Justia Tax Law Opinion Summaries

by
Frank Bibeau, a member of the Minnesota Chippewa Tribe, argued that his self-employment income from his law practice on the Leech Lake Reservation was exempt from federal taxation. For the 2016 and 2017 tax years, Bibeau reported his income on a joint federal income tax return with his wife, claiming a net operating loss carryforward that shielded his income from taxes but not from self-employment taxes. After receiving a notice from the IRS regarding his tax debts, Bibeau requested a Collection Due Process (CDP) hearing, arguing his income was exempt. The IRS disagreed and issued a notice of determination to collect the tax.Bibeau petitioned the United States Tax Court, asserting that Indians are generally exempt from federal taxes or that treaties between the U.S. and the Chippewa exempted his income. The Tax Court ruled against him, stating that Indians are subject to federal tax laws unless a specific law or treaty provides otherwise. The court found that neither the Indian Citizenship Act of 1924 nor the 1837 Treaty between the U.S. and the Minnesota Chippewa Tribe contained a specific exemption from federal taxation.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court held that as U.S. citizens, Indians are subject to federal tax requirements unless specifically exempted by a treaty or act of Congress. The court found that Bibeau failed to point to any statute or treaty that specifically exempted his self-employment income from taxation. The court also noted that the Indian Citizenship Act of 1924 and the 1837 Treaty did not provide such an exemption. Consequently, the Eighth Circuit affirmed the Tax Court’s decision, holding that Bibeau’s self-employment income is subject to federal self-employment taxes. View "Bibeau v. CIR" on Justia Law

by
Kenneth and Anita Wolke Brooks purchased 85 acres of land in Georgia for $1.35 million, subdivided it, and granted a conservation easement on a 41-acre parcel to Liberty County. They claimed a $5.1 million charitable deduction on their tax returns for this easement. The IRS disallowed the deductions for 2010, 2011, and 2012, citing non-compliance with the Internal Revenue Code and regulations, and imposed accuracy-related penalties for gross valuation misstatements.The Brookses challenged the IRS's notice of deficiency in the United States Tax Court. The Tax Court upheld the IRS's disallowance of the deductions and the imposition of penalties. The court found that the Brookses failed to provide a contemporaneous written acknowledgment of the donation, did not submit an adequate baseline report to Liberty County, and misrepresented their basis in the property. The court also found that the valuation of the easement was grossly overstated.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the Tax Court's decision. The court held that the Brookses did not meet the statutory requirements for a charitable deduction due to the lack of a proper contemporaneous written acknowledgment and an inadequate baseline report. The court also agreed with the Tax Court's finding that the Brookses' valuation of the easement was speculative and unsupported, justifying the 40 percent penalty for gross valuation misstatements. The court concluded that the Tax Court did not abuse its discretion in admitting the IRS Civil Penalty Approval Form into evidence despite its late disclosure. View "Brooks v. Commissioner of Internal Revenue" on Justia Law

by
Carlton Loeber, the trustor of an irrevocable trust owning two undeveloped properties within the Lakeside Joint School District, sought to place an initiative on the ballot to exempt taxpayers over 65 from any district parcel tax on undeveloped parcels. The district declined to call the election, citing cost concerns and legal objections. Loeber filed a petition for a writ of mandate to compel the district to place the initiative on the ballot. The trial court dismissed the petition, ruling that Loeber lacked standing.The trial court found that Loeber did not have a direct and substantial interest in the initiative because he did not personally own property in the district and failed to show that the trust could qualify for the exemption. The court also rejected Loeber’s public interest standing argument, noting the lack of public engagement and the significant cost to the district. The court concluded that the public need was not weighty enough to warrant the application of the public interest exception.The California Court of Appeal, Sixth Appellate District, reviewed the case and determined that Loeber had standing under the public interest exception, given the significant public right at issue concerning the initiative power. However, the court concluded that the proposed initiative did not fall within the scope of Article XIII C, Section 3 of the California Constitution, which allows initiatives to reduce or repeal local taxes. The court held that the initiative, which sought to create a new exemption for certain taxpayers, did not constitute "reducing" a tax within the meaning of the constitutional provision. Consequently, the district was not obligated to call an election on the initiative. The judgment was modified to deny the writ petition and affirmed as modified. View "Loeber v. Lakeside Joint School District" on Justia Law

