Justia Tax Law Opinion Summaries

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Political subdivisions of the State of Colorado challenged Colorado’s Taxpayer Bill of Rights (“TABOR”) under the Colorado Enabling Act and the Supremacy Clause, contending that TABOR contradicted the Enabling Act’s requirement that Colorado maintain a “republican form of government.” TABOR allowed the people of Colorado to raise or prevent tax increases by popular vote, thereby limiting the power of Colorado’s legislative bodies to levy taxes. The issue currently before the Tenth Circuit Court of Appeals was whether certain school districts, a special district board, and/or a county commission had standing to challenge TABOR. On a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), the district court held that plaintiffs had Article III standing but that they lacked political subdivision standing and prudential standing. Accordingly, the court dismissed the complaint. The Tenth Circuit concluded that it could not properly reach its conclusions at this stage of litigation. Because the Court held the political subdivision plaintiffs were not barred by standing requirements, the district court was reversed. View "Kerr v. Hickenlooper" on Justia Law

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The Supreme Court reversed the judgment of the circuit court upholding Augusta County's tax assessments against McKee Foods Corporation for the years 2011 through 2014 and remanded the matter for a new trial, holding that the assessments were not entitled to a presumption of validity. McKee filed an application for relief from erroneous assessment for real property taxes, alleging that the assessments were above the property's fair market value, were not uniform in application, and were otherwise invalid or illegal. After a trial, the circuit court upheld the assessments. The Supreme Court reversed, holding (1) because the appraiser did not properly use any of the three generally accepted approaches to valuation the Supreme Court erred in applying the presumption of validity to his 2011 assessment; (2) the 2012 and 2013 assessments were based on the same improper methodology and were not entitled to the presumption of correctness; and (3) the 2014 assessment was not entitled to a presumption of validity because it was based on a single approach to the determination of market value. View "McKee Foods Corp. v. County of Augusta" on Justia Law

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The Supreme Court affirmed the decision of the tax court dismissing petitions filed by Wal-Mart Real Estate Business Trust (the Trust) challenging Anoka County's assessment of the Trust's three parcels of land in the county, holding that the tax court properly found that the properties were "income-producing" and that the Trust's disclosures were inadequate. Each parcel at issue in this case had a Walmart retail store, operated by Walmart, Inc. The Trust was a wholly-owned subsidiary of Walmart. The tax court dismissed the Trust's petitions challenging the Trust's assessment of the parcels because the Trust failed to disclose certain information before the deadline set forth in Minn. Stat. 278.05, subd. 6(a). The Trust appealed, arguing that it was not subject to the mandatory disclosure rule because Walmart stores are not "income-producing" within the meaning of the tax statute's mandatory-disclosure provision. The Supreme Court affirmed, holding that the properties were income-producing and that the Trust's disclosures were inadequate. View "Wal-Mart Real Estate Business Trust v. County of Anoka" on Justia Law

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The Supreme Court affirmed the decision of the tax court affirming the conclusion of the Commissioner of Revenue that the sales tax exemption in Minn. Stat. 297A.68, subd. 5 for the purchase of capital equipment did not apply to items that Kroll Ontrack, LLC purchased. Kroll - a Minnesota LLC that sold technology-driven services to government entities, law firms, and corporate law departments - provided two internet-based programs that allowed its customers to maintain private databases of litigation documents and to sort, search, and produce relevant documents from those databases. From March 1, 2011 to November 30, 2012 Kroll purchased machinery and equipment needed to run its computer system and paid Minnesota sales tax on its purchases. In 2014, Kroll filed two requests for a refund of the sales tax it paid on the machinery and equipment, asserting that these items qualified as exempt capital equipment. The Commissioner of Revenue denied the refund claim. The tax court affirmed. The Supreme Court affirmed, holding that Kroll's system did not qualify for the capital equipment exemption in Minn. Stat. 297A.68, subd. 5. View "Kroll Ontrack, LLC v. Commissioner of Revenue" on Justia Law

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In this appeal, the issue presented to the Pennsylvania Supreme Court centered on whether the Business Privilege and Mercantile Tax (“BPT”) imposed by Appellee the City of York (“City”), had to be paid by Appellant, S & H Transport, Inc. (“S & H”), a freight broker, on the total yearly amount of money S & H receives from its customers for arranging shipping of commercial goods with freight carriers on their behalf, where, after deducting its commission, S & H remits the remaining money to the freight carriers as payment of their shipping fees. After careful review, the Supreme Court found that the amount of money S & H collected and passed on to freight carriers for their fees was excluded from taxation under the City’s BPT. View "S & H Transport v. City of York" on Justia Law

