Plaintiffs, a partnership and an LLC, were related entities with common owners. The partnership acquired a commercial office complex and later transferred ownership of the property to the LLC. In 2008, the City of Norwalk’s tax assessor set the fair market value of the partnership at approximately $49 million. The trial court sustained Plaintiffs’ property tax appeal and reduced the valuation of the LLC’s property by approximately $15 million. The Appellate Court reversed, concluding that the trial court lacked subject matter jurisdiction over Plaintiffs’ appeal because the LLC had not appeared in administrative proceedings before the City’s Board of Assessment Appeals and did not initiate the appeal to the trial court. The Supreme Court reversed, holding that although the tax appeal was initially brought by a nonaggrieved party, the partnership, the appeal was also maintained by the LLC, an aggrieved party that had properly been added to the trial court proceedings by way of a promptly filed amended complaint. View "Fairfield Merrittview Ltd. P’ship v. City of Norwalk" on Justia Law

The controversy in this case arose out of the South Carolina Department of Revenue's ("SCDOR") computation of Duke Energy's taxable income. Because Duke Energy did business in both North Carolina and South Carolina, it had apportion its income to determine its income tax liability in South Carolina. Duke Energy had a treasury department responsible for purchasing and selling securities. In 2002, Duke Energy filed amended corporate tax returns with the SCDOR for the income tax years of 1978 to 2001, seeking a total refund of $126,240,645 plus interest. In the amended returns, Duke Energy sought to include the principal recovered from the sale of short-term securities from 1978 to 1999 in the sales factor of the multi-factor apportionment formula. In its original returns, Duke Energy included only the interest or gain from those transactions. The SCDOR denied the refund request. Duke Energy appealed the decision to the SCDOR's Office of Appeals. The Office of Appeals denied Duke Energy's refund request, finding, inter alia, that including recovered principal in the apportionment formula: was contrary to the SCDOR's long-standing administrative policy, would lead to an absurd result, and would misrepresent the amount of business Duke Energy does in South Carolina. Duke Energy filed a contested case in the Administrative Law Court ("ALC"). The parties filed cross-motions for summary judgment. The ALC found this was an issue of first impression in South Carolina, and adopted the reasoning of states that found including the principal recovered from the sale of short-term investments in an apportionment formula would lead to "absurd results" by greatly distorting the calculation, and by defeating the intent and purpose of the applicable statutes. The Court of Appeals affirmed, albeit on different grounds. The South Carolina Supreme Court granted certiorari to review the Court of Appeals' decision affirming the administrative law judge's finding. The Supreme Court affirmed the Court of Appeals. View "Duke Energy v. SCDOR" on Justia Law

503 South Front Street, LP, a for-profit corporation, owned 30,000 square feet of commercial space and leased the property for a term of thirty years to ShadoArt Productions, a nonprofit organization. ShadoArt filed an application for exemption under Ohio Rev. Code 5709.12 and 5709.121, which statutes articulate the substantive requirements for public-use and charitable-use exemptions. The tax commissioner denied the request. The Board of Tax Appeals (BTA) affirmed. On appeal, ShadoArt argued that because Ohio Rev. Code 5715.27, which permits certain long-term lessees to file applications for exemption, authorizes it to file an application for exemption, it was also entitled to receive an exemption under sections 5709.12 and 5709.121. The Supreme Court affirmed the decision of the BTA, holding (1) amended section 5715.27 did not alter the substantive requirements for any specific exemption under chapter 5709; and (2) ShadoArt’s claim for exemption did not satisfy the requirements set forth in sections 5709.12 and 5709.121 because the property does not belong to a charitable institution. View "ShadoArt Prods., Inc. v. Testa" on Justia Law

Rural Health Collaborative of Southern Ohio, Inc. owned a facility in Adams County that was operated under lease by Dialysis Clinic, Inc. Rural Health filed a charitable-use exemption application for the property. The tax commissioner denied the exemption. The Board of Tax Appeals (BTA) concluded that Rural Health qualified as a charitable institution under Ohio Rev. Code 5709.121(A)(2) and granted the exemption. The Supreme Court vacated the BTA’s grant of exemption and remanded, holding (1) the BTA did not abuse its discretion in determining that Rural Health qualifies as a charitable institution; but (2) BTA erred in granting the exemption because the BTA did not fully analyze the claim under Ohio Rev. Code 5709.121(A)(1). Remanded. View "Rural Health Collaborative of S. Ohio, Inc. v. Testa" on Justia Law

The Polk County assessor set the 2011 valuation of Wellmark, Inc.’s corporate headquarters located in Des Moines at $99 million. Wellmark protested. The Polk County Board of Review denied the protest. On appeal, the district court found the value of the property on January 1, 2011 was $78 million. At issue in this case was whether the property should have been valued as if it were a multi-tenant office building, which would likely be the result if the property were sold, or whether the property should have been valued according to its current use as a single-tenant headquarters building. The Supreme Court reversed, holding that while there had been a showing of no active market for a single-tenant office building such as the Wellmark property, value should be based on the presumed existence of a hypothetical buyer at the property’s current use. View "Wellmark, Inc. v. Polk County Bd. of Review" on Justia Law

