Justia Tax Law Opinion Summaries

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The Supreme Court affirmed in part and reversed in part the judgment of the circuit court granting Isle of Wight County's motion to strike International Paper Company's application for correction of a machinery and tools tax assessment that International Paper claimed was nonuniform, invalid, and illegal, holding that the court erred in sustaining the County's motion to strike as to counts 4 and 5 regarding uniformity.International Paper owned a paper production facility in the County that utilized paper-making machinery for its manufacturing operations. International Paper filed an application for a correction of the County's "nonuniform, invalid & illegal" assessment of International Paper's machinery and tools taxes for tax year 2017. The refund action had five counts. After a bench trial, the County moved to strike International Paper's evidence and claims. The circuit court granted the motion to strike and dismissed the refund action with prejudice. The Supreme Court reversed in part and remanded this case for further proceedings, holding (1) the circuit court did not err in sustaining the County's motion to strike as to three counts regarding vested rights, separation of powers, and the County's alleged lack of statutory authority; but (2) the circuit court erred in sustaining the County's motion to strike as to two counts regarding uniformity. View "International Paper Co. v. County of Isle of Wight" on Justia Law

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The Supreme Court held that Section 858.01 of the Codified Ordinances of the Village of Put-In-Bay does not impose an unconstitutional tax on motor vehicles.The Village filed separate criminal complaints against Defendants, who operated businesses that made motorized golf cars available for rent within the Village, for failing to pay the annual license fee on their golf carts. The trial court dismissed the criminal complaints on the basis that section 858.01 is for a similar purpose as the annual state license tax levied on the operation of motor vehicles under Ohio Rev. Code 4503.02 and the local government tax permitted by Ohio Rev. Code 4504.02 and 4504.06. The court of appeals reversed, concluding that section 858.01 was not preempted by state law and did not violate Ohio Const. art. XII, 5a. The Supreme Court affirmed, holding (1) the tax is a constitutional exercise of the municipality's right to tax; and (2) section 858.01 does not impose an unconstitutional tax. View "Put-in-Bay v. Mathys" on Justia Law

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In 2015, the owners of a 13,000-acre tract of land known as 70 Ranch successfully petitioned to include their tract in a special district. After 70 Ranch was incorporated into the district, the district began taxing the leaseholders of subsurface mineral rights, Bill Barrett Corporation, Bonanza Creek Energy, Inc., and Noble Energy, Inc. for the oil and gas they produced at wellheads located on 70 Ranch. The Lessees, however, objected to being taxed, arguing the mineral interests they leased could not be included in the special district because neither they nor the owners of the mineral estates consented to inclusion, which they asserted was required by section 32-1-401(1)(a), C.R.S. (2019), of the Special District Act. The Colorado Supreme Court determined that section 401(1)(a) permitted the inclusion of real property covered by the statute into a special taxing district when (1) the inclusion occurred without notice to or consent by the property’s owners and (2) that property was not capable of being served by the district. The Court answered "no," however, 32-1-401(1)(a) required the assent of all of the surface property owners to an inclusion under that provision, and inclusion was only appropriate if the surface property could be served by the district. "Section 32-1-401(1)(a) does not require assent from owners of subsurface mineral estates because those mineral estates, while they are real property, are not territory. Thus, Lessees’ consent was not required for the inclusion of 70 Ranch in the special district." The Court therefore affirmed the court of appeals on alternate grounds. View "Barrett Corp. v. Lembke" on Justia Law

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New York State appealed from the district court's consolidated judgments invalidating the State's Opioid Stewardship Act (OSA), which requires opioid manufacturers and distributors to make an annual payment to fund statewide opioid-related services but prohibits them from passing the costs of those payments through to their customers.The Second Circuit held that the OSA's opioid stewardship payment is a tax within the meaning of the Tax Injunction Act (TIA), and that the district court should have dismissed plaintiff's challenges to the payment under the TIA for lack of jurisdiction. After considering the factors in Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 737 F.3d 228, 232–33 (2d Cir. 2013), and San Juan Cellular Telephone Co. v. Public Service Commission, 967 F.2d 683, 685 (1st Cir. 1992), the court concluded that the primary purpose of the opioid stewardship payment is to raise revenue, not to punish or regulate plaintiffs and other licensees who are required to make the payment. Accordingly, the court reversed the judgments, except insofar as they relate to the pass-through prohibition, which is not before the court. View "Association for Accessible Medicines v. James" on Justia Law

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The Eleventh Circuit affirmed the bankruptcy court's conclusion that debtors' 2001 tax liability was not dischargeable under 11 U.S.C. 523(a)(1)(C) because debtors "willfully attempted . . . to evade or defeat" that liability. The court found substantial evidence of attempted evasion and concluded that the bankruptcy court did not clearly err in finding that debtors acted willfully when they redirected their funds away from paying their debt and toward their personal luxuries. The court has held that excessive discretionary spending constitutes circumstantial evidence of willfulness. Furthermore, the bankruptcy court also inferred willfulness from debtor's exploitation of the offer-in-compromise process. View "Feshbach v. Department of Treasury Internal Revenue Service" on Justia Law