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Taxpayer filed a tax refund action against the United States, seeking a refund collected from him by the IRS pursuant to a treaty between the United States and Canada, for income taxes that he owed to Canada in 2006. After both countries executed the Convention Between the United States of America and Canada with Respect to Taxes on Income and on Capital, the Senate ratified it. Under Article 26A, which was later added to the treaty and ratified by the Senate, the United States and Canada agreed to assist each other with the collection of unpaid taxes. The court affirmed the district court's judgment and held that Article 26A merely facilitates collection of an already existing debt and thus did not violate the Origination Clause; Article 26A did not infringe on the Taxing Clause where the Taxing Clause is not an exclusive grant of power to Congress; and thus Article 26A did not require House-originating implementation legislation. The court also held that the IRS can use its domestic assessment authority in pursuit of the collection of a liability owed by a taxpayer to Canada. View "Retfalvi v. United States" on Justia Law

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The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) assessing use tax, additions to tax, and interest against Appellants, Business Aviation LLC and its members, as a result of Business Aviation's purchase of an aircraft, holding that Appellants qualified for the resale use tax exemption pursuant to the interplay of Mo. Rev. Stat. 144.018.1(4), 144.615(3), and 144.030.2(20). The aircraft at issue was purchased in Kansas and then leased by Business Aviation to Burgess Aircraft Management LLC, a common carrier in Missouri. The AHC determined that Appellants owed the use tax because, although it found that the right to use the aircraft was transferred to Burgess, the right was not fully transferred for valuable consideration. The Supreme Court reversed, holding that because Business Aviation transferred the right to use the aircraft to a common carrier for valuable consideration paid or to be paid, the lease agreement constituted a sale pursuant to both the use and sales tax definitions. View "Business Aviation, LLC v. Director of Revenue" on Justia Law

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Louis Hansen was indicted for tax evasion and tax obstruction. Before trial, Hansen purported to waive his right to counsel. The district court held a hearing to determine whether this waiver was made knowingly and intelligently. At that hearing, the district court asked Hansen, among other things, whether he understood he would be required to follow federal procedural and evidentiary rules if he proceeded without counsel. Hansen’s response was at best ambiguous and unclear; at one juncture, he specifically told the court that he did not understand that he would be required to abide by these rules. Without seeking clarification from Hansen, the court accepted the waiver. Hansen represented himself at trial, and the jury convicted him of both tax evasion and tax obstruction. On appeal, Hansen argued that his waiver of the right to counsel was invalid because it was not made knowingly and intelligently. The Tenth Circuit concluded the district court incorrectly determined that Hansen’s waiver was knowing and intelligent. In particular, the Court determined the trial court failed to engage in a sufficiently thorough colloquy with Hansen that would properly warn him that if he proceeded pro se, he would be obliged to adhere to federal procedural and evidentiary rules. The district court’s waiver determination was reversed and the matter remanded to vacate Hansen’s conviction and to conduct further proceedings. View "United States v. Hansen" on Justia Law

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In operating his companies, Rankin failed to remit to the IRS employees’ withholding taxes and inaccurately reported his own earnings as royalties (26 U.S.C. 7202, 7206, 7212). Rankin interfered with and delayed IRS investigations, filing amended returns containing false information and falsely claiming that fire had destroyed his records. Rankin bragged about his efforts to beat the IRS at its own game. He was convicted of 17 tax-related counts, sentenced to 60 months in prison, and required to pay restitution. The Sixth Circuit affirmed his conviction and sentence, modifying his judgment to reflect that he need not pay restitution until his term of supervised release commences. The court rejected a challenge to Count 17, which alleged that during the relevant time, Rankin had “willfully misl[ed] agents of the IRS by making false and misleading statements to those agents and by concealing information sought by those agents who he well knew were attempting to ascertain income, expenses and taxes for [Rankin] and his various business entities and interests.” The indictment contains the elements of the charged offense and does more than merely track the language of the statute. It alleges a nexus between Rankin’s misleading conduct and the agents’ attempts “to ascertain [his] income, expenses and taxes,” an investigation that went beyond the “routine, day-to-day work carried out in the ordinary course by the IRS.” The indictment reflects that the investigation was pending and that Rankin was aware of it. View "United States v. Rankin" on Justia Law

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Aspen Park, Inc., a nonprofit organization, sought a property tax exemption from Bonneville County, Idaho for its low-income apartments. The County’s Board of Equalization denied an exemption because some of the apartments were leased to tenants with incomes above 60 percent of the county’s median income level, a requirement set forth in Idaho Code section 63-602GG(3)(c). Aspen Park appealed to the Idaho Board of Tax Appeals, arguing that the statute allowed vacant apartments to be leased to higher-income earners. After the Board of Tax Appeals denied tax exempt status, Aspen Park filed a petition for judicial review with the district court. The district court granted Bonneville County summary judgment after deciding that to be eligible for a tax exemption under Idaho Code section 63-602GG, every apartment must be rented to low-income individuals or remain vacant. Aspen Park appealed, but finding no reversible error, the Idaho Supreme Court affirmed. View "Aspen Park v. Bonneville County" on Justia Law