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Municipalities sued other municipalities to recover revenue under the Use Tax Act (35 ILCS 105/1). Use tax is imposed on the privilege of using in Illinois tangible personal property purchased at retail from a retailer outside the state. Retailers who have a sufficient physical presence in Illinois and have out-of-state facilities from which Internet, telephone, and mail-order sales are made of tangible personal property to be used in Illinois must collect use tax from the purchaser and remit the tax to the Illinois Department of Revenue (IDOR) to prevent avoidance of sales tax. The general rate for both sales tax and use tax is 6.25% of the sale price with 5% allocated to the state. For sales tax, the remaining amount is distributed to the municipality and county where the sale occurred. For use tax, the remaining share is distributed to Chicago, the RTA Fund, the Madison County Mass Transit District, and the Build Illinois Fund. The balance is distributed to all other municipalities based on their proportionate share of the state population. The Illinois Supreme Court reinstated the dismissal of the suit. IDOR has been vested, for purposes of plaintiffs’ claims, with exclusive authority to audit the reported transactions that plaintiffs dispute and to redistribute the tax revenue due to an error. In addition, under Municipal Code section 8-11-21, the General Assembly must give a municipality the right to bring suit about missourcing or misreporting of use taxes. View "Chicago v. Kankakee" on Justia Law

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The Supreme Court vacated the order and judgment of the circuit court granting the State’s motion to dismiss for lack of jurisdiction this challenge to the State’s implementation of Haw. Rev. Stat. 248-2.6, holding that the State’s application of section 248-2.6 was consistent with the statute’s plain language and legislative intent and that the statute does not violate the state or federal constitutions. Section 248-2.6 authorizes the State to be reimbursed for its costs in administering a rail surcharge on state general excise and use taxes on behalf of the City and County of Honolulu. Tax Foundation of Hawai’i filed a class action on behalf of all taxpayers in the City and County of Honolulu challenging the State’s application of section 248-2.6. The circuit court granted the State’s motion to dismiss. The Supreme Court reversed and remanded with instructions to grant the State’s motion for summary judgment on the merits, holding (1) the circuit court had jurisdiction to hear Tax Foundation’s claims; (2) Tax Foundation had standing; (3) the State did not violate the statute by retaining ten percent of the surcharge gross proceeds; and (4) the State’s application of section 248-2.6 did not violate the state or federal constitutions. View "Tax Foundation of Hawaii v. State" on Justia Law

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The Supreme Court reversed a consolidated order of the Circuit Courts of Randolph, Barbour and Upshur Counties pursuant to which the Tax Commissioner’s determination was upheld that Penn Virginia Operating Company’s (Penn) forest properties were not eligible for lower valuation for tax year 2016, holding that Penn was deprived of its right to an administrative appeal of the denial of its application. Penn sought to have its timberland taxed at a lower appraised value subject to a cooperative contract with the State Division of Forestry (Forestry) pursuant to the Division’s Managed Timberland Program. The consolidated order in this case denied relief from the Commissioner’s determination that Penn’s forest properties were not eligible for lower valuation because Penn filed its application with Forestry for certification of its properties as managed timberland sixteen days after the deadline. The Supreme Court reversed and remanded this case with directions to allow Penn to appeal the denial of its application to Forestry’s Director, holding that Penn received incorrect information from Forestry and could have appealed the denial but was advised otherwise. View "Penn Virginia Operating Co., LLC v. Honorable Phyllis K. Yokum" on Justia Law

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The State of Washington taxes “motor vehicle fuel importer[s]” who bring large quantities of fuel into the state by “ground transportation,” Wash. Code 82.36.010(4), (12), (16). Cougar, a wholesale fuel importer owned by a member of the Yakama Nation, imports fuel over Washington’s public highways for sale to Yakama-owned retail gas stations located within the reservation. In 2013, the state assessed Cougar $3.6 million in taxes, penalties, and licensing fees for importing motor vehicle fuel. Cougar argued that the tax, as applied to its activities, is preempted by an 1855 treaty between the United States and the Yakama Nation that reserves the Yakamas’ “right, in common with citizens of the United States, to travel upon all public highways,” 12 Stat. 953. The Washington Supreme Court and the U.S. Supreme Court agreed. The statute taxes the importation of fuel, which is the transportation of fuel, so travel on public highways is directly at issue. In previous cases involving the treaty, the Court has stressed that its language should be understood as bearing the meaning that the Yakamas understood it to have in 1855; the historical record adopted by the agency and the courts below indicates that the treaty negotiations and the government’s representatives’ statements to the Yakamas would have led the Yakamas to understand that the treaty’s protection of the right to travel on the public highways included the right to travel with goods for purposes of trade. To impose a tax upon traveling with certain goods burdens that travel. View "Washington State Department of Licensing v. Cougar Den, Inc." on Justia Law

