Justia Tax Law Opinion Summaries

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The Missouri Supreme Court ruled in a case involving the St. Louis County Assessor ("Assessor") and a group of St. Louis County commercial property owners, referred to as "Taxpayers." The Taxpayers alleged that their properties were assessed at a higher percentage of fair market value (FMV) than other commercial properties in the county. This claim is known as a "ratio discrimination" claim. The Taxpayers appealed their assessments to the local board of equalization ("BOE") and the Missouri State Tax Commission ("STC"). In some of the appeals, the BOE and STC did not change the Assessor's original FMV and assessed value, while in others, they ordered reductions in the estimated FMV of the property, resulting in a lower assessed value and decreased tax liability.The STC found that the Taxpayers did not provide substantial and persuasive evidence of discrimination. The Taxpayers then filed a petition for judicial review, and the circuit court reversed the STC's decision and order and remanded the case for retrial. The Assessor appealed to the Missouri Supreme Court, which found that the STC's decision was authorized by law and supported by substantial evidence. The Court agreed with the STC that the Taxpayers did not provide persuasive evidence of discriminatory assessment. The Court held that the actual assessment level used to analyze a claim of discriminatory assessment and taxation is based on the assessed value that actually determines the tax liability. The Court also found that the STC did not abuse its discretion by denying certain discovery requests and quashing subpoenas for the deposition of the Assessor and several staff appraisers. The circuit court's judgment was vacated, and the STC's decision and order was reinstated. View "Crown Diversified Industries Corp. v. Zimmerman" on Justia Law

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During the COVID-19 pandemic, the Ohio General Assembly passed a temporary law (H.B. 197) stating that for a limited time, Ohio workers would be taxed by the municipality that was their “principal place of work” rather than the municipality where they actually performed their work. Josh Schaad, who primarily worked from his home in Blue Ash during the pandemic, challenged this law after his employer withheld municipal taxes from his wages and forwarded them to Cincinnati, the location of his employer's business. Schaad's principal argument was that the Due Process Clause of the Fourteenth Amendment to the United States Constitution forbids an Ohio municipality from taxing a nonresident for work performed outside of that municipality. The Supreme Court of Ohio rejected Schaad's argument and affirmed the judgment of the First District Court of Appeals, holding that the Due Process Clause did not prohibit the General Assembly from directing that an Ohio citizen pay taxes to the municipality where the employee’s principal place of work was located rather than to the subdivision of the state where the employee actually worked. The court also held that the General Assembly's power to pass emergency legislation did not expand its substantive constitutional powers. View "Schaad v. Alder" on Justia Law

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In a case regarding the timing of appeals, the Supreme Court of the State of Hawaii has clarified the interpretation of Hawaii Rules of Appellate Procedure (HRAP) Rule 4(a)(3). The case arose from a tax dispute between taxpayers Schuyler and Marilyn Cole and the City and County of Honolulu, leading to a consolidated appeal with other similar cases. In July 2017, the Tax Appeal Court granted summary judgment to the City, and the Taxpayers filed a motion for reconsideration. However, the court failed to rule on this motion within 90 days, and the court's clerk did not provide notice of automatic denial of the motion, as required by HRAP Rule 4(a)(3).The Supreme Court held that if the court clerk does not notify the parties within 5 days after the 90th day that a post-judgment motion has been automatically denied, the time to appeal starts either when the clerk provides notice to the parties or when the court enters a nullified order. The Court also held that judicial inaction cannot operate to foreclose a right to appeal. As a result, the Taxpayers' appeal clock started when the court issued its late order on the motion for reconsideration, and they filed their appeal within the 30-day window from that point, therefore the Intermediate Court of Appeals had jurisdiction over the appeal.The Supreme Court expressed concern about the potential for indefinite extension of the appeal deadline due to court and clerk oversight and suggested that the Standing Committee to Review the Hawaii Rules of Appellate Procedure may wish to consider proposing an amendment to HRAP Rule 4(a)(3). The case was remanded to the Intermediate Court of Appeals for further proceedings. View "Cole v. City and County of Honolulu" on Justia Law

