Respondent City of Concord appealed a superior court order granting summary judgment to petitioner Granite State Management & Resources (GSMR), and denying summary judgment to the City, based upon a finding that GSMR is a charitable organization eligible for a tax exemption under RSA 72:23, V (2012) for tax years 2008 and 2009. The trial court found that “there [could] be no serious dispute that the fundamental purpose of GSMR is to service educational loans” and that its only assets “likely to generate income are the loan servicing assets.” GSMR derived income from origination fees paid by borrowers, loan servicing and origination fees paid by institutions, and interest stemming from the education loans that GSMR administered. It used its income to pay expenses, for uncollectible loans and collection expenses, to fund loan default reserves, to "provide student[s], parent[s], and institution[s] information and counseling, . . . to pay for new educational loan related activities and services,” and to market its services. In 2008 and 2009, GSMR serviced approximately $2.5 billion in loans, earned a substantial net profit, maintained investments, and retained a surplus. The Supreme Court disagreed with the City that by virtue of servicing other lenders' loans GSMY was categorically ineligible for a charitable tax exemption, and affirmed the trial court with respect to denying the City's motion. The Court found genuine issues of material facts with regard to GMSR's motion, and reversed and remanded for further proceedings. View "Granite State Management & Resources v. City of Concord" on Justia Law

In 2009, a political blog and a Chicago television station began reporting that Illinois State Rep. Froehlich offered his constituents reductions in county property taxes in exchange for political favors. The reports highlighted Satkar Hospitality, reporting that it and its owners donated hotel rooms worth thousands of dollars to Froehlich’s campaign. Satkar Hospitality and Capra appealed their tax assessments for 2007 and 2008 and won reductions, but after the publicity about Rep. Froehlich, both were called back before the Board of Review for new hearings. They claim that in these second hearings, the Board inquired not into the value of their properties but into their relationships with Rep. Froehlich. The Board rescinded the reductions. Satkar and Capra sued the Board and individual members under 42 U.S.C. 1983. The district courts concluded that the individual defendants were entitled to absolute quasi‐judicial immunity and the Board itself is not. The Seventh Circuit affirmed, but also held that the damages claims against the Board cannot proceed. They are not cognizable in federal courts, which must abstain in suits for damages under 42 U.S.C. § 1983 challenging state and local tax collection, at least if an adequate state remedy is available. View "Satkar Hospitality, Inc. v. Rogers" on Justia Law

The issue in this appeal was whether Colorado's notice and reporting obligations for retailers who do not collect sales or use taxes violate the Commerce Clause. The Tenth Circuit did not reach that merits question: because the Tax Injunction Act, 28 U.S.C. 1341, deprived the district court of jurisdiction to enjoin Colorado's tax collection effort, the Court remanded the case back to the district court to dismiss DMA's Commerce Clause claims. View "Direct Marketing Association v. Brohl" on Justia Law

Employee was injured during the scope and course of his employment with Employer, the Burlington Northern Santa Fe Railway Company. Because he was a railroad employee, Employee filed a claim for personal injury damages pursuant to the Federal Employers' Liability Act. The district court entered judgment in favor of Employee for $145,000. Employer paid the judgment but withheld $6,202 as Employee's share of Railroad Retirement Tax Act (RRTA) payroll taxes on the entire general verdict award. The district court (1) overruled BNSF's motion for satisfaction and discharge of judgment and directed BNSF to pay $6,202 directly to Employee, and (2) directed the parties to agree in writing that no amount of the award would be considered lost wages so as to avoid any obligations under the RRTA. The Supreme Court reversed, holding that the general verdict award in favor of Employee was an award of compensation from which Employer was required to withhold a portion of in order to pay RRTA payroll taxes. Remanded with directions that the district court enter a satisfaction and discharge of the judgment upon proof of payment of $6,202 by BNSF to the IRS on account of the lost wages paid to Employee. View "Heckman v. Burlington N. Santa Fe Ry. Co." on Justia Law

This case involved the allocation of tax refunds pursuant to a Tax Sharing Agreement (TSA) between two members of a Consolidated Group, the parent corporation (the Holding Company), and one of its subsidiaries (the Bank), the principal operating entity for the Consolidated Group. At issue on appeal was whether the Bankruptcy Court erred in declaring the tax refunds an asset of the bankruptcy estate. The court concluded that the relationship between the Holding Company and the Bank is not a debtor-creditor relationship; when the Holding Company received the tax refunds it held the funds intact - as if in escrow - for the benefit of the Bank and thus the remaining members of the Consolidated Group; the parties intended that the Holding Company would promptly forward the refunds to the Bank so that the Bank could, in turn, forward them on to the Group's members; and in the Bank's hands, the tax refunds occupied the same status as they did in the Holding Company's hands - they were tax refunds for distribution in accordance with the TSA. Accordingly, the court reversed the Bankruptcy Court's judgment and directed that court to vacate it decision declaring the tax refunds the property of the bankruptcy estate and to instruct the Holding Company to forward the funds held in escrow to the FDIC, as receiver, for distribution to the members of the Group in accordance with the TSA. View "Zucker, et al. v. FDIC" on Justia Law

