Justia Tax Law Opinion Summaries

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The IRS began a criminal investigation of Gaetano, who owns Michigan cannabis dispensaries. Portal 42, a software company that provides the cannabis industry with point-of-sale systems, confirmed that Gaetano was a client. Agents served a summons, ordering Portal 42 to produce records “and other data relating to the tax liability or the collection of the tax liability or for the purpose of inquiring into any offense connected with the administration or enforcement of the internal revenue laws concerning [Gaetano] for the periods shown.” The IRS did not notify Gaetano about the summons. Portal 42 sent the IRS an email with a hyperlink to the requested records. An IRS computer specialist copied the documents. None of the personnel in the IRS’s Criminal Investigation Division have viewed the records.Gaetano filed a petition under 26 U.S.C. 7609, seeking to quash the summons, arguing that the IRS should have notified Gaetano about the summons and that it was issued in bad faith. The Sixth Circuit affirmed the dismissal of the action for lack of subject-matter jurisdiction because Gaetano lacked standing. Section 7609 waives the government’s sovereign immunity to allow taxpayers to bring an action to quash certain third-party IRS summonses. An exception applies because the summons here was issued by an IRS criminal investigator “in connection” with an IRS criminal investigation and the summoned party is not a third-party recordkeeper. Without a statutory waiver of sovereign immunity, subject-matter jurisdiction cannot obtain. View "Gaetano v. United States" on Justia Law

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In these cases concerning property tax abatement requests the Supreme Judicial Court affirmed two decisions of the superior court vacating a decision denying requests for abatement and granting a petition for judicial review of an adverse decision concerning another request for a tax abatement, holding that the superior court did not err.This consolidated appeal concerned property tax abatement requests made by the Roque Island Gardner Homestead Corporation (RIGHC). The superior court vacated a decision of the Board of Appeals (BOA) of the Town of Jonesport denying RIGHC's requests for abatement concerning three tax years and remanded the matter for the BOA to make an independent determination of the property's fair market value. The court also granted judicial review as to the State Board of Property Tax Review's adverse decision concerning RIGHC's request for another tax year abatement and directed the Town to grant the abatement request. The Supreme Judicial Court affirmed both decisions, holding that the superior court did not err. View "Roque Island Gardner Homestead Corp. v. Town of Jonesport" on Justia Law

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To finance the purchase of a home in 2008, Wood borrowed $39,739.44. About six years later, Wood defaulted, with an unpaid balance of $23,066.66. The Department of Housing and Urban Development (HUD), which had insured the loan, paid that amount and sent Wood a Notice of Intent to Collect by Treasury Offset, using income tax overpayments. In 2017, Treasury offset Wood's federal tax overpayment of $9,961 toward the debt. In 2018, Wood filed a Chapter 7 bankruptcy petition, opting to exempt any 2017 income tax overpayment. Treasury nonetheless offset a $6,086 overpayment.Wood requested that the bankruptcy court void HUD’s lien and order a return of the $6,086. The court concluded that a debtor’s tax overpayment becomes property of the estate, protected by the stay, and the debtor may exempt the overpayments and defeat a governmental creditor’s right to setoff. The district court agreed, stating that because Treasury had knowingly intercepted the overpayments after the Woods filed for bankruptcy, equity did not favor granting permission to seek relief from the automatic stay.The Fourth Circuit remanded. The protections typically accorded properly exempted property under 11 U.S.C. 522(c) do not prevail over the government’s 26 U.S.C. 6402(d) right to offset mutual debts. Although the government exercised that right before requesting relief from the automatic stay, there is no reason to abridge the government’s 11 U.S.C. 362(d) right to seek the stay’s annulment. View "Wood v. United States Department of Housing and Urban Development" on Justia Law

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Humboldt County Ballot Measure S proposed a tax on commercial cultivators of marijuana and was approved by the voters. The tax became operative on January 1, 2017. Measure S allows the Board of Supervisors to amend the law or approve enforcement regulations promulgated by the administrative officer if the action “does not result in an increase in the amount of the tax or broaden the scope of the tax.” The Supervisors amended Measure S in June 2017, and again in April 2018, making the tax applicable to all persons with a cultivation permit, as opposed to just those engaged in cultivation; redefining “cultivation area”; and changing the time when the taxes start to accrue.Silva owns property in Humboldt County. No one cultivated cannabis on the property in 2017. The County sent her an invoice of $40,000 in commercial cannabis cultivation taxes under Measure S for the year 2017–2018. Silva paid the invoice. The County sent an invoice of $54,025 for the year 2018–2019. Silva again paid the invoice.A 2018 petition argued that the amendments impermissibly broadened Measure S. The court of appeal affirmed a ruling in Silva's favor. The trial court was not procedurally barred from considering the challenge to the Board’s amendments. The doctrine of exhaustion of administrative remedies does not apply and the amendments expanded, rather than just clarifying, Measure S. View "Silva v. Humboldt County" on Justia Law

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The Supreme Court reversed the judgment of the circuit court dismissing Plaintiffs' three separate complaints against the County of Northampton (the County) and the Town of Cape Charles (the Town) with prejudice, holding that the circuit court abused its discretion in excluding one of Plaintiffs' witnesses as an expert.In their complaint, Plaintiffs alleged that their real property had been overvalued in recent tax assessments. The County and Town each filed a motion in limine and motion to dismiss arguing that Plaintiffs' two experts should be excluded because Plaintiffs had not complied with the court's uniform pretrial scheduling order. The court granted the motion to exclude both witnesses as experts and dismissed the case with prejudice. The Supreme Court reversed, holding that the trial court abused its discretion by excluding one of Plaintiffs' intended expert witnesses from testifying at trial. View "Galloway v. County of Northampton" on Justia Law