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The United States Court of Appeals for the Sixth Circuit ruled in favor of the United States in a case involving civil penalties for failure to file a Report of Foreign Bank and Financial Accounts (FBAR). The defendant, James J. Kelly Jr., was a U.S. citizen who had a bank account in Switzerland with a balance exceeding $10,000, which required him to file an FBAR with the U.S. Department of the Treasury. Failure to do so risks civil penalties. The government sued Kelly for willfully failing to timely file FBARs for 2013, 2014, and 2015. The district court granted summary judgment to the government.The Court of Appeals affirmed the lower court's decision, finding that Kelly's failure to comply with his FBAR obligations was reckless, if not knowing. The court argued that Kelly had taken steps to intentionally evade his legal duties and acted with objective recklessness. Despite being aware of his FBAR obligations and participating in the IRS Offshore Voluntary Disclosure Program (OVDP), Kelly failed to ensure that the FBARs were submitted. His failure to consult with any professionals about his tax obligations and his considerable efforts to keep his account secret were further evidence of his willful violation of the Bank Secrecy Act. Thus, the court concluded that Kelly's failure to satisfy his FBAR requirements for the years 2013, 2014, and 2015 was a willful violation of the Bank Secrecy Act. View "United States v. Kelly" on Justia Law

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In the case before the Supreme Court of the State of South Dakota, a Minnesota-based company, Ellingson Drainage, Inc., was charged a use tax by the South Dakota Department of Revenue (DOR) after an audit revealed Ellingson had not paid use tax on equipment used in South Dakota but purchased elsewhere. Ellingson challenged the constitutionality of the tax in an administrative appeal, which was dismissed. The company then appealed to the circuit court, which affirmed the imposition of the tax, holding it did not violate the Due Process Clause of the Fourteenth Amendment or the Interstate Commerce Clause. Ellingson appealed this decision and the Supreme Court of the State of South Dakota also affirmed the imposition of the tax.The Court determined that the use tax, imposed under SDCL 10-46-3, met all four prongs of the Complete Auto test, which is used to determine if a tax violates the Interstate Commerce Clause. The Court found that Ellingson had a sufficient connection to South Dakota, the tax was fairly related to benefits provided to the taxpayer, the tax did not discriminate against interstate commerce, and the tax was fairly apportioned. Moreover, the Court concluded that the use tax did not violate the Due Process Clause of the Fourteenth Amendment, as Ellingson had a sufficient connection to South Dakota and the statute was rationally related to South Dakota values.The Court rejected Ellingson's argument that the tax was unfairly disproportionate to the extent of the equipment’s usage in South Dakota, stating that "use is use" and that the provisions of SDCL 10-46-3 do not contemplate a formula by which to measure use. The Court concluded that such a change is not a judicial one, but rather one better suited to the formulation of public policy by the Legislature. View "Ellingson Drainage v. Dep’t Of Revenue" on Justia Law

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In this case, the Supreme Court of the State of North Dakota dealt with a dispute between divorced parents, Nickolette Keller and Michael Keller, over tax exemptions for their children. The divorce judgement had allocated the right to claim the oldest child to Michael Keller and the younger child to Nickolette Keller. In 2023, Michael Keller attempted to claim his eldest child on his taxes, but received a letter from the child, facilitated by Nickolette Keller, stating the child would be filing his own taxes. Consequently, Michael Keller filed a motion for contempt against Nickolette Keller.The district court found Nickolette Keller in contempt for willful and inexcusable intent to violate the court order and awarded Michael Keller attorney’s fees up to when Nickolette Keller provided the necessary tax form. The Supreme Court of the State of North Dakota affirmed the district court's decision, holding that Nickolette Keller's refusal to comply with the divorce judgement and her facilitation of the child's letter constituted contempt.Michael Keller cross-appealed, arguing the district court erred in not awarding him the full amount of attorney’s fees. The Supreme Court denied his claim, holding that the district court did not abuse its discretion in not awarding Michael Keller attorney’s fees incurred after Nickolette Keller provided him the IRS form. Michael Keller also unsuccessfully requested attorney’s fees on appeal, which the Supreme Court denied due to inadequate briefing and argument. View "Keller v. Keller" on Justia Law

