Justia Tax Law Opinion Summaries

ACC OP (Oxford, Mississippi), LLC owns a student-housing property in Oxford, Mississippi. For the 2021 and 2022 tax years, the Lafayette County Tax Assessor appraised and the Board of Supervisors approved the property's value at approximately $21.3 million. ACC believed the property was overvalued by $8–9 million and objected in writing to the Board's assessments, submitting documentation as required. Prior to the Board hearing, the Tax Assessor, through her office, requested additional documents via a form referencing Mississippi Code Section 27-1-23 and directed submission to the Assessor’s Office, not the Board. ACC responded to each item, explaining that some requested documents did not exist, and submitted others.The Board denied ACC’s objections, citing ACC’s failure to submit “required documentation” and, for 2021, also referencing ACC’s absence at the Board meeting. ACC appealed both denials to the Lafayette County Circuit Court, which consolidated the appeals. After extensive litigation, the County moved to dismiss the appeals, arguing that ACC’s noncompliance with document requests barred the circuit court’s jurisdiction under Mississippi Code Section 27-35-97. The circuit court denied the motions, finding that Section 27-35-97’s preclusion applies only to a demand from the Board, not the Tax Assessor, and that ACC had complied with the written objection requirement.On interlocutory appeal, the Supreme Court of Mississippi reviewed the circuit court’s denial of the County’s motions to dismiss de novo. The Supreme Court held that the Tax Assessor’s document request was an informal request under Section 27-1-23, not a Board demand under Section 27-35-97, and thus carried no penalty for preclusion. The Board itself never made a demand for documents, and ACC satisfied the written objection requirement under Section 27-35-93. The Court affirmed the circuit court’s order and remanded the case for further proceedings. View "Lafayette County Board of Supervisors v. ACC OP" on Justia Law

In 2025, the Santa Clara County Board of Supervisors faced significant federal funding cuts for healthcare and social services due to the passage of H.R. 1 by Congress. Anticipating a loss of over $1 billion in funding within five years, the Board declared an emergency and resolved to place a general sales tax measure (Measure A) on the ballot for a special election. The proposed tax was intended to offset the funding shortfall and maintain critical county services. The Board unanimously passed a resolution and urgency ordinance with detailed findings about the impacts of H.R. 1, the necessity for immediate action, and the risks of waiting for the next general election.Plaintiffs, county residents, filed a preelection complaint and petition for writ of mandate in the Santa Clara County Superior Court. They challenged the sufficiency of the emergency declaration under article XIII C, section 2 of the California Constitution and Proposition 218, and the format and impartiality of the ballot question and analysis. After expedited proceedings, the trial court found the emergency declaration valid, denied the writ petition on that ground, and directed modifications to some ballot language. Measure A was subsequently approved by voters.The Court of Appeal of the State of California, Sixth Appellate District, reviewed the case. It held that the “cases of emergency” clause in article XIII C, section 2 should be interpreted according to its ordinary meaning, permitting local governments to declare emergencies broadly when unforeseen circumstances require immediate action. The court found the Board’s emergency declaration reasonable and supported by legislative findings. Any error in the trial court’s evidentiary rulings was not prejudicial. The court declined to review the ballot language and impartial analysis issues as moot and not of broad public interest. The order denying the writ of mandate and judgment was affirmed. View "Holtz v. Moreles" on Justia Law

