property. Contractual obligations under a divorce agreement fall under the general rule that causes of action survive their personal representatives. Minn. Stat. Section 573.01. That being so, Minnesota law unambiguously provides that the payments in question were not deductible because Appellant’s liability to make the payments would survive Appellee’s death. This is consistent with the stated purpose of Section 71(b)(1)(D). View "Andrew Redleaf v. CIR" on Justia Law

by
Exxon sought $1.5 billion from the IRS. The source of this sum is two retroactive changes Exxon made to its returns. The first change involves a tax issue: whether a transaction is a mineral lease or mineral sale. See, e.g., Goldfield Consol. Mines Co. v. Scott, 247 U.S. 126 (1918); Stratton’s Indep., Ltd. v. Howbert, 231 U.S. 399 (1913). The second concerned a more recent development in the tax code: how an incentive for producing renewable fuels affects a company’s excise tax, and in turn, its income tax.   The district court rejected both changes but gave Exxon back a penalty the IRS imposed for requesting an excessive refund. Exxon appealed the lease-versus-sale issue, and the government cross-appealed the rejection of the penalty. The Fifth Circuit affirmed the district court’s ruling.   The court explained that Qatar and Malaysia have an economic interest in the minerals being extracted. That means the agreements are as Exxon originally described them: leases. The court further wrote that although Exxon’s position is close to the “reasonable basis” line, it agreed with the district court’s assessment granting Exxon a refund.   The court next addressed the issue regarding which amount of excise tax Exxon can deduct from its gross income: (1) the lesser amount it actually paid after claiming a renewable-fuel credit or (2) the greater amount it would have paid without the credit. The court found that Exxon’s renewable-fuel credit reduced its excise tax. It can deduct only the reduced amount. View "Exxon Mobil v. USA" on Justia Law

by
The City of Malibu formed the Broad Beach Geologic Hazard Abatement District (the District), to protect the homes on the city’s Broad Beach, threatened by longstanding shoreline erosion. The District developed a plan to import sand and maintain a revetment on portions of the beach, in order to fortify the shoreline. To fund this project, it proposed a special assessment on parcels within its boundaries, and homeowners approved the assessment. Litigation ensued, in which the District filed an action seeking to validate the assessment, and the homeowners opposing the assessment claimed it violated the requirements of Proposition 218, which added article XIII D to the California Constitution, limiting local government’s ability to impose assessments.   The trial court ultimately agreed with the challengers on these issues and invalidated the District’s assessment. After the court’s ruling on the merits, the challengers sought attorney fees under Code of Civil Procedure section 1021.5, which codified the private attorney general doctrine of attorney fees.   The Second Appellate District affirmed the court’s judgment invalidating the assessment. The court held that Prop. 218 required the District to separate and quantify general benefits from the widened beach, regardless of whether those benefits imposed additional costs and without regard to the District’s subjective intent in designing the project. Further, the court wrote that it discerned no no error in the trial court’s determination and weighing of the challengers’ financial interest in the litigation. View "Broad Beach Geologic Hazard etc. v. 31506 Victoria Point LLC" on Justia Law

by
Plaintiffs are “in the business of purchasing tax-lien certificates.” They attend government auctions where they bid on tax-delinquent properties and, if successful, either take title to the properties or earn interest while the owners try to redeem them. A Maryland statute has made that endeavor difficult in Prince George’s County. The problem: the statute directs the County to offer defaulted properties to a select class of people (comprising largely those living and holding government positions there) before listing the properties for regular public auction. Plaintiffs, who do not fit that limited class, claim the statute violates the Privileges and Immunities Clause of the U.S. Constitution.   The Fourth Circuit reversed the district court’s ruling and held that Section 14-817(d) violates the Privileges and Immunities Clause and that Section 14-821(b) cannot be severed from it, and remand with instructions to enter summary judgment in Plaintiffs’ favor, enjoining Defendants from conducting limited auctions under Section 14-817(d) going forward and allowing the transfer of the already-purchased liens. The court reasoned that no substantial reasons justify the favoritism, and the court must hold the statute unconstitutional. View "Chris Brusznicki v. Prince George's County" on Justia Law

by
The Supreme Court held that delivery of a pre-litigation notice to each of the three addresses referred to in Ariz. Rev. Stat. 42-18202(A)(1)(a)-(c) is sufficient to satisfy the statute's pre-litigation-notice requirement, even if the lienholder has reason to believe that the property owner never received the notice.HNT Holdings, LLC owned three continuous parcels of real property on which property tax payments became became delinquent. Lienholders each purchased a tax lien on one of the parcels and later sought to foreclose on the respective properties. After the statutorily-mandated time, Lienholders filed complaints to foreclose on their tax liens and attempted to serve the complaints on the HNT statutory agent. Three separate trial proceedings resulted in default judgments against HNT. HNT then successfully moved to set the judgments aside. The Supreme Court remanded the case, holding (1) Lienholders' efforts to provide notice to HNT complied with the second method of notice under section 42-18202; and (2) Lienholders were not required to take any other action to provide notice of their intent to foreclose. View "4QTKids, LLC v. HNT Holdings, LLC" on Justia Law