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Jeffers underreported his 2008 income and was audited. The IRS assessed additional taxes and penalties. Jeffers filed his 2009 tax return late, reporting that he owed more than $12,000 in taxes without including any payment. The IRS assessed the unpaid amount plus interest and penalties. An installment agreement was terminated when he failed to make payments. In 2012, the IRS mailed Jeffers proper notice of the tax lien on his property with respect to unpaid debt from the 2008 and 2009 tax periods, 26 U.S.C. 6320(a), 6321, explaining the right to a Collection Due Process (CDP) hearing. Jeffers did not request one. He filed amended returns claiming he was owed refunds. In 2017, the IRS notified Jeffers of its intent to levy on his property. This time, Jeffers timely requested a CDP hearing.The officer found the liability issue precluded because Jeffers had a prior opportunity to raise the issue in 2012. The Office of Appeals issued a notice of determination sustaining the proposed levy action. The Tax Court granted the IRS summary judgment. The Seventh Circuit affirmed. Jeffers could not challenge his underlying tax liability because he received notice of the federal tax lien and had the opportunity to dispute his tax liability then. The settlement officer was not obligated to consider the amended tax returns because there is no right to have one’s amended return considered. View "Jeffers v. Commissioner of Internal Revenue" on Justia Law

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Plaintiffs Johnathan Billewicz, Michael Billewicz, J & M Investment Trust, and Lillian Billewicz appealed a the trial court’s grant of summary judgment to defendant Town of Fair Haven. Plaintiffs sought damages and a declaratory judgment that deeds purporting to convey their properties to the Town following a tax sale were void. The court found their action was foreclosed by the one-year statute of limitations at 32 V.S.A. 5294(4) for claims challenging the validity of a tax collector’s acts. Plaintiffs argued this was error because their claims were instead subject to the three-year statute of limitations for actions for the recovery of land sold at a tax sale under 32 V.S.A. 5263. Finding no reversible error, the Vermont Supreme Court affirmed. View "Billewicz, et al. v. Town of Fair Haven" on Justia Law

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The Ninth Circuit reversed the district court's judgment in an action brought by the United States against taxpayer for tax penalties and interest involving her failure to report foreign financial accounts. In this case, taxpayer did not timely file a Report of Foreign Bank and Financial Accounts form (FBAR) disclosing her foreign financial accounts in the United Kingdom. The IRS found that taxpayer violated the reporting requirements of 31 U.S.C. 5314 and imposed multiple penalties under 31 U.S.C. 5321(a)(5)(A) based on her belated submission of a single FBAR.The panel held that section 5321 authorizes the IRS to impose only one non-willful penalty when an untimely, but accurate, FBAR is filed, no matter the number of accounts. In this case, taxpayer was required to file one FBAR for the 2010 calendar year by June 30, 2011 and failed to do so; she committed one violation and the IRS concluded that her violation was non-willful; and thus the maximum penalty for such a violation "shall not exceed $10,000." View "United States v. Boyd" on Justia Law

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Appellants were five individuals and one Idaho limited liability company (collectively, “Plaintiffs”) who owned real property in the City of Boise (“City”) and paid ad valorem taxes to Ada County, Idaho. Plaintiffs brought an action in district court challenging ordinances the City passed that allocate tax increment financing (“TIF”) revenues to Capital City Development Corporation (“CCDC”), the City’s urban renewal agency. Specifically, the ordinances approved the allocation of TIF revenues for CCDC’s use in the Shoreline District Urban Renewal Project Area and Gateway East Economic Development District Project Area. Because Plaintiffs’ alleged injuries were solely predicated upon their status as taxpayers, the district court dismissed their complaint for lack of standing. On appeal to the Idaho Supreme Court, Plaintiffs alleged they had standing under Koch v. Canyon County, 177 P.3d 372 (2008), in which the Supreme Court held that no particularized harm was necessary to establish taxpayer standing where a violation of article VIII, section 3 of the Idaho Constitution was alleged. Because the Supreme Court determined here that, as a matter of law, the ordinances Plaintiffs challenged did not violate article VIII, section 3, it affirmed the judgment of the district court. View "Hoffman v. City of Boise" on Justia Law

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After the Commissioner issued tax adjustments to the partnership of BCP, members of BCP, themselves limited partnerships, challenged the adjustments, arguing they were untimely and that the Commissioner mistakenly determined that the investment partnership was a sham. The tax court found the adjustments timely and upheld the Commissioner's adjustments.The DC Circuit concluded that the tax court applied correct legal precedent and committed no clear error in its findings upholding the Commissioner's tax adjustments. The court explained that the tax court outlined various events that occurred before the taxpayers' individual extensions or the partnership extension were signed, all of which would have put the taxpayers on notice that they should not rely on E&Y's advice any longer. The court also concluded that there was no error in the tax court's determination that BCP was a "sham" partnership. The court explained that the tax court correctly applied Luna v. Commissioner, 42 T.C. 1067 (1964), to determine whether the parties intended to, and did in fact, join together for the present conduct of an undertaking or enterprise. In this case, the tax court correctly concluded that BCP failed the Luna analysis. Finally, the court concluded that the tax court did not abuse its discretion in denying a non-participating party's intervention. Accordingly, the court affirmed the tax court's judgment. View "BCP Trading and Investments, LLC v. Commissioner of Internal Revenue" on Justia Law