Simon is a CPA, a professor of accounting, and an entrepreneur “whose business dealings require a flowchart to unravel” and included managing three foreign companies. For tax years 2003 through 2006, the Simon family received approximately $1.8 million from those companies and spent approximately $1.7 million. Simon paid just $328 in income taxes for 2005, and claimed refunds for the other years, while pleading poverty to financial aid programs in order to gain need‐based scholarships for his children at private schools. Charged with filing false tax returns, 26 U.S.C. 7206(1) and 18 U.S.C. 2; failing to file reports related to foreign bank accounts, 31 U.S.C. 5314, 5322 and 18 U.S.C. 2; mail fraud, 18 U.S.C. 1341; and financial aid fraud, 20 U.S.C. 1097 and 18 U.S.C. 2, Simon sought to demonstrate that money received from the entities was loaned to him and was not taxable or constituted partnership distributions, not taxable because they did not exceed his basis in the partnership. The Seventh Circuit affirmed Simon’s convictions, rejecting challenges to evidentiary rulings and jury instructions. View "United States v. Simon" on Justia Law

At issue in this case was the deductibility of a worthless nonbusiness asset under the New Jersey Gross Income Tax Act. The Waksals filed a complaint in Tax Court, challenging a deficiency assessed on their sale of the asset on the ground that section 5-1c of the Act authorized their deduction of a worthless nonbusiness debt by incorporating the Internal Revenue Code’s treatment of such debts into New Jersey’s tax law through language stating that gains or losses should be determined by methods use “for federal income tax purposes.” The Waksals and the Director of the Division of Taxation cross-moved for summary judgment, and the Tax Court granted the Director’s motion, holding that section 5-1c only applies when a taxpayer has sold, exchanged or disposed of property, and that its applicability may depend on the circumstances of the underlying transaction. The Tax Court dismissed the Waksals’ complaint. The Waksals appealed, and the Appellate Division affirmed substantially for the reasons cited by the Tax Court. Upon review, the Supreme Court concluded that the worthless nonbusiness debt at issue was not a “sale, exchange or other disposition of property.” Section 5-1c did not integrate into the Act every provision of the Internal Revenue Code governing capital gains and losses, and 26 U.S.C.A. 166(d)(1)(B) did not constitute a federal “method of accounting” for purposes of this case. View "Waksal v. Director, Division of Taxation" on Justia Law

Saint Charles County was the sole owner and operator of the Saint Charles County Family Arena (Arena). After collecting taxes for several years on the fees, charges, and sales at the Arena, the County sought a refund for a three-year period. Specifically, the County sought a tax exemption pursuant to Mo. Rev. Stat. 144.030.2(17). The Director of Revenue denied the County's claims, and the Administrative Hearing Commission upheld the decision. The Supreme Court affirmed, holding that the County was not entitled to the sales and use tax exemption it claimed where it did not present clear and unequivocal proof it met the requirements of Section 144.030.2(17) to be entitled to an exemption. View "Saint Charles County v. Dir. of Revenue" on Justia Law

In assessing the value of electric power plants for purposes of property taxation, assessors may not include the value of intangible assets and rights in the value of taxable property. An electric company purchased "emission reduction credits" (ERCs), which the company had to purchase to obtain authorization to construct an electric power plant and to operate it at certain air-pollutant emission levels. These ERCs constituted intangible rights for property taxation purposes. In assessing the value of the power plant using the replacement cost method, the State Board of Equalization (Board) estimated the cost of replacing the ERCs. In also using an income approach in assessing the plant, the Board failed to attribute a portion or the plant's income stream to the ERCs and to deduct that value from the plant's projected income stream prior to taxation. In analyzing the Board's valuation of the power plant, the Supreme Court held (1) the Board improperly taxed the power company's ERCs when it added their replacement cost to the power plant's taxable value; and (2) the Board was not required to deduct a value attributable to the ERCs under an income approach. Remanded. View "Elk Hills Power, LLC v. Bd. of Equalization" on Justia Law

This case arose when the Department imposed penalties on plaintiffs for their violation of a New York law that taxes the sale of cigarettes and provides for the issuance of tax stamps evidencing payment of the required taxes. On appeal, the Department challenged a permanent injunction issued by the district court forbidding it from imposing penalties on plaintiffs under N.Y. Tax Law 481(1)(b)(i). The court concluded that the district court was barred by the comity doctrine from granting injunctive and declaratory relief to plaintiffs because such relief would interfere with the state's administration of its tax laws; the district court erred in finding that section 481(1)(b)(i) constituted a criminal penalty; and, instead, the court concluded that section 481(1)(b)(i) provided for a civil penalty and plaintiffs therefore did not suffer double jeopardy when the Department imposed the penalties on them. Accordingly, the court reversed and remanded with instructions to the district court to dismiss the suit with prejudice. View "Abuzaid, et al. v. Woodward" on Justia Law