Detroit Medical Center consists of several not-for-profit hospitals incorporated under Michigan law. The Center overpaid its taxes, entitling it to a refund plus interest. Under the Internal Revenue Code, “corporations” receive lower interest rates on such refunds (the federal short-term interest rate plus as little as 0.5%) than other taxpayers (the federal short-term interest rate plus 3%), 26 U.S.C. 6621(a)(1). The IRS rejected the Center’s claim that, as a not-for-profit corporation, it should not be treated as a corporation and should be eligible for the higher interest rate, increasing its refund by $9.1 million. The district court and Sixth Circuit affirmed, reasoning that a nonprofit entity incorporated under state law amounts to a corporation, and that the Code contains no indication to the contrary. View "United States v. Detroit Medical Center" on Justia Law

As a result of a partial revaluation of parcels of land located within the Town of Scarborough, including land owned by Plaintiffs, the municipal assessment of the parcels of land increased. Plaintiffs sought abatements from the Town assessor and the Scarborough Board of Assessment Review without success. Plaintiffs appealed the Board’s decision, arguing that they bore an unequal share of the Town’s overall tax burden. The Business and Consumer Docket concluded that Plaintiffs did not have standing to seek remedial relief because Plaintiffs’ properties were not treated differently than the properties of other taxpayers. The Supreme Judicial Court vacated the judgment, holding (1) the Town’s method of assessing separate but abutting parcels held in common ownership resulted in unequal apportionment, and the Board erred in concluding that the unlawful practice did not result in discriminatory assessments of Plaintiffs’ properties; and (2) therefore, Plaintiffs had standing to pursue all of their challenges. Remanded. View "Petrin v. Town of Scarborough" on Justia Law

Plaintiffs filed suit against the IRS and several of its individual employees, seeking money damages by way of relief under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, and equitable relief by way of injunction and declaratory judgment. Additionally, the complaints alleged that the IRS invaded plaintiffs’ statutory rights by violating 26 U.S.C. 6103, by conducting unauthorized inspection and/or disclosure of tax return information from their applications and the other information improperly obtained from them. The court affirmed the district court's dismissal of the Bivens actions under Rule 12(b)(6). The court held, however, that the equitable actions are not moot. After the initiation of the suits, the IRS took action to end some unconstitutional acts against at least a portion of plaintiffs. Based on these actions, the district court dismissed the equitable claims as moot. Even if the court accorded deference to the district court, the government has not carried its heavy burden of showing mootness under the voluntary cessation doctrine. Therefore, the court vacated and remanded for further proceedings with respect to the equitable claims. View "True the Vote, Inc. v. IRS" on Justia Law

I.R.C. 469 restricts taxpayers’ ability to reduce their taxable income using passive rental losses. At issue is whether section 469 entitles real estate professionals like petitioner to deduct rental losses without showing material participation in the rental property. The court held that section 469’s text, regulations, and relevant case law all point in one direction: though taxpayers who qualify as real estate professionals are not subject to section 469(c)(2)’s per se rule that rental losses are passive, they still must show material participation in rental activities before deducting rental losses. Congress endeavored to narrow the scope of permissible deductions for passive losses in real estate investments, in part by requiring material participation before losses may be deducted. The court concluded that real estate professionals were not exempted from this requirement. Accordingly, the court affirmed the grant of summary judgment for the government. View "Gragg v. United States" on Justia Law

Pike County's Sny Island Levee Drainage District was organized in 1880 to protect from Mississippi River flooding and runoff. The Kansas City Southern and the Norfolk Southern operate main line railways over the District's flood plain. Illinois law permits the District to assess properties within its territory in order to maintain the levees. A new method, ​adopted in 2009, purported to calculate assessments based on the benefits the District conferred on each property, rather than based on acreage. After the Seventh Circuit enjoined use of the methodology, the District discontinued collecting annual assessments and implemented a one-time additional assessment, 70 ILCS 605/5. The District filed an assessment roll based on new benefit calculations, identifying the tax on KC as $91,084.59 and on Norfolk as $102,976.18, if paid in one installment..The Railroads again filed suit, alleging that the District used a formula that discriminated against them in violation of the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. 11501. The Seventh Circuit affirmed judgment in favor of the District. The court rejected an argument that the comparison class against which their assessment should be measured is all other District properties, instead of the narrower class of commercial and industrial properties used by the district court. There was no clear error in the court’s assessment of a “battle of the experts.” View "Kansas City S. Ry. v. Sny Island Levee Drainage Dist" on Justia Law

