Justia Tax Law Opinion Summaries

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In 2010, Noell Industries, Inc. sold its interest in a limited liability company for a net gain of $120 million. Noell Industries reported the income to Idaho, but paid all of the resulting tax on the gain to the Commonwealth of Virginia, its commercial domicile. Following an audit, the Idaho Tax Commission concluded the net gain was “business income” pursuant to Idaho Code section 63-3027(a)(1) and, thus, apportionable to Idaho. Noell Industries sought judicial review before the Ada County District Court pursuant to Idaho Code section 63-3049(a). The district court ruled that the Commission erred when it: (1) determined that Noell Industries paid insufficient taxes in 2010; and (2) assessed additional tax and interest against it. The Commission appealed. Finding no reversible error in the trial court's judgment, the Idaho Supreme Court affirmed. View "Noell Industries v. Idaho Tax Commission" on Justia Law

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C & K Consulting, LLC, Stonebridge Villas LLC, Stonebridge Villas II LLC, Stonebridge Development Company LLC, and Townhomes at Stonebridge LLC (collectively, “C&K Consulting”) appealed a district court’s dismissal of their cases against the Ward County North Dakota Board of Commissioners (“Ward County”) and the court’s denial of their motion for post-judgment relief. Several cases consolidated for review were appeals of Ward County’s decisions on C&K Consulting’s applications for tax abatement and refunds. C&K Consulting argued the court erred when it dismissed the cases as a sanction for missing a briefing deadline. Because the court did not conduct the required sanctions analysis, the North Dakota Supreme Court reversed the court’s dismissal judgment and its order denying C&K Consulting’s motion for post-judgment relief and remanded for further proceedings. View "C & K Consulting v. Ward County Board of Commissioners" on Justia Law

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The plaintiffs each own a wind farm that was put into service in 2012. Each applied for a federal cash grant based on specified energy project costs, under section 1603 of the American Recovery and Reinvestment Tax Act of 2009. The Treasury Department awarded each company less than requested, rejecting as unjustified the full amounts of certain development fees included in the submitted cost bases. Each company sued. The government counterclaimed, alleging that it had actually overpaid the companies. The Claims Court and Federal Circuit ruled in favor of the government. Section 1603 provides for government reimbursement to qualified applicants of a portion of the “expense” of putting certain energy-generating property into service as measured by the “basis” of such property; “basis” is defined as “the cost of such property,” 26 U.S.C. 1012(a). To support its claim, each company was required to prove that the dollar amounts of the development fees claimed reliably measured the actual development costs for the windfarms. Findings that the amounts stated in the development agreements did not reliably indicate the development costs were sufficiently supported by the absence in the agreements of any meaningful description of the development services to be provided and the fact that all, or nearly all, of the development services had been completed by the time the agreements were executed. View "California Ridge Wind Energy, LLC v. United States" on Justia Law

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CSX argued that SCVA impermissibly discriminates against railroads in violation of the Railroad Revitalization and Regulatory Reform Act of 1976. The Fourth Circuit reversed the district court's determination that South Carolina had provided sufficient justification for the discriminatory tax. The court held that CSX has made a prima facie showing of discriminatory tax treatment based on the appropriate comparison class of other commercial and industrial real property taxpayers in South Carolina. Furthermore, the state's three justifications -- the equalization factor applied to railroad assessments, the combined effect of other tax exemptions applied to rail carriers, and assessable transfers of interest which trigger new appraisals -- were insufficient to justify the discriminatory tax scheme. View "CSX Transportation, Inc. v. South Carolina Department of Revenue" on Justia Law

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The Supreme Court affirmed the decision of the district court dismissing two of Plaintiffs' claims as unripe and the remainder of the claims for failure to exhaust administrative remedies, holding that none of Plaintiffs' claims presented a justiciable controversy. Plaintiffs, five Utah counties, filed suit against the State of Utah challenging several provisions of the Utah Tax Code as unconstitutional. The district court dismissed as unripe two of the Counties' claims because the allegations did not show that the Counties had been adversely affected by the pertinent tax code provision. The court dismissed the remaining claims for failure to exhaust administrative remedies because the Counties had not first filed with the Utah State Tax Commission an appeal of a tax assessment. The Supreme Court affirmed, holding (1) dismissal of the two claims on ripeness grounds was proper because the Counties' complaint was facially insufficient to show that the law at issue adversely affected them; and (2) the remaining claims were properly dismissed on the ground that the claims were merely requests for an advisory opinion because none of the claims was tied to the facts of a particular controversy. View "Salt Lake County v. State" on Justia Law

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Honigman Miller Schwartz and Cohn LLP filed a petition in the Tax Tribunal, challenging the income tax assessments issued by the city of Detroit for the tax years 2010 through 2014. The firm argued that under MCL 141.623 of the Uniform City Income Tax Ordinance (UCITO), payment for services performed by attorneys working in the city on behalf of clients located outside the city constituted out-of-city revenue for the purpose of calculating income taxes, not in-city revenue as asserted by the City. The tribunal granted partial summary judgment in favor of the City, reasoning that the relevant consideration for calculating gross revenue under MCL 141.623 was where the work was performed, not where the client received the services. The Court of Appeals reversed, concluding that under MCL 141.623, the relevant consideration for determining the percentage of gross revenue from services rendered in the city was where the service itself was delivered to the client, not where the attorney performed the service. In reaching that result, the Court attributed different meanings to the term “rendered” in MCL 141.623 and the term “performed” in MCL 141.622, reasoning that because the Legislature used different words within the same act, it intended the terms to have distinct meanings. The Michigan Supreme Court reversed: when calculating the percentage of gross revenue from services rendered in the city, the focus was on where the service was performed, not on where it was delivered. View "Honigman Miller Schwartz & Cohn, LLP v. City of Detroit" on Justia Law