A corporation that manufactures generic prescription drugs sells its products to wholesale distributors, who then sell the drugs to retail pharmacies. The manufacturer invoices distributors at a “list price,” but it negotiates separate agreements with retailers for lower prices. When a distributor sells to a retailer, it pays the manufacturer the lower negotiated price rather than the list price, deducting the difference (known as a “chargeback”) at the time of payment. This chargeback practice is common in the pharmaceutical industry, and about 97% of the manufacturer’s sales to distributors use this arrangement.Following an audit, the Ohio Department of Taxation determined that the manufacturer had underreported its gross receipts for the purposes of Ohio’s commercial-activity tax (CAT) by reporting only the amounts it actually received, rather than the higher list prices shown on invoices to distributors. The tax commissioner assessed additional taxes based on the list price. The manufacturer challenged the assessment, arguing that only the amounts actually received should count as gross receipts. The Board of Tax Appeals (BTA) agreed with the manufacturer, finding that only the amounts actually realized were subject to the CAT, and reversed the tax commissioner’s assessment.The Supreme Court of Ohio reviewed the case and affirmed the BTA’s decision. The court held that, under the CAT statute, “gross receipts” means the “amount realized” from a transaction. The court concluded that the amount realized is the sum actually received by the manufacturer from the distributors (i.e., the negotiated price with the retailer), not the list price invoiced. Thus, only the actual payments received—excluding the chargeback amounts—are subject to the CAT. The Supreme Court of Ohio therefore affirmed the BTA’s decision in favor of the manufacturer. View "Perrigo Sales Corp. v. Harris" on Justia Law

Three principals of an investment firm received approximately $141.5 million in distributive shares from the firm for the 2016 and 2017 tax years. The firm, organized as a Delaware limited partnership, did not include these distributive shares as self-employment income, asserting that the principals were "limited partners" within the meaning of the Internal Revenue Code, which exempts limited partners’ distributive shares from self-employment tax. The Internal Revenue Service audited the firm and determined that, because the principals worked full-time and exercised managerial control over the partnership, they were not limited partners. The IRS issued adjustments to increase the firm’s taxable income for both years, including the distributive shares as self-employment income.The firm challenged the IRS adjustments in the United States Tax Court, arguing both that the principals qualified for the limited partner exemption and that the Tax Court lacked jurisdiction to decide the adjustments under the TEFRA partnership-level procedures. The Tax Court found that the principals, despite their formal status as limited partners, functionally exercised managerial control and therefore did not qualify for the exemption. The Tax Court also held it had jurisdiction to review the adjustments as partnership-level items under TEFRA and upheld the IRS’s adjustments.On appeal, the United States Court of Appeals for the Second Circuit affirmed the Tax Court’s decisions. The court held that the Tax Court properly exercised jurisdiction and that the principals were not “limited partners” within the meaning of § 1402(a)(13) because they actively managed the partnership’s business. The distributive shares received by the principals were therefore subject to self-employment tax. The Tax Court’s orders and decisions were affirmed. View "Soroban Capital Partners LP v. Commissioner of Internal Revenue" on Justia Law

CheckFree Services Corporation, a subsidiary of Fiserv, Inc., provides financial-services products to banks and merchants, primarily offering debit authorization and disbursement authorization services, along with ancillary services supporting these core offerings. For the period July 2011 to June 2015, CheckFree collected sales tax from customers for these services and later sought a refund, claiming its services were not subject to Ohio’s sales-tax law. CheckFree obtained customer approval to seek refunds on their behalf and would remit any refund received to its customers.The Ohio Tax Commissioner denied CheckFree’s refund application, finding insufficient evidence of entitlement. CheckFree appealed to the Board of Tax Appeals (BTA), which held a hearing with evidence and testimony from CheckFree employees. The BTA vacated the Tax Commissioner’s final determination and remanded the case for further proceedings. The BTA found CheckFree’s debit-authorization service nontaxable, referencing Marc Glassman, Inc. v. Levin, 2008-Ohio-3819. However, the BTA determined that the taxability of ancillary services must be independently evaluated using the true-object test, as established in Cincinnati Fed. S. & L. Co. v. McClain, 2022-Ohio-725. The BTA’s analysis of the disbursement-authorization service was unclear, leading to differing interpretations by the parties.The Supreme Court of Ohio reviewed the BTA’s decision for reasonableness and lawfulness. The court concluded that the BTA’s lack of clarity regarding the taxability of CheckFree’s disbursement-authorization service prevented meaningful judicial review. The Supreme Court vacated the BTA’s decision in part and remanded the case, instructing the BTA to clarify its analysis of disbursement authorization and to independently evaluate the taxability of each ancillary service under the true-object test. The court did not disturb the BTA’s determination that debit authorization was nontaxable. View "CheckFree Servs. Corp. v. Harris" on Justia Law