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In the case before the Court of Appeal of the State of California First Appellate District Division Two, the appellant, Debra Abney, challenged the decision of the State Department of Health Care Services and the City and County of San Francisco to consider money garnished from her Social Security payments as income for the purposes of determining her eligibility for benefits under Medi-Cal.Abney's Social Security payments were being reduced by nearly $600 each month to satisfy a debt she owed to the IRS. The authorities considered this garnished money as income, which led to Abney being ineligible to receive Medi-Cal benefits without contributing a share of cost. Abney argued that the money being garnished was not income “actually available to meet her needs” under the regulations implementing the Medi-Cal program.The trial court rejected Abney's argument, and she appealed. The Court of Appeal affirmed the trial court's decision. The Court of Appeal held that the tax garnishment was "actually available" to meet Abney's needs because it benefitted her financially by helping to extinguish her debt to the IRS. Therefore, the garnished money was correctly considered as income for the purpose of calculating her eligibility for the Medi-Cal program. View "Abney v. State Dept. of Health Care Services" on Justia Law

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The case concerned the valuation of agricultural land owned by Donald V. Cain Jr. for the 2013 tax year. Cain appealed the decision of the Custer County Board of Equalization, which upheld the assessed values of his land as determined by the county assessor. The Nebraska Tax Equalization and Review Commission (TERC) affirmed the decision of the Board. Cain then appealed to the Nebraska Supreme Court, arguing that the valuation attributed to the property for the 2012 tax year should have been used for the 2013 tax year. The Supreme Court disagreed and affirmed TERC's decision. The Supreme Court held that each year’s assessment is separate and a property's valuation for one year depends upon the evidence pertaining to that year. The Court also found sufficient evidence of the actual value that the Assessor and the Board attributed to the property, and that the Assessor's mass appraisal methodology was appropriately conducted and supported the assessed valuation of the property. View "Cain v. Custer Cty. Bd. of Equal." on Justia Law

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The Supreme Court of the State of Montana affirmed a lower court's ruling in a tax dispute between Bluebird Energy LLC and the State of Montana Department of Revenue. Bluebird Energy acquired three oil wells that had previously qualified for a tax incentive known as the New Well Tax Incentive, which provides a reduced tax rate for the first 18 months of production from a well. After acquiring the wells, Bluebird Energy invested in permanent production facilities and resumed oil production, believing that it would qualify for the New Well Tax Incentive. However, the Department of Revenue determined that the wells were not eligible for the incentive because the initial 18-month incentive period had already expired under the previous ownership. Bluebird Energy appealed this decision.The Supreme Court held that, according to the statutes governing the New Well Tax Incentive, the 18-month period for the reduced tax rate begins when production begins and runs contiguously, regardless of whether production is continuous. The court found that the Department of Revenue's interpretation of the statutes was correct and consistent with the legislative intent. The court also held that the relevant administrative rules were consistent with and reasonably necessary to carry out the purpose of the Oil and Gas Production Tax statutes. Therefore, Bluebird Energy was not entitled to the reduced tax rate. View "Bluebird Energy v. DOR" on Justia Law

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The Supreme Court of the State of Colorado reviewed a case involving a dispute over the methodology for implementing Tax Increment Financing (TIF) under Colorado's Urban Renewal Law (URL). The respondents, collectively known as AURA, argued that the methodology applied by the Colorado State Property Tax Administrator and the Arapahoe County Assessor was in violation of the URL because it differentiated between direct and indirect benefits when adjusting the base and increment values of blighted property in urban renewal areas. They contended that this methodology deprived urban renewal authorities of property tax revenues they should receive due to enhanced market perceptions of properties located in a TIF plan. The court of appeals agreed with AURA and reversed the district court's summary judgment favoring the Assessor. However, the Supreme Court held that the Administrator's methodology does not violate the URL. The URL does not prescribe a specific methodology but gives the Administrator broad authority to determine how to calculate and proportionately adjust the base and increment values. The court concluded that the Administrator's differentiation between direct and indirect benefits does not conflict with the URL, and therefore, reversed the portion of the division’s judgment concerning the Administrator’s methodology and affirmed that the district court correctly entered summary judgment. View "Kaiser v. Aurora Urban Renewal Authority" on Justia Law