The County appealed the district court's order preliminarily enjoining it from foreclosing upon certain real property owned by the Cayuga Nation in order to recover uncollected ad valorem property taxes. The court affirmed the district court's injunction where the court declined, as has the Supreme Court, to read a "commercial activity" exception into the doctrine of tribal sovereign immunity from suit. In the absence of a waiver of immunity by the tribe, unless Congress has authorized the suit, precedents demand that the court affirm the district court's injunction of the County's foreclosure proceedings against the Cayuga Nation's property. Accordingly, the court affirmed the judgment of the district court. View "Cayuga Indian Nation of New York v. Seneca County, New York" on Justia Law

Two retail stores offered customers the opportunity to finance their purchases through private label credit cards. The cards were issued by banks that paid to the retailer at the time of the sale the full amount of the purchase, including sales tax, for each transaction made using the credit cards. The retailer then remitted the applicable sales tax to the State. If a customer failed to pay his or her credit card debt, the issuing bank took any tax write off. The retailers in this case separately applied for refunds of the sales tax that the banks had written off. The Director of Revenue denied both requests. The Administrative Hearing Commission reversed and allowed the retailers to claim their respective sales tax refunds. The Supreme Court reversed, holding that because, at the time of the initial transaction, the banks fully reimbursed the retailers for both the amount of the sales tax and the amount of the purchase on which that tax was based, the retailers were not entitled under statute to seek a refund of taxes the banks subsequently wrote off. View "Circuit City Stores, Inc. v. Dir. of Revenue" on Justia Law

The plaintiffs in this case, Jimmie Jackson, E. Simms Hardin, and KSD Properties, LLC, untimely paid ad valorem taxes to the City of New Orleans on their respective properties, and were assessed penalties, fees, and interest thereon for various tax years between 2003 and 2009. Plaintiffs filed a class action suit against the City, seeking a declaration that Ordinance Number 22207, and the collection of any penalties, fees, and interest collected thereunder, violated the statutes and constitution of Louisiana, and that the application of Ordinance Number 22207 to this case violated U.S. Constitutional guarantees of due process and equal protection. The district court issued rulings on the City's exceptions and on the plaintiffs' motion for summary judgment, which: granted the City's exception of no cause of action as to Jackson and Hardin, dismissing these plaintiffs (for failing to comply with the city ordinance requiring payment under protest); denied the City's objections of no cause of action and prescription as to plaintiff KSD; and granted KSD's motion for summary judgment (upon a finding of unconstitutionality as to Ordinance Number 22207). Both plaintiffs and the City filed motions for new trial. The City's motion was granted in part, to dismiss KSD's claims as to its 2008 tax penalty and fees for failure to state a cause of action and to amend the judgment accordingly (for KSD's failure to timely assert a protest as to the penalty and fees assessed for that year's delinquent tax payment); the motions for new trial were denied in all other respects. On appeal to the Supreme Court, the City argued the district court erred in granting summary judgment by declaring Ordinance Number 22207 unconstitutional. After review of the district court record and the applicable law, the Supreme Court affirmed the district court's decision and remanded the case for further proceedings.View "Jackson v. City of New Orleans" on Justia Law

The Town of Monkton brought a consolidated appeal from decisions of the state appraiser in three property tax cases challenging the Town's 2011 assessment. At issue was the manner in which the Town assessed land that had the potential for subdivision and further development. The state appraiser ruled that the Town had treated taxpayers inequitably by adding additional "home-site values" to undeveloped parcels that are subject to a permitted and recorded subdivision plan. The Town did not add this additional element of appraised value to other undeveloped parcels that may be eligible for subdivision without a permit due to their history or configuration. The Town argued it acted fairly in applying different valuation methods to properties with different characteristics. From the Town’s perspective, the appraised value of a parcel of land with a permit for more than one home should reflect additional development value, and land that could be subdivided but is not the subject of a permit is not similarly situated for purposes of tax appraisal. After review, the Supreme Court agreed with the Town's arguments and reversed the state appraiser. View "Lathrop v. Town of Monkton" on Justia Law