Several owners of shoreline properties along Lake Austin challenged a 2019 ordinance enacted by the City of Austin. The ordinance declared that their properties had always been within Austin’s full-purpose jurisdiction, repealed a 1986 ordinance that had previously classified the properties as limited-purpose (which restricted taxation until city services were provided), and subjected the properties to full taxation. The plaintiffs alleged that Austin taxed their properties as if they were full-purpose residents but provided fewer municipal services than other full-purpose residents, raising federal and state law claims.Initially, the United States District Court for the Western District of Texas dismissed all claims under the Tax Injunction Act. On appeal, the United States Court of Appeals for the Fifth Circuit reversed the dismissal of all but two claims and remanded the case. Upon remand, the City reasserted several grounds for dismissal, including the political-question doctrine, Pullman abstention, Burford abstention, and failure to state a claim. The magistrate judge recommended Pullman abstention, which the district court adopted, dismissing the claims without prejudice and entering final judgment. The plaintiffs appealed again.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision and held that the case was not moot, as recent state legislation neither refunded taxes nor automatically disannexed the properties. The Fifth Circuit concluded that Pullman abstention was inappropriate because the plaintiffs’ federal equal protection claim did not hinge on any uncertain or disputed question of Texas law. Accordingly, the Fifth Circuit reversed the district court’s judgment and remanded the case for consideration of the City’s remaining grounds for dismissal, expressly declining to reach those grounds itself. View "Harward v. City of Austin" on Justia Law

Federal tax privacy law prohibits the Internal Revenue Service (IRS) from sharing taxpayer return information with other federal agencies unless strict statutory requirements are met. In 2025, after a request from Immigration and Customs Enforcement (ICE), the IRS developed and implemented a new protocol, known as the Data-Exchange Procedure, for responding to ICE’s mass requests for the addresses of over a million undocumented individuals. This streamlined process did not ensure that ICE’s requests satisfied the statutory prerequisites, such as providing a taxpayer’s actual address or identifying an appropriate point of contact personally involved in a criminal investigation. Using this flawed procedure, the IRS disclosed over 47,000 taxpayer records to ICE.The Center for Taxpayer Rights, joined by other organizations, sued in the United States District Court for the District of Columbia, arguing the IRS’s actions violated federal law and harmed their missions by eroding trust in the tax system, deterring immigrant engagement, and diverting resources. The district court found that the IRS had, in fact, adopted a new policy, concluded plaintiffs were likely to prevail on the merits, and issued a preliminary injunction halting further disclosures under the new procedure unless statutory requirements were strictly followed and the court was notified of any future requests.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s order. The appellate court held that the IRS’s Data-Exchange Procedure constituted final agency action reviewable under the Administrative Procedure Act (APA), did not comply with statutory requirements, and that the relief available under the Internal Revenue Code did not preclude APA review. The court found plaintiffs likely to succeed on the merits, likely to suffer irreparable harm, and that the balance of equities and public interest favored preliminary relief. The preliminary injunction was affirmed. View "Center for Taxpayer Rights v. IRS" on Justia Law

Richard Rund, a U.S. citizen and businessman, failed to report his interest in multiple foreign bank accounts over several years, specifically from 2003 to 2008, 2013, and 2014. He maintained accounts in his own name and in the names of various businesses and entities, including FOB Instruments Ltd., York Luen, and Far East Ventures Ltd. Despite knowing about his obligation to file annual FBARs (Reports of Foreign Bank and Financial Accounts), Rund omitted many accounts from his filings or failed to file altogether. He later participated in the IRS’s Offshore Voluntary Disclosure Program but was removed from it. Throughout the period, Rund experienced personal and health challenges, but continued to work with tax professionals.The United States District Court for the Eastern District of Virginia reviewed the government’s civil suit to reduce IRS-assessed penalties to judgment after Rund did not pay the $2,915,633 assessed for his willful FBAR violations. After discovery, the district court granted summary judgment for the government, finding that Rund had a financial interest in the accounts, knew of his reporting requirements, and intentionally or recklessly disregarded them. The court also held that the Excessive Fines Clause of the Eighth Amendment did not apply to civil FBAR penalties and, even if it did, the penalties were not excessive. Judgment was entered against Rund for the full penalty plus interest.The United States Court of Appeals for the Fourth Circuit reviewed the case de novo. The court affirmed summary judgment, holding that Rund’s FBAR violations were willful as a matter of law under the civil recklessness standard set out in United States v. Horowitz, 978 F.3d 80 (4th Cir. 2020). The court further held that the $2.9 million penalty did not violate the Excessive Fines Clause, as it was not grossly disproportional to the gravity of Rund’s willful, repeated violations. The judgment was affirmed. View "US v. Rund" on Justia Law

