Justia Tax Law Opinion Summaries

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This case involves a dispute over the taxation of cell phones sold in California as part of a "bundled transaction," in which a consumer purchases the phone at a reduced price from a wireless service provider in exchange for signing a contract for future wireless service. The plaintiffs challenged a state regulation that calculates sales tax on the full, unbundled price of the phone, rather than the discounted price paid by the consumer. They argued that this regulation violated the Revenue and Taxation Code and was not properly adopted under the Administrative Procedures Act.The Court of Appeal of the State of California, Third Appellate District, rejected these arguments. It concluded that the Department of Tax and Fee Administration could allocate a portion of the contract price in a bundled transaction to the cell phone and tax it accordingly. It also found that the regulation was properly adopted under the Administrative Procedures Act.The court noted that, while services are not taxable under California law, the sale of a cell phone as part of a bundled transaction is not a true discount because the wireless service provider recoups the cost of the phone through the service contract. Therefore, the Department could reasonably allocate a portion of the contract price to the phone and tax it accordingly. The court also concluded that the regulation had been properly adopted under the Administrative Procedures Act, rejecting the plaintiffs' arguments that the Department had failed to properly assess the regulation's economic impact and provide adequate notice to the public.As a result, the court reversed the portion of the lower court judgment that invalidated the regulation and prohibited the Department from applying it to bundled transactions. It remanded the case with instructions to deny the plaintiffs' petition for a writ of prohibition. View "Bekkerman v. California Department Of Tax and Fee Administration" on Justia Law

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The case involves Toolpushers Supply Co., a Wyoming-based company with a retail location in Mississippi that sells supplies and items used in the oil-and-gas industry. In 2016, the Mississippi Department of Revenue (MDOR) audited Toolpushers’ sales and concluded that the company owed an additional $124,728 based on the failure to remit sales tax on certain sales. Toolpushers considered these sales wholesale and thus tax-exempt, but the MDOR determined they were not qualified as wholesale. Toolpushers appealed to the MDOR’s Board of Review, which affirmed the decision. The company then appealed to the Mississippi Board of Tax Appeals, which also affirmed. Toolpushers continued to appeal to the Hinds County Chancery Court, First Judicial District, and both Toolpushers and the MDOR sought summary judgment. The chancellor denied Toolpushers’ motion and granted the MDOR’s. Toolpushers then appealed to the Supreme Court of Mississippi.The Supreme Court of Mississippi stated that the chancery court correctly applied the de novo standard of review. The Supreme Court affirmed the decisions of the Court of Appeals and the chancery court, which in turn affirmed the MDOR’s decision. The Supreme Court agreed with the chancery court that Toolpushers could not establish its claim that the sales were wholesale. The court emphasized that the amended Mississippi Code Section 27-77-7(5) made it clear that the chancery court should give no deference to the decision of the Board of Tax Appeals, the Board of Review, or the Department of Revenue when trying the case de novo and conducting a full evidentiary judicial hearing on all factual and legal issues raised by the taxpayer. The court declared that the Court of Appeals' decision to discuss and apply caselaw addressing the pre-2015 version of Section 27-65-77, seemingly giving deference to the MDOR’s tax decision, was an error but was not reversible. View "Toolpushers Supply Co. v. Mississippi Department of Revenue" on Justia Law

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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