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The Town of Belmont appealed a New Hampshire Board of Tax and Land Appeals (BTLA) decision that, pursuant to RSA 72:36-a (2012) respondent Robin M. Nordle 2013 Trust was entitled to a 100% real estate tax exemption for a homestead in Belmont. RSA 72:36-a provided that a person who met certain qualifications set forth in the statute, and “who owns a specially adapted homestead which has been acquired with the assistance of the Veterans Administration,” qualified for a property tax exemption. Louis Nordle served during the Vietnam War and was honorably discharged in 1969. In 1998, Louis and his wife, Robin Nordle, purchased a summer camp in Belmont. In 2007, the Nordles demolished the original home and built a new home. The house was later transferred to the Robin M. Nordle 2013 Trust, in which Louis had a life estate in the trust and Robin was the trustee. In 2015, the United States Department of Veterans Affairs determined that Louis was totally and permanently disabled due to his service-connected disabilities. In 2016, Louis received a “Specially Adapted Housing Grant” from the Veterans Administration (VA), and used the funds to modify his home to accommodate his disability. The town originally denied Nordle's application for tax-exempt status, determining that the “home was not ‘acquired’ or ‘purchased’ by or with the assistance of a VA loan.” In making its determination, the town relied upon advice from the New Hampshire Department of Revenue that, in order to be entitled to the property tax exemption, the VA “had to help ‘purchase’ the home not adapt it.” The BTLA reasoned that “the word ‘acquired’ in the statute had a plain meaning broader than simply ‘purchased,’” and that because Louis “obtained, and is now in possession of, a specially adapted homestead . . . only because of the financial assistance he received from the VA,” the taxpayer was entitled to the tax exemption set forth in RSA 72:36-a. The New Hampshire Supreme Court determined that once the remodeling was completed, the taxpayer owned a specially adapted homestead which was “acquired with the assistance of the Veterans Administration.” and affirmed the BTLA’s determination that the taxpayer was entitled to a 100% real estate tax exemption for the homestead in Belmont. View "Appeal of Town of Belmont" on Justia Law

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Freedom From Religion Foundation (FFRF), a nonprofit organization, “[t]akes legal action challenging entanglement of religion and government, government endorsement or promotion of religion.” FFRF paid its co-presidents a portion of their salaries in the form of a housing allowance, seeking to challenge 26 U.S.C. 107, which provides: In the case of a minister of the gospel, gross income does not include— (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home. Having unsuccessfully sought refunds from the IRS based on section 107 they sued. The district court granted FFRF and its employees summary judgment, finding that the statute violates the Establishment Clause of the First Amendment. The Seventh Circuit reversed, applying the “Lemon” test. The law has secular purposes: it is one of many per se rules that provide a tax exemption to employees with work-related housing requirements; it is intended to avoid discrimination against certain religions in favor of others and to avoid excessive entanglement with religion by preventing the IRS from conducting intrusive inquiries into how religious organizations use their facilities. Providing a tax exemption does not “connote[] sponsorship, financial support, and active involvement of the [government] in religious activity.” FFRF offered no evidence that provisions like section 107(2) were historically viewed as an establishment of religion. View "Gaylor v. Peecher" on Justia Law

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The Ninth Circuit affirmed the tax court's decision to sustain a deficiency against an estate for overstating the amount of a charitable deduction and to sustain an accuracy-related penalty. In Ahmanson Foundation v. United States, 674 F.2d 761, 772 (9th Cir. 1981), the panel underscored the principle that the testator may only be allowed a deduction for estate tax purposes for what was actually received by the charity. Applying Ahmanson, the panel held that the tax court correctly considered the difference between the deduction and the property actually received by the charity due to the executor's manipulation of the redemption appraisal value. The panel also found nothing in the record that suggested that the tax court's findings were clearly erroneous. Finally, there was no error in the tax court's holding that the commissioner properly imposed the accuracy-related penalty under I.R.C. 6662(a). View "Dieringer v. Commissioner" on Justia Law