by
The case revolves around Equinor Energy LP's appeal against the North Dakota State Tax Commissioner's denial of sales tax refunds. Equinor, an oil and gas producer, had purchased and paid North Dakota sales tax on oilfield equipment, including separators, for several facilities. The company applied for a refund, arguing that the equipment was installed into a system used to compress, process, gather, collect, or refine gas, thus qualifying for a tax refund. The Tax Commissioner approved a portion of the claim but denied the remaining refund claim related to the purchase of separators.The Tax Commissioner issued an administrative complaint requesting denial of the remaining requested refund amount. The Commissioner argued that initial separators used during production do not qualify for the exemption, which applies only to equipment installed downstream of the wellsite transfer meter, i.e., off the wellsite. An administrative law judge (ALJ) upheld the denial of the refund claim, and the Commissioner adopted the ALJ’s findings of fact and conclusions of law. Equinor appealed to the district court, which reversed the Commissioner’s order. However, on remand, the ALJ again recommended the denial of Equinor’s refund. The district court affirmed the final order of the Commissioner, leading to this appeal.The Supreme Court of North Dakota affirmed the district court's judgment. The court concluded that the Commissioner's interpretation was in accordance with the language of the relevant statute. The court found that the separators merely isolated the three component parts of the well stream and did not gather or compress gas. Therefore, they did not qualify for the tax exemption. The court also noted that the legislature's intent in using the phrases “recovered from,” “a system to compress gas,” or “a system to gather gas” was clear, and it was unnecessary to apply “the rule of last resort” and construe the ambiguity in favor of the taxpayer. View "Equinor Energy v. State" on Justia Law

by
The case involves the Perkins County Board of Equalization (the Board) and Mid America Agri Products/Wheatland Industries, LLC (Wheatland). Wheatland owns real property in Perkins County, Nebraska, which includes ethanol production facilities. In 2018, 2019, and 2020, Wheatland protested the valuations set by the Perkins County assessor on this property. The Board denied these protests and affirmed the valuations for all three tax years. Wheatland appealed the Board’s decisions to the Tax Equalization and Review Commission (TERC). TERC reversed the Board’s decisions and adopted lower valuations for each of the three tax years.The Board filed a petition for judicial review in the Nebraska Court of Appeals, alleging it was aggrieved by TERC's final decisions. The Board served summons on Wheatland more than 30 days after filing the petition, which is outside the statutory timeframe. However, before summons was served, the Board emailed a courtesy copy of the summons and petition to Wheatland’s counsel. Wheatland’s counsel then filed an appearance of counsel and a “Response to Petition for Review.”The Nebraska Supreme Court held that a voluntary appearance is not a permissible substitute for strict compliance with the statutory requirement to timely serve summons under § 77-5019(2)(b). The court noted that the Legislature has mandated service of summons as one of the jurisdictional prerequisites for judicial review of administrative decisions. Therefore, the court dismissed the matter for lack of jurisdiction. View "Perkins Cty. Bd. of Equal. v. Mid America Agri Prods." on Justia Law

by
The case revolves around a request for disclosure of certain redacted contents of the Internal Revenue Manual under the Freedom of Information Act (FOIA) by T. Keith Fogg. The redacted contents pertain to the IRS's unique authentication procedures used in special situations to prevent unauthorized disclosure of sensitive taxpayer information, identity theft, and criminal fraud. The IRS claimed these redacted contents were exempt from FOIA disclosure under Exemption 7(E) as they were records or information compiled for law enforcement purposes.The District Court for the District of Minnesota initially granted summary judgment to the IRS, holding that Exemption 7(E) applied to the redacted contents. Fogg appealed to the United States Court of Appeals for the Eighth Circuit, which reversed the grant of summary judgment and remanded the case to the district court for an in-camera inspection of the redacted contents.Upon inspection, the district court again concluded that Exemption 7(E) applied to the redacted contents as they served a law enforcement purpose and involved exceptional situations of a heightened risk of fraud or identity theft. The court granted summary judgment to the IRS once more.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that the redacted contents were techniques and procedures used for law enforcement investigations, akin to background checks. The court also concluded that the IRS had met its burden under the foreseeable harm requirement, showing that disclosure of the redacted contents would foreseeably harm the IRS's interest in preventing circumvention of the law. View "Fogg v. IRS" on Justia Law

by
This case involves a dispute over a tax sale of a property in Jackson County, Mississippi. The property was owned by Deborah Hallford, who failed to pay property taxes in 2014, leading to the property being sold at a tax sale in 2015. Pierre Thoden, a resident of New York, purchased the property at the sale. Hallford failed to redeem the property within the redemption period, and Thoden later received title after he paid the delinquent taxes for 2015-18. After learning of the tax sale, Hallford filed a complaint to set aside the tax sale, claiming that due to a lack of proper notice, the sale was void. The chancery court found in Hallford’s favor and voided the tax sale based on insufficient notice.Thoden appealed the chancery court's decision, arguing that he was entitled to a statutory lien and reimbursement for appliances, costs, and expenses on the property. The Supreme Court of Mississippi affirmed the chancery court’s finding that the tax sale was void but held that Thoden was entitled to a hearing to present proof of his damages. The case was remanded for a hearing to determine the amount Thoden was owed as damages.On remand, the chancery court found that Thoden was unjustly enriched by the rent he collected from tenants and that he could not keep money he collected on property where he was in the nature of a trespasser. The court also found that Thoden was entitled to the amount he paid in taxes, plus interest. However, the court denied Thoden’s claim to reimbursement for his repairs on, improvements to, and maintenance of the property. Thoden appealed these findings.The Supreme Court of Mississippi affirmed in part and reversed and rendered in part. The court held that Thoden was entitled to a refund of his purchase price and interest on that price, and that he was not entitled to reimbursement of the cost of repairs, improvements, and maintenance. The court also held that Hallford was entitled to a $4,500 set-off. However, the court reversed the chancery court's determination that Thoden was not entitled to the taxes he paid on the property for 2015-18, and awarded Thoden $2,231.06. View "Thoden v. Hallford" on Justia Law