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Jay Campbell, on behalf of himself and a certified class of "other persons similarly situated," appealed the grant of summary judgment on claims challenging the constitutionality of two municipal taxes adopted in 2013 by the City of Gardendale in connection with Gardendale's planned creation of a municipal school system. After review, the Alabama Supreme Court concluded Campbell did not demonstrate that the Gardendale school taxes were rendered invalid by operation of Local Amendment 14. The Court therefore pretermitted discussion of the alternate arguments for affirmance presented by Jefferson County and Smallwood. The judgment of the trial court was affirmed. View "Campbell v. City of Gardendale" on Justia Law

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Appellant Don Weaver brought a declaratory judgment action to challenge the constitutionality of S.C. Code Ann. section 6-11-271 (2004), which addressed the millage levied in certain special purpose districts. Appellant owned property and was a taxpayer in the Recreation District, a special purpose district created to fund the operation and maintenance of parks and other recreational facilities in the unincorporated areas of Richland County, South Carolina. Appellant first argued section 6-11-271 was unconstitutional because it violated the South Carolina Constitution's prohibition on taxation without representation. Appellant next contended section 6-11-271 did not affect all counties equally and was, therefore, special legislation that was prohibited by the South Carolina Constitution. Appellant lastly argued section 6-11-271 was void because it violated Home Rule as set forth in the state constitution and the Home Rule Act. The circuit court found Appellant failed to meet his burden of establishing any constitutional infirmity. To this, the South Carolina Supreme Court concurred and affirmed judgment. View "Weaver v. Recreation District" on Justia Law

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After plaintiffs filed suit against their accounting firm for negligence, the firm settled the case by paying plaintiffs $800,000. The Eleventh Circuit affirmed the district court's grant of summary judgment to the government as to plaintiffs' deduction of litigation expenses as a business expense, because the litigation between plaintiffs and the firm was personal in its character and origin. The court also affirmed the district court's grant of summary judgment in favor of the government as to plaintiffs' $1.4 million deduction for a purported loss, because the settlement agreement bars plaintiffs from deducting any fraction of the settlement for the covered transactions.With respect to the $800,000 settlement payment exclusion, the court reversed the district court's grant of summary judgment in favor of plaintiffs and remanded for entry of judgment in favor of the government. Assuming that Clark v. Comm'r, 40 B.T.A. 333, 335 (1939), was correctly decided, and that its rationale applies in a case like this one where the accounting malpractice related not to the preparation of a tax return but to the structuring of an underlying transaction, the court held that plaintiffs failed to sustain their burden of demonstrating that the $800,000 settlement was excludable. In this case, plaintiffs failed to meet their burdens of showing their entitlement to the exclusion and the amount of that exclusion. The court explained that the IRS' tax deficiency notice was presumed correct, and plaintiffs did not overcome that presumption. View "McKenney v. United States" on Justia Law

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The Supreme Court affirmed the order of the district court finding that the production of aggregate by Ash Grove Cement Company qualified as "processing" under the Nebraska Advantage Act (NAA), Neb. Rev. Stat. 77-5701 to 77-5735, and finding that Ash Grove's aggregate production did not qualify as "manufacturing" under the NAA, holding that the appeals in this case were without merit.Because Lyman-Richey, which sold aggregate products used for things like manufacturing concrete, was wholly owned by Ash Grove, Ash Grove was eligible to include Lyman-Richey in its application for NAA tax incentives. At issue in this case was whether the district court erred in (1) finding that aggregate production locations were not engaged in "manufacturing" under the NAA; (2) denying Lyman-Richey's claims for overpayment of sales and use tax based on the manufacturing machinery or equipment exemption; and (3) finding the aggregate production locations were engaged in "processing" under the NAA. The Supreme Court affirmed, holding (1) although Ash Grove did not engage in "manufacturing" when it produced aggregate without crushing, it did engage in the qualified business of "processing" under the NAA; and (2) Lyman-Richey failed to prove entitlement to overpayment of sales and use tax based on the manufacturing machinery and equipment exemption. View "Ash Grove Cement Co. v. Nebraska Department of Revenue" on Justia Law

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The Court of Appeal affirmed the trial court's issuance of a writ of administrative mandamus allowing the Assessor to levy more than four years' worth of escape assessments under Revenue and Taxation Code section 532, subdivision (b)(3). The court held that every single one of the prerequisites for the escape assessments challenged by Downey SPE is not only satisfied, but is undisputedly so. The court also held that the filing requirement set forth in section 480.1 is not satisfied when the taxpayer acquiring the legal entity recorded a document with less than all the information required by section 480.1. Therefore, taxpayers must strictly comply with those aspects of the notice requirements of section 480.1. In this case, it is undisputed that Downey SPE's act of recording the Certificate with the County Recorder's Office did not strictly comply with section 480.1's informational requirements (because it lacked several categories of information) or with section 480.1's requirement that the information be provided to the State Board. View "Prang v. L.A. County Assessment Appeals Board No. 2" on Justia Law