The County Assessor reassessed two mobile home parks owned by resident-controlled nonprofit corporations after some residents sold both their mobile homes and their interests in the corporation. The mobile homes, classified as personal property, were assessed separately. The Assessor appraised the real property interest subject to reassessment by the extraction method of appraisal. The Appeal Board rejected the appraisals submitted by the Assessor and instead used those submitted by the corporations to calculate the value of the interests subject to reassessment. The Assessor filed a petition for writ of administrative mandate. The trial court denied the petition, and the court of appeal affirmed, concluding that the Assessor’s method for the taxation of changes in the mobile home ownership was not the method set out in Cal. Rev. & Tax. Code 62.1(b). The Supreme Court reversed, holding (1) section 62.1(b) simply describes a unit of real property that is subject to reassessment and does not mandate any particular formula for appraising this unit; and (2) because the Appeal Board’s decisions were premised on an erroneously interpretation of section 62.1(b), the Appeal Board abused its discretion, and the Assessor’s petition for a writ of mandate should have been granted.View "Holland v. Assessment Appeals Bd." on Justia Law

The Internal Revenue Service (IRS) issued summonses to four individuals, seeking information and records relevant to the tax obligations of Dynamo, 26 U.S.C.7602. When they failed to comply, the IRS brought an enforcement action. The individuals challenged the IRS’s motives in issuing the summonses and sought to question the responsible agents. The district court denied the request and ordered the summonses enforced. The Eleventh Circuit reversed, holding that refusal to allow questioning of the agents was an abuse of discretion. A unanimous Supreme Court vacated and remanded. A taxpayer has a right to examine IRS officials regarding reasons for issuing a summons when the taxpayer points to specific facts or circumstances plausibly raising an inference of bad faith. The proceedings at issue are “summary in nature,” and the only relevant question is whether the summons was issued in good faith. Prior cases support a requirement that a summons objector offer not just naked allegations, but some credible evidence to support a claim of improper motive. Circumstantial evidence can suffice; a fleshed out case is not required. The objector need only present a plausible basis for the charge. The Eleventh Circuit erroneously applied a categorical rule demanding the examination of IRS agents without assessing the plausibility of the claims. View "United States v. Clarke" on Justia Law

Quality Stores made severance payments to employees who were involuntarily terminated in its Chapter 11 bankruptcy. The payments were made pursuant to plans that did not tie payments to the receipt of state unemployment insurance and varied based on job seniority. Quality Stores paid and withheld taxes required under FICA, 26 U.S.C. 3101. Later, believing that the payments should not have been taxed as FICA wages, Quality Stores sought a refund on behalf of itself and about 1,850 former employees. The IRS neither allowed nor denied the refund, Quality Stores initiated proceedings in the Bankruptcy Court, which granted summary judgment in its favor. The district court and Sixth Circuit affirmed. The Supreme Court reversed, finding that the severance payments were taxable FICA wages. FICA defines “wages” broadly as “all remuneration for employment.” Severance payments are a form of remuneration made only to employees in consideration for employment. By varying according to a terminated employee’s function and seniority, the Quality Stores severance payments confirm the principle that “service” “mea[ns] not only work actually done but the entire employer-employee relationship for which compensation is paid.” FICA’s exemption for severance payments made because of "retirement for disability,” would be unnecessary were severance payments generally not considered wages. FICA has contained no general exception for severance payments since 1950. The Internal Revenue Code, section 3401(a), also has a broad definition of “wages” and specifies that “supplemental unemployment compensation benefits,” which include severance payments, be treated “as if” they were wages; simplicity of administration and consistency of statutory interpretation indicate that the meaning of “wages” should generally be the same for income-tax withholding and for FICA calculations. View "United States v. Quality Stores, Inc." on Justia Law

