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Many states tax the retail sales of goods and services in the state. Sellers are required to collect and remit the tax; if they do not in-state consumers are responsible for paying a use tax at the same rate. Under earlier Supreme Court decisions, states could not require a business that had no physical presence in the state to collect its sales tax. Consumer compliance rates are low; it is estimated that South Dakota lost $48-$58 million annually. South Dakota enacted a law requiring out-of-state sellers to collect and remit sales tax, covering only sellers that annually deliver more than $100,000 of goods or services into the state or engage in 200 or more separate transactions for the delivery of goods or services into the state. State courts found the Act unconstitutional. The Supreme Court vacated, overruling the physical presence rule established by its decisions in Quill (1992), and National Bellas Hess (1967). That rule gave out-of-state sellers an advantage and each year becomes further removed from economic reality and results in significant revenue losses to the states. A business need not have a physical presence in a state to satisfy the demands of due process. The Commerce Clause requires “a sensitive, case-by-case analysis of purposes and effects,” to protect against any undue burden on interstate commerce, taking into consideration the small businesses, startups, or others who engage in commerce across state lines. Without the physical presence test, the first inquiry is whether the tax applies to an activity with a substantial nexus with the taxing state. Here, the nexus is sufficient. Any remaining Commerce Clause concerns may be addressed on remand. View "South Dakota v. Wayfair, Inc." on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals affirming the decision of the tax commissioner finding that Ohio Rev. Code 5709.911 subordinated a property’s original tax increment financing (TIF) exemption to the public-worship exemption from taxation. The Fairfield Township Board of Trustees filed a complaint against the continued exemption from taxation as a house of public worship, claiming that by granting the property owner the public-worship exemption and by continuing the exemption, the tax commissioner unlawfully relieved the church of its payment obligations as the owner of property subject to a recorded covenant. The covenant in question related to a TIF agreement entered into between the Township and a previous owner of the church property. The tax commissioner rejected the Township’s agreement, and the Board of Tax Appeals affirmed. The Supreme Court affirmed, holding (1) by dictating that TIF exemptions be subordinated to other exemptions, section 5709.911 barred the enforcement of the real covenant with respect to service payments; and (2) the Township lacked standing to raise its constitutional challenge to section 5709.911. View "Fairfield Township Board of Trustees v. Testa" on Justia Law

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The issue this case presented for the Georgia Supreme COurt's review centered on whether the contract involved in this case between the City of Atlanta and a private business for the lease of retail concession space at Hartsfield-Jackson Atlanta International Airport created a taxable interest subject to ad valorem taxation by Clayton County. The City of Atlanta owned the Airport, which was partially in Clayton County outside the City’s boundaries. Appellee Aldeasa Atlanta Joint Venture entered into the written agreement with the City to lease space on two different concourses at the Airport for the non-exclusive rights to operate two duty free retail stores. Appellant Clayton County Board of Tax Assessors (“County”) issued real property tax assessments to Aldeasa for the 2011 and 2012 tax years on Aldeasa’s purported leasehold improvements on the two parcels involved in the Concessions Agreement and also on Aldeasa’s purported possessory interest in the two parcels. Aldeasa appealed the assessments and paid the tax pending the outcome of the appeal. The trial court found the Concessions Agreement created a usufruct interest in the property, and not an estate in real property; it rejected the County’s assertion that it was legally authorized to impose a property tax on usufructs located at the Airport; and it also rejected the County’s assertion that the Concessions Agreement created a taxable franchise. Accordingly, the trial court granted Aldeasa’s motion for summary judgement and denied the motion filed by the County. The County appealed, asserting four different taxable interests were created by the Concessions Agreement. The Supreme Court disagreed with the State's assertions and affirmed the trial court. View "Clayton County Bd. of Assessors v. Aldeasa Atlanta Joint Venture" on Justia Law

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At issue was the tax exempt status of land purchased by the Upper Republican Natural Resources District (NRD) as part of a ground water integrated management plan. The NRD retired irrigated acres and converted them to grassland to achieve soil conservation and range management objectives and then leased much of the grassland for grazing. The parties here disputed, among other things, the extent to which the lease was at fair market value for a public purpose under Neb. Rev. Stat. 77-202(1)(a) and the scope of the questions properly before the Tax Equalization and Review Commission (TERC). The Supreme Court affirmed the determination of TERC that certain unimproved parcels of property, portions of two improved parcels, and contiguous parcels were used for a public purpose and therefore exempt and vacated those parts of the TERC’s opinion addressing issues other than whether the property was used for a public purpose. View "Upper Republican Natural Resources District v. Dundy County Board of Equalization" on Justia Law