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After approximately ten years of litigation, the Georgia Supreme Court granted a second petition for certiorari in a dispute over the refund of millions of dollars in Georgia sales and use taxes that allegedly violated a federal statute. In 2010, New Cingular Wireless PCS, LLC and three other AT&T Mobility subsidiaries (collectively, “AT&T”) filed refund claims with the Georgia Department of Revenue seeking the return of the sales and use taxes that AT&T had collected from its customers and turned over to the Department. In 2015, the Department denied the claims, and AT&T filed a complaint in DeKalb County Superior Court to compel the refunds. In 2016, the trial court dismissed the complaint on grounds: (1) a Georgia regulation required “dealers” like AT&T to return the sums collected from their customers before applying to the Department for a refund of the illegal taxes; (2) AT&T lacked standing to seek refunds of taxes for periods prior to May 5, 2009, the effective date of the General Assembly’s amendment to the refund statutes to allow dealers to seek refunds on behalf of their customers; and (3) AT&T’s claims amounted to a class action barred by the refund statutes. In its first certiorari review, the Georgia Supreme Court reversed that ruling, holding that the regulation, as properly construed, did not require dealers to return the sums collected before applying for a refund. On remand, the Court of Appeals upheld the trial court’s ruling that AT&T lacked standing to seek refunds for periods prior to the effective date of the 2009 amendments to the refund statutes allowing dealers to seek refunds on behalf of their customers. The issue presented in the second petition for certiorari review was whether plaintiffs lacked standing to file the refund claims. The Supreme Court determined AT&T was statutorily granted representational standing to recover wrongfully paid sums on behalf of and for the benefit of its customers. To the extent, therefore, that the Court of Appeals held that AT&T lacked standing to file a claim on behalf of its customers for any taxes for periods before May 5, 2009, the Court of Appeals’ judgment was erroneous and had to be reversed. View "New Cingular Wireless PCS, LLC v. Dept. of Revenue" on Justia Law

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The Eleventh Circuit vacated the tax court's decision upholding the Commissioner's disallowance of a charitable deduction for taxpayer's donation of a conservative easement over property that included a private golf course and undeveloped land. The court explained that the deduction was proper if the donation was made for "the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem," or was made for "the preservation of open space . . . for the scenic enjoyment of the general public" under I.R.C. 170(h)(4)(A)(ii) & (iii)(I). The court reasoned that, without the golf course, this easement would easily meet these criteria. The court held that the Code does not disqualify an easement just because it includes a golf course. Accordingly, the court remanded for further proceedings. View "Champions Retreat Golf Founders, LLC v. Commissioner" on Justia Law

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Under the federal tax offset program, the Secretary of the Treasury has the discretion to set-off "any" tax overpayment against a taxpayer's preexisting tax liabilities, and the bankruptcy code provides that exempt property cannot be used to satisfy "any" of the bankruptcy debtor's prepetition debts. At issue was which of these statutory directives controls when a bankruptcy debtor claims, as exempt property, a tax overpayment that the government seeks to set-off under the offset program. The Fourth Circuit agreed that debtors' interest in their tax overpayment became part of the bankruptcy estate. However, based on the plain language of the various statutes, particularly the plain language of 11 U.S.C. 553(a), the court held that the government's right to offset the debtors' tax overpayment under 26 U.S.C. 6402(a) cannot be subordinated or otherwise affected by debtors' attempts to claim the overpayment as exempt property. Accordingly, the court vacated the district court's judgment, remanding for further proceedings. View "Copley v. United States" on Justia Law

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The Supreme Court held that Sussex County, Kent County, and New Castle County use assessment methodologies when preparing their assessment rolls used by school districts in levying local taxes that fail to comply with three legal requirements. Plaintiffs were the NAACP Delaware State Conference of Branches (the NAACP-DE), the Delawareans for Educational Opportunity (the DEO) and the City of Wilmington. The NAACP-DE and the DEO argued that Delaware's public schools failed to provide an adequate education for students from low-income households, students whose first language is not English, and students with disabilities. When school districts levy local taxes, they are required to use the assessment rolls prepared by Delaware's three counties. The NAACP-DE and the DEO argued that when preparing their assessment rolls, the counties failed to comply with 9 Del. C. 8306(a) (the True Value Statute) and Del. Const. art. VIII, 1 (the Uniformity Clause). The City of Wilmington argued that New Castle County also violated its obligations under 22 Del. C. 1101-1104 (the Assessment Roll Statutes). The Supreme Court held (1) Plaintiffs had standing to assert their claims; and (2) all three counties used assessment methodologies that violate the True Value Statute and the Uniformity Clause and that New Castle County violated its obligations under the Assessment Roll Statutes. View "In re Delaware Public Schools Litigation" on Justia Law