Woods and McCombs participated in a tax shelter to generate paper losses to reduce their taxable income. They purchased currency-option spread packages consisting of a long option, for which they paid a premium, and a short option, which they sold and for which they collected a premium. Because the premium paid was largely offset by that received, the net cost of the packages was substantially less than the cost of the long option alone. Woods and McCombs contributed the spreads, plus cash, to partnerships, which used the cash to purchase stock and currency. In calculating their basis in the partnership interests, they considered only the long component of the spreads and disregarded the nearly offsetting short component. When the partnerships’ assets were disposed of for modest gains, they claimed huge losses. Although they had contributed $3.2 million in cash and spreads to the partnerships, they claimed losses of more than $45 million. The IRS sent notices, finding that the partnerships lacked “economic substance,” disallowing related losses, and concluding that the partners could not claim a basis greater than zero for their partnership interests and that tax underpayments would be subject to a 40-percent penalty for gross valuation misstatements. The district court held that the partnerships were properly disregarded as shams but that the penalty did not apply. The Fifth Circuit affirmed. The Supreme Court reversed, first holding that the district court had jurisdiction to make the determination. The Tax Equity and Fiscal Responsibility Act authorizes courts in partnership-level proceedings to provisionally determine the applicability of any penalty that could result from an adjustment to a partnership item, even though imposing the penalty requires a subsequent, partner-level proceeding. In the later proceeding, a partner may raise reasons why the penalty may not be imposed on him personally. However, the valuation-misstatement penalty applies in this case. Once the partnerships were deemed shams, no partner could legitimately claim a basis greater than zero. Any underpayment resulting from use of a non-zero basis would be attributable to a partner having claimed an adjusted basis that exceeded the correct amount. When an asset’s adjusted basis is zero, a valuation misstatement is automatically deemed gross. The valuation¬misstatement penalty encompasses misstatements that rest on both legal and factual errors, so it is applicable to misstatements that rest on use of a sham partnership. View "United States v. Woods" on Justia Law

The IRS advised Ford Motor that it had underpaid its taxes from 1983 until 1989. Ford remitted $875 million to stop the accrual of interest that Ford would otherwise owe once audits were completed and the amount of its underpayment was finally determined. Eventually it was determined that Ford had overpaid its taxes in the relevant years, entitling Ford to a return of the overpayment and. Ford argued that “the date of overpayment” for purposes of 26 U.S.C. 6611(a) was the date that it first remitted the deposits to the IRS. The IRS countered that the relevant date was the date that Ford requested that the IRS treat the remittances as payments of tax. The difference between the competing interpretations is worth some $445 million. The district court granted judgment on the pleadings in favor of the government. The Sixth Circuit affirmed, concluding that section 6611 is a waiver of sovereign immunity that must be strictly construed in favor of the government. The Supreme Court vacated and remanded, noting that the government was arguing, for the first time, that the only general waiver of sovereign immunity that encompasses Ford’s claim is the Tucker Act, 28 U. S. C. 1491(a). Although the government acquiesced in jurisdiction in the district court, the Tucker Act applies, jurisdiction over this case was proper only in the Court of Federal Claims. The Sixth Circuit should have the first opportunity to consider the argument.View "Ford Motor Co. v. United States" on Justia Law

Windsor and Spyer, two women, married in Canada in 2007. Their home state, New York, recognized the marriage. Spyer died in 2009 and left her estate to Windsor, who sought to claim the federal estate tax exemption for surviving spouses. Her claim was barred by section 3 of the Defense of Marriage Act (DOMA), 28 U.S.C. 1738C, which defined “marriage” and “spouse” to exclude same-sex partners for purposes of federal law. Windsor paid $363,053 in taxes and sought a refund, which the IRS denied. Windsor sued, challenging DOMA. The Department of Justice declined to defend section 3’s constitutionality. The district court ordered a refund, finding section 3 unconstitutional. The Second Circuit affirmed. The Supreme Court affirmed, 5-4, first holding that the government retained a stake, sufficient to support Article III jurisdiction, because the unpaid refund is “a real and immediate economic injury.” There was sufficient argument for section 3’s constitutionality to satisfy prudential concerns. DOMA is unconstitutional as a deprivation of the equal liberty of persons under the Fifth Amendment. Regulation of marriage has traditionally been within the authority of the states. DOMA, applicable to more than 1,000 federal statues and all federal regulations, was directed to a class of persons that the laws of New York and 11 other states have sought to protect. DOMA is inconsistent with the principle that marriage laws may vary from state to state, but are consistent within each state. A state’s decision to give a class of persons the right to marry confers a dignity and status of immense import. New York’s decision was a proper exercise of its sovereign authority. By seeking to injure the class New York seeks to protect, DOMA violated basic due process and equal protection principles applicable to the federal government. Constitutional guarantees of equality “must at the very least mean that a bare congressional desire to harm a politically unpopular group cannot” justify disparate treatment of the group. DOMA’s history and text indicate a purpose and practical effect to impose a disadvantage, a separate status, and a stigma upon those entering into same-sex marriages made lawful by the states. The law deprived some couples married under the laws of their states, but not others, of rights and responsibilities, creating two contradictory marriage regimes within the same state; it diminished the stability and predictability of basic personal relations. View "United States v. Windsor" on Justia Law