Bruce A. Hauptman, an investment consultant, sought judicial review of the Commissioner's notices of determination permitting a levy to collect Hauptman’s unpaid income tax liabilities for tax years 1992 through 1996. The tax court upheld the IRS’s determinations. The court rejected Hauptman’s challenge to the tax court’s jurisdiction where Hauptman cites to no authority to support his claim that there are additional requirements before a tax court can exercise jurisdiction over supplemental notices. The court agreed with the tax court’s conclusion that the Office of Appeals did not abuse its discretion when it rejected Hauptman’s offer-in-compromise based on its well-supported findings that Hauptman had not complied with his income tax obligations, that he had not fully disclosed his financial circumstances during the collection due process proceedings, and that he had not prioritized payment of his tax liabilities. Accordingly, the court affirmed the judgment. View "Hauptman v. Commissioner" on Justia Law

Years after Steven Greenfield was implicated in tax evasion as a result of a document leak, the Government issued a summons for Greenfield’s records, including documents relating to all of Greenfield’s financial accounts and documents pertaining to the ownership and management of offshore entities controlled by Greenfield. Greenfield opposed production and moved to quash the summons based on his Fifth Amendment right against self-incrimination. The district court granted enforcement as to a subset of the records demanded by the summons. The court found that, for all but a small subset of the documents covered by the order, the Government has not demonstrated that it is a foregone conclusion that the documents existed, were in Greenfield’s control, and were authentic even in 2001. Second, the court found that the Government has failed to present any evidence that it was a foregone conclusion that any of the documents subject to the summons remained in Greenfield’s control through 2013, when the summons was issued. Accordingly, the court vacated the district court's order and remanded, because the Government has not made the showing that is necessary to render Greenfield’s production of the documents non-testimonial and, hence, exempt from Fifth Amendment challenge. View "United States v. Greenfield" on Justia Law

The property of Riverboat Corporation, an ad valorem taxpayer, was subject to assessment by the Harrison County Board of Supervisors (“the Board”) because Riverboat owned certain personal and real property in Harrison County. The Mississippi Supreme Court was asked "to abandon the common law of this state, pronouncements of this Court, and customs and practices of trial courts across this state, all dating back to the nineteenth century, under the guise that today’s issue has not yet been squarely before" it and to "overrule a learned trial judge who, [. . .] determined a jury trial should be had in an appeal of a county’s ad valorem tax assessment." When Riverboat appealed its tax assessment, the Board requested a jury trial. Riverboat then moved for a bench trial, averring that there was no right to a jury trial in tax appeals. The trial court denied Riverboat's motion. The Supreme Court declined to rule against Mississippi precedent, and affirmed the trial court's denial of Riverboat's motion. View "Riverboat Corporation of Mississippi v. Harrison County Board of Supervisors" on Justia Law

At issue in this case was property owned by Innkeeper Ministries, Inc. that contained two large residential buildings and various recreational amenities. Innkeeper’s mission was to invite religious leaders to stay at the property at no charge and to enjoy the amenities and free meals as a type of spiritual retreat. Innkeeper filed an exemption application in 2008 seeking an exemption for, inter alia, charitable use. The tax commissioner denied exemption, stating, as for charitable use, that the activity at issue did not meet the charity standard. The Board of Tax Appeals (BTA) reversed. The Supreme Court reversed, holding that, given the residential use of the property by a caretaker couple, the BTA erred by failing to require proof of the primacy of charitable hospitality. View "Innkeeper Ministries, Inc. v. Testa" on Justia Law

At issue in this case was Hennepin County’s assessment of the market value of two bulk-distribution warehouses for two assessment dates in 2009 and 2010. The tax court adopted market valuations that were far lower than the recent sale price of each subject property. The County appealed, arguing that the tax court provided inadequate reasons for rejecting the County’s sales comparison analysis and for rejecting a large portion of the County’s income capitalization analysis. The Supreme Court reversed the portion of the tax court’s decision rejecting the County’s sales comparison analysis and vacated the tax court’s order, holding that the tax court (1) did not err in rejecting portions of the County’s income capitalization analysis, but (2) failed adequately to explain its reasons for rejecting the County’s sales comparison analysis. Remanded. View "Archway Marketing Servs. v. County of Hennepin" on Justia Law