Andrew Filipowski, a software entrepreneur, accumulated significant tax liability after selling his company for $3.5 billion in 1999 and claiming $110 million in losses through a partnership later deemed a sham by the U.S. Tax Court. The IRS assessed Filipowski’s individual tax liability, including taxes, penalties, and interest totaling approximately $140 million. Filipowski did not challenge the notice of deficiency or the amount owed, nor did he make substantive payments toward the liability, aside from applying a minor tax credit. When the IRS initiated collection proceedings, Filipowski sought a Collection Due Process hearing, indicating his inability to pay and offering an installment agreement or an offer-in-compromise (OIC).After receiving Filipowski’s OIC proposing to settle his tax debt for $1.5 million, the IRS’s collections department investigated his finances. The investigation raised concerns about Filipowski’s connections to the DePasquale Trust, delayed tax filings, and alleged undisclosed assets. The IRS calculated his reasonable collection potential as $5.9 million, which was less than the owed amount but still higher than the OIC. The IRS ultimately rejected the OIC on public policy grounds, reasoning that acceptance would undermine voluntary compliance. Filipowski challenged this decision in the U.S. Tax Court, arguing that disputed facts remained and that summary judgment was inappropriate. The Tax Court granted summary judgment in favor of the IRS, concluding that the rejection was supported by Filipowski’s tax history and the magnitude of his liability.The United States Court of Appeals for the Eleventh Circuit reviewed the Tax Court’s grant of summary judgment de novo. It held that the IRS did not abuse its discretion in rejecting Filipowski’s OIC on public policy grounds and affirmed the Tax Court’s decision, finding no genuine disputes of material fact that would preclude summary judgment. View "Filipowski v. Commissioner of Internal Revenue" on Justia Law

Several individuals, including Richard and Jocelyn Markowitz, John and Elizabeth van Merkensteijn, and pension funds they controlled, were found by a jury to have defrauded the Danish tax authority (Skat) by submitting false claims for tax refunds. The defendants conceded before trial that they were never entitled to the refunds under the U.S.-Denmark tax treaty, admitting that they had not owned Danish shares or received dividends subject to Danish withholding tax. However, they argued that they had been misled by a London-based trading partner into believing otherwise and were unaware that the refund claims submitted on their behalf were fraudulent.The United States District Court for the Southern District of New York presided over the case after it was consolidated as part of multidistrict litigation. The defendants unsuccessfully moved to dismiss Skat’s claims, contending that the common law revenue rule barred the suit. The district court held that because the defendants never owned the relevant Danish stocks or paid taxes, Skat’s claims were for commercial fraud rather than enforcement of Danish tax law. After trial, the jury found each defendant liable, and the district court entered judgments totaling over $476 million based on Skat’s gross payments and prejudgment interest.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court held that Skat’s lawsuit was not barred by the revenue rule because it did not seek to enforce foreign tax laws, but rather sought recovery for fraud. The court also found no abuse of discretion in the district court’s exclusion of certain evidence and upheld the sufficiency of evidence supporting judgments against Jocelyn Markowitz and Elizabeth van Merkensteijn under an agency theory. The Second Circuit affirmed the district court’s judgment. View "Skatteforvaltningen v. Markowitz" on Justia Law