by
The case revolves around a dispute between Pinellas County and Pasco County in Florida. Pinellas County owns approximately 12,400 acres of real estate in neighboring Pasco County. Although Pinellas County once paid ad valorem taxes to Pasco County for the property, it now asserts that sovereign immunity relieves it of that obligation. Pinellas County filed a lawsuit against the Pasco County Property Appraiser, seeking a judgment declaring the property immune from ad valorem taxes and an injunction prohibiting future assessment and collection of such taxes.The trial court ruled in favor of Pinellas County, holding that as a political subdivision of the state, Pinellas County is entitled to sovereign immunity, which includes immunity from the ad valorem taxation of its properties, regardless of whether those properties are located within the boundaries of Pinellas County or in another county within the state of Florida. The Pasco County Property Appraiser appealed this decision.The Second District Court of Appeal reversed the trial court's ruling. The district court noted that each county has statutory and constitutional authority to assess ad valorem taxes on “all property in the county.” The district court also rejected Pinellas County’s primary contention that its immunity from taxation extends beyond its own borders, noting that Pinellas County had not identified any supporting authority.The Supreme Court of Florida disagreed with Pinellas County's argument that its property in Pasco County was not taxable based on principles of sovereign immunity. The court held that although a county’s real property is immune from that county’s own efforts to assess ad valorem taxes, Pinellas County has not identified any authority recognizing an immunity from taxation of the county’s property located beyond its territorial boundaries. Therefore, the court concluded that sovereign immunity does not shield a county from the obligation of paying ad valorem taxes for property owned by that county but located outside its territorial boundaries. The court approved the decision of the Second District Court of Appeal. View "Pinellas County, Florida v. Joiner" on Justia Law

by
The New London Hospital Association, Inc. (NLH), a nonprofit corporation, appealed a decision by the Superior Court dismissing its appeals from denials by the Town of Newport of NLH’s applications for charitable property tax exemptions for tax years 2015, 2017, and 2018. NLH owns a property in Newport where it operates the Newport Health Center (NHC), an outpatient treatment center. NLH applied for a charitable tax exemption for the NHC property, which was denied by the Town. NLH appealed these denials to the superior court. The court ruled that NLH established three of the four factors necessary for the exemption, but not the fourth.The Supreme Court of New Hampshire affirmed the trial court’s rulings that NLH satisfied the second and third factors for charitable exemption. However, it reversed the trial court's ruling that NLH failed to prove that it satisfied the fourth factor, which required NLH to show that “any of [NLH’s] income or profits are used for any purpose other than the purpose for which [NLH] was established.” The court concluded that the practice of referring patients to Dartmouth-Hitchcock Health (DHH) for “appropriate medical care” that NLH cannot provide, does not confer on DHH a “pecuniary . . . benefit” prohibited under the fourth factor. The court also found that NLH was not required to show that the independent contractors to whom it made payments shared NLH’s charitable mission. The case was remanded for further proceedings. View "New London Hospital Association v. Town of Newport" on Justia Law

by
The case revolves around a clerical error by the Internal Revenue Service (IRS) that resulted in a taxpayer, Jeffrey Page, receiving a tax refund check significantly larger than he was entitled to. Page returned only a portion of the excess refund, prompting the United States government to sue under 26 U.S.C. § 7405 to recover the outstanding balance. Page did not respond to the lawsuit, leading the government to move for default judgment. However, the district court denied the motion and dismissed the complaint as untimely, arguing that the two-year limitations period began when Page received the refund check.The United States Court of Appeals for the Ninth Circuit disagreed with the district court's interpretation of when the two-year limitations period began. The appellate court held that the limitations period to sue to recover an erroneous refund starts on the date the erroneous refund check clears the Federal Reserve and payment to the taxpayer is authorized by the Treasury. As Page's refund check cleared less than two years before the government sued, the appellate court held that the complaint was timely and that the district court erred by dismissing it. The appellate court also noted that the district court had improperly shifted the burden to the government to prove at the pleading stage that its claim against Page was timely. The case was reversed and remanded for further proceedings. View "United States v. Page" on Justia Law