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The State of New Hampshire appealed a superior court order following a ten-day bench trial granting judgment to the defendants, the direct or indirect subsidiaries of Priceline.com, Inc., Orbitz, LLC, Expedia, Inc., and Travelocity.com, LLP, alleging that: (1) they violated the New Hampshire Meals and Rooms Tax Law by failing to remit meals and rooms taxes on transactions with hotel consumers and by bundling money collected from consumers as taxes with other amounts; and (2) the bundling of taxes with other fees also violated the New Hampshire Consumer Protection Act (CPA). Online travel companies (OTCs) use either the “agency” or the “merchant” model to conduct business. Under the agency model, the consumer pays the hotel directly for the room; the hotel then pays the OTC a commission for the booking and remits to the State the meals and rooms tax on the full amount received from the consumer. Under the merchant model, the consumer pays the OTC for the room; the OTC collects payment from the consumer using the consumer’s credit card. The OTC, therefore, is the merchant of record. The hotel then has a certain number of days in which to send an invoice to the OTC for the net rate of the hotel room and the meals and rooms tax on that rate. The parties disputed whether the OTCs were subject to the meals and rooms tax law. The trial court ruled that OTCs were not subject to the law because they are not “operators” of hotels. The State challenged the trial court's conclusion that OTCs were not subject to the law as "operators." The New Hampshire Supreme Court concluded the State failed to show the trial court erred in its ruling as to the CPA. View "New Hampshire v. Priceline.com, Inc." on Justia Law

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In 2010, the Internal Revenue Service issued a refund to the Wichita Center of Graduate Medical Education (a federally qualified charitable organization) on overpaid taxes along with incorrectly calculated interest on the refund. The IRS then sought repayment of part of the interest. Under the Internal Revenue Code, corporate taxpayers received a lower refund interest rate than other taxpayers such as individuals or partnerships. The Center claimed it was not a corporation for purposes of this section and was be entitled to the higher interest rate applicable to non-corporations. The Tenth Circuit affirmed the district court’s finding that the Center was a corporation and subject to the lower interest rate: the statutory text compelled the conclusion that the Center, even though it did not issue stock or generate profit, had to be treated as an ordinary corporation for purposes of the refund statute. View "Wichita Ctr for Grad Med. Ed. v. United States" on Justia Law

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This case arose out of the efforts the IRS made to investigate the tax liability of High Desert Relief, Inc. (“HDR”), a medical marijuana dispensary in New Mexico. The IRS began an investigation into whether HDR had improperly paid its taxes, and specifically whether it had improperly taken deductions for business expenses that arose from a “trade or business” that “consists of trafficking in controlled substances.” Because HDR refused to furnish the IRS with requested audit information, the IRS issued four summonses to third parties in an attempt to obtain the relevant materials by other means. HDR filed separate petitions to quash these third-party summonses in federal district court in the District of New Mexico, and the government filed corresponding counterclaims seeking enforcement of the summonses. HDR argued that the summonses were issued for an improper purpose—specifically, that the IRS, in seeking to determine the applicability of 26 U.S.C. 280E, was mounting a de facto criminal investigation pursuant to the Controlled Substances Act. HDR also asserted that enforcement of section 280E was improper because an "official [federal] policy of non-enforcement” of the CSA against medical marijuana dispensaries had rendered that statute’s proscription on marijuana trafficking a “dead letter” incapable of engendering adverse tax consequences for HDR. The petitions were resolved in proceedings before two different district court judges; both judges ruled in favor of the United States on the petitions to quash, and separately granted the United States’ motions to enforce the summonses. HDR challenged these rulings on appeal. The Tenth Circuit determined HDR was unable to overcome the government’s demonstration of good faith under United States v. Powell, 379 U.S. 48 (1964), and its alternative “dead letter” argument was without merit. View "High Desert Relief v. United States" on Justia Law