This case arose out of a struggle Vermont towns have had with taxing parcels of land that lie in more than one tax district. Taxpayer owned three units in a condominium community that was in both the Town of Sudbury and its neighbor, Hubbardton. Taxpayer objected to Sudbury’s tax assessment of the portion within its boundaries, arguing that the trial court erred in upholding: (1) the state law through which Sudbury made its tax assessment; (2) Sudbury’s valuation of the portion within its boundaries; and (3) Sudbury’s method of apportioning the tax burden among the owners of the condominium community. Finding no error to any of these issues, the Supreme Court affirmed. View "Adams v. Town of Sudbury" on Justia Law

Defendant Mary Vernon was a physician licensed to practice in the State of Kansas. She co-authored a book with the late Dr. Robert Atkins, famous for a low-carbohydrate diet. Vernon also worked as the medical director for several nursing home facilities in the northeast Kansas area, and also provided consulting services to various entities, including the University of Kansas. In April 1999, the Internal Revenue Service (IRS) assigned Revenue Officer Joni Broadbent to collect from Vernon unpaid taxes for the 1997 tax year. Broadbent was subsequently assigned by the IRS to collect from Vernon unpaid taxes for the tax years 1991 through 1996. Although Vernon filed a tax return for 1997, she did not file a tax return for the years 1991 through 1996. Together, the unpaid taxes, penalties and interest for the tax years 1991 through 1997 totaled $1,432,299.38. After processing late returns, the IRS adjusted the amount owed by Vernon downwards to approximately $1.1 million. Vernon did not comply with deadlines set by the IRS for payment. As a result, Broadbent levied various investment and retirement accounts that Vernon held, and eventually seized Vernon's personal residence. At the time the IRS moved to seize Vernon's personal residence, the amount of unpaid taxes was approximately $543,015.11. The federal tax lien was eventually released so that Vernon could sell the residence without encumbrance. Vernon, unbeknownst to Broadbent and the IRS, arranged for her domestic partner, Sara Wentz, to purchase the residence for a price of $250,000. The proceeds from the sale went to the IRS, but still did not satisfy Vernon’s tax liability in full. Vernon set up a new company, through which she could continue her work as a consultant, Rockledge Medical Services. Wentz was Rockledge's sole shareholder, and Vernon worked as a volunteer, thus receiving no income for her work. Vernon and Wentz disregarded corporate formalities in dealing with Rockledge’s contracts and finances. At some point, the IRS began investigating Vernon from a criminal standpoint. And that investigation ultimately led to the indictment for tax evasion that was issued in this case. Vernon was sentenced to a total term of imprisonment of 41 months, to be followed by a three-year term of supervised release, and ordered to pay $311,157 in restitution to the Internal Revenue Service. Vernon appealed her convictions and sentences. Finding no reversible error, the Tenth Circuit affirmed. View "United States v. Vernon" on Justia Law

This case stems from a dispute regarding Palmer Ranch's residential development (B-10). Palmer Ranch argued that B-10’s highest and best use was residential development under a Moderate Density Residential (“MDR”) zoning designation, which would allow between two and five units per acre, or 164 to 410 units total. Based on this highest and best use, Palmer Ranch stuck to its initial $25,200,000 valuation. The IRS countered with a maximum highest and best use of 100 units and a corresponding valuation of $7,750,000. The tax court held in favor of Palmer Ranch. The parties cross-appealed. The court affirmed the tax court's determination of B-10's highest and best use. However, the court reversed the ensuing valuation and directed the tax court on remand to either stick with the comparable-sales analysis or explain its departure. Whatever the tax court chooses to do, the tax court must keep its sights set strictly on the evidentiary record for purposes of selecting an appreciation rate, and ensure that it crunches the numbers correctly. View "Palmer Ranch Holdings v. Commissioner" on Justia Law

In 2010, the Washington County Auditor determined a value of $9,091,000 for a Lowe’s Home Center store in Marietta. Lowe’s filed a complaint before the Washington County Board of Revision (BOR) seeking a reduction to $3,600,000. The BOR retained the auditor’s valuation. On appeal, Lowe’s and the County presented competing appraisals. The Board of Tax Appeals (BTA) adopted the County’s appraisal, concluding that the County’s comparables were more appropriate. Lowe’s appealed, arguing that the BTA misapplied the Supreme Court’s decision in Meijer Stores Ltd. Partnership v. Franklin County Bd. of Revision by adopting the type of appraisal in this case that the BTA rejected in Rite Aid of Ohio, Inc. v. Washington County Bd. of Revision. The Supreme Court explained the significance of Meijer Stores in its decision in the Rite Aid appeal, also issued today. The Supreme Court vacated the BTA’s decision in the instant case, holding that reading the BTA decision in light of that explanation identified a significant omission in the BTA’s analysis. Remanded. View "Lowe's Home Ctrs., Inc. v. Washington County Bd. of Revision" on Justia Law

In 2011, 2012, and 2013, the Board of Trustees of the University of Arkansas (“University”) submitted applications to the Washington County Tax Assessor seeking immunity from taxation or, alternatively, exemption from taxation for tax years 2010 through 2012. The assessor denied the University’s applications. The Washington County Board of Equalization affirmed. The University paid the assessed taxes under protest and appealed. The county court affirmed. The University appealed and filed a complaint in the circuit court. The Fayetteville School District intervened in the case. The circuit court granted summary judgment in favor of the University, concluding that the University was entitled to sovereign immunity from ad valorem taxation. The school district and the county and its assessor and tax collector appealed. The Supreme Court affirmed, holding that the University is an instrumentality of the State, and therefore, the property at issue was immune from ad valorem taxation. View "Washington County Bd. of Trs." on Justia Law