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Plaintiff appealed the district court's summary judgment determination that her late husband was personally liable under 26 U.S.C. 6672 for over $4.3 million in penalties for the unpaid withholding taxes of his medical practice. The Fifth Circuit reversed the denial of the motion for reconsideration; affirmed the district court's determination that the husband's $100,000 loan was unencumbered for purposes of section 6672 liability; vacated the remainder of the summary judgment because there was a genuine issue of material fact as to whether his medical practice had $4.3 million in available, unencumbered funds after the husband learned of the unpaid taxes; and remanded for further proceedings. View "McClendon v. United States" on Justia Law

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The 90-day filing requirement in I.R.C. 6015(e)(1)(A)(ii) is jurisdictional. The Fourth Circuit affirmed the tax court's dismissal of a petition for relief based on lack of jurisdiction. The court held that the tax court correctly concluded that it lacked jurisdiction to consider the untimely petition and declined to consider petitioner's additional arguments about equitable tolling, which were all predicated on subsection (e)(1)(A) being a non-jurisdictional filing deadline. View "Nauflett v. Commissioner of IRS" on Justia Law

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In 2001, McMahan and his wholly owned corporation participated in a tax shelter called “Son of BOSS” that “is a variation of a slightly older alleged tax shelter,” BOSS, an acronym for ‘bond and options sales strategy.’” BOSS “was aggressively marketed by law and accounting firms in the late 1990s and early 2000s” and involves engaging in a series of transactions to create an “artificial loss [that] may offset actual—and otherwise taxable— gains, thereby sheltering them from Uncle Sam.” The Internal Revenue Service considers the use of this shelter abusive and initiated an audit of McMahan’s 2001 tax return in 2005. In 2010, the IRS notified McMahan it was increasing his taxable income for 2001 by approximately $2 million. In 2012, McMahan filed suit against his accountant, American Express, which prepared his tax return, and Deutsche Bank, which facilitated the transactions necessary to implement the shelter. McMahan claimed these defendants harmed him by convincing him to participate in the shelter. The Seventh Circuit affirmed the rejection of all the claims by dismissal or summary judgment. McMahan’s failure to prosecute prejudiced the accountant and Amex defendants and the Deutsch Bank claim was untimely. View "McMahan v. Deutsche Bank AG" on Justia Law

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The North Carolina Department of Revenue (Defendant) unconstitutionally taxed the income of The Kimberly Rice Kaestner 1992 Family Trust (Plaintiff) pursuant to N.C. Gen. Stat. 105-160.2 based solely on the North Carolina residence of the beneficiaries during certain tax years because Plaintiff did not have sufficient minimum contacts with the State of North Carolina to satisfy the due process requirements of the state and federal Constitutions. Plaintiff filed a complaint alleging that Defendant wrongfully denied Plaintiff’s request for a refund because the taxes collected pursuant to section 105-160.2 violate the due process clause. The North Carolina Business Court concluded that the provision of section 105-160.2 allowing taxation of a trust income “that is for the benefit of a resident of this State” violated both the Due Process Clause and N.C. Const. art. I, 19, as applied to Plaintiff. The court therefore granted Plaintiff’s motion for summary judgment. The court of appeals affirmed. The Supreme Court affirmed, holding (1) section 105-160.2 is unconstitutional as applied to collect income taxes from Plaintiff for the tax years at issue; and (2) therefore, summary judgment was properly granted for Plaintiff. View "Kaestner 1992 Family Trust v. North Carolina Department of Revenue" on Justia Law

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Because N.Y. Tax Law 471, which imposes requirements on Indian retailers located on reservation land to pre-pay the tax on cigarette sales to individuals who are not members of the Seneca Nation of Indians, does not operate as a direct tax on the retailers or upon members of the Seneca Nation, it does not conflict with either the Buffalo Creek Treaty of 1842 or N.Y. Indian Law 6. Plaintiffs brought this action seeking a declaration that Tax Law 471 is unconstitutional and a permanent injunction enjoining Defendants from enforcing the law against them. Supreme Court dismissed the complaint for failure to state a cause of action. The Appellate Division reinstated the complaint to the extent it sought a declaration and then granted judgment in favor of Defendants. The Court of Appeals affirmed, holding (1) Tax Law 471 does not constitute a tax on an Indian retailer; and (2) therefore, Tax Law 471 does not violate the plain language of the Treaty or Indian Law 6. View "White v. Schneiderman" on Justia Law

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The Eighth Circuit affirmed defendant's conviction of evasion of payment of taxes and corruptly endeavoring to impede enforcement of Internal Revenue laws. The court held that the district court adequately warned defendant of the dangers of self-representation and did not err in finding that he understood them and knowingly waived his right to counsel. The court also held that the district court did nor err giving Eighth Circuit Pattern Jury Instruction No. 2.23, which instructs the jury that where a defendant represents himself, it may only consider his testimony as evidence. View "United States v. Stanley" on Justia Law