Mortgage Electronic Registration Systems, as nominee for two lenders (collectively, Plaintiffs), held mortgages on Lot 456. For the property owner's failure to pay his water bill, the Pawtucket Water Supply Board (PWSB) auctioned the lot. PWSB issued a deed conveying the title in the property to Amy Realty. Amy Realty subsequently discovered that the property PWSB had intended to auction had been mistakenly listed as Lot 486 on the tax sale notices and deed. Amy Realty then obtained a corrective deed from the PWSB conveying title to Lot 456. Amy Realty subsequently filed a petition to foreclose on Plaintiffs' rights of redemption in Lot 456. Plaintiffs filed this action seeking to vacate the final decree of disclosure, alleging that the corrective deed changing the lot number from 486 to 456 was invalid and this infirmity rendered the foreclosure decree void. The superior court granted summary judgment for Plaintiffs. The Supreme Court affirmed, holding (1) the corrective deed obtained in this case was null and void because it was not recorded within sixty days of the tax sale; and (2) the final foreclosure decree may be vacated because the tax sale was invalid. View "Mortgage Elec. Registration Sys., Inc. v. DePina" on Justia Law

In 2006, the Iowa Department of Revenue assessed the value of Qwest Corporation's Iowa operating property. Qwest protested the assessment by challenging the general assembly's previous decision to tax the personal property of incumbent local exchange carriers (ILECs) but not competitive long distance telephone companies (CLDTCs) or wireless providers operating in Iowa. Specifically, Qwest argued that the tax scheme which taxed ILECs for the value of their personal property but not CLDTCs and wireless providers violated Qwest's equal protection rights. The State Board of Tax Review (Board) concluded that Qwest's constitutional rights were not violated. The district court reversed. The Supreme Court reversed the district court and upheld the Board's assessment on Qwest, holding that imposing a tax on Iowa-based personal property of ILECs but not on that of CLDTCs or wireless service providers did not violate the Iowa Constitution, as the differential tax treatment of these enterprises is rationally related to legitimate state interests in encouraging the development of new competitive telecommunications infrastructure while raising revenue from those providers that historically had a regulated monopoly and continue to enjoy some advantages of that monopoly. View "Qwest Corp. v. State Bd. of Tax Review" on Justia Law

The City of Nashua appealed a New Hampshire Board of Tax and Land Appeals (BTLA) ruling that taxpayer Marijane Kennedy was entitled to an "elderly exemption" under RSA 72:39-a (2012) for the 2011 tax year. Upon review of the applicable statute and the facts on record in this case, the Supreme Court found that the BTLA erred in its interpretation and accordingly reversed. View "Appeal of City of Nashua" on Justia Law

Appellees John Apland and others (collectively, Apland) and the Butte County Director of Equalization (Director) were involved in a dispute over the method Director used to calculate the value of Apland's rangeland property for tax purposes. In Apland I, the Supreme Court held that Director failed to comply with the Constitutional requirements of equality and uniformity and remanded with direction to Director to re-determine the property values after giving appropriate consideration and value to appurtenant and nontransferable water rights. On remand, the trial court entered a judgment in favor of Apland, concluding that Director failed to comply with the directives in Apland I. The Supreme Court reversed and remanded, holding that Director properly executed the directives of Apland I but that the record did not allow the Court to determine whether Director's method of valuation of Apland's property resulted in an equal and uniform assessment. View "Apland v. Bd. of Equalization for Butte County" on Justia Law

The Maryland Economic Development Corporation (MEDCO) is a public corporation established by the legislature to aid in promoting the economic development of the State. This litigation arose from MEDCO's involvement in the development of a technology development center. MEDCO sought a loan with Bank to finance the center. MEDCO executed a leasehold deed of trust with Bank requiring MEDCO to pay all recording costs and fees in connection with filing the loan documents. MEDCO subsequently presented the deed of trust for recording in Montgomery County, claiming an exemption from the recordation tax based on Md. Code Ann. Econ. Dev. 10-129(a), which granted MEDCO a tax exemption "from any requirement to pay taxes or assessments on its properties or activities." The county transfer office denied the exemption and required MEDCO to pay recordation tax. The county department of finance denied MEDCO's recordation tax refund claim. The tax court denied MEDCO's petition for appeal. The circuit court reversed, and the court of special appeals reversed the circuit court. The Court of Appeals reversed, holding that, based on the plain language of section 10-129(a), the legislature intended to exempt MEDCO from paying the recordation tax at issue in this case. View "Md. Econ. Dev. Corp. v. Montgomery County" on Justia Law

Kerman founded Kenmark. By 2000 its annual sales of eyeglass frames approached $35 million. Kerman’s personal net worth topped $12.5 million. Kerman was Kenmark’s sole owner until 2000, when Kerman sold 27 percent of his stock for $6.1 million to Kenmark’s employee stock ownership plan, realizing a taxable gain of $5.4 million. Kerman consulted his financial advisor and pursued a “Custom Adjustable Rate Debt Structure,” tax-saving strategy. A British company (not subject to U.S. tax law) borrowed foreign currency from a foreign bank; the U.S. taxpayer would receive some of the borrowed currency, would agree to be jointly liable for the entire loan, and would exchange his portion of the foreign currency for dollars. A currency exchange is taxable. The taxpayer would claim that the currency’s basis was the full loan amount, not the small amount of currency actually purchased. Because of the inflated basis, the taxpayer would claim a loss. The dollars would be deposited in the same foreign bank with the balance of the foreign currency and be used to pay off the loan. The IRS disallowed the deduction and imposed a penalty, 26 U.S.C. 6662(e), 6662(h). The tax court and Sixth Circuit affirmed, finding that the transaction lacked economic substance and Kerman lacked good faith to believe that it did. View "Kerman v. Comm'r of Internal Revenue" on Justia Law

The Texas legislature enacted two distinct "e911 fee" statutes to help fund the State's 911 emergency networks. The first statute, enacted in 1997, imposed on wireless subscribers a monthly emergency service fee, collected on the customer's bill. The second statute, enacted in 2010, imposed on prepaid wireless subscribers a flat fee collected by the retail seller when a consumer buys prepaid service. Before 2005, prepaid providers paid $2.3 million in e911 fees under the 1997 law. When the prepaid providers concluded that tax-preparation errors caused them erroneously to remit millions, they sought refunds of the amounts already paid. The Commission on State Emergency Communications (CSEC) initiated a case against the providers to determine the 1997 law's applicability to prepaid services. The CSEC adopted the ALJ's proposal for decision, which construed the 1997 law as imposing the e911 fee on prepaid wireless. After the legislature enacted the 2010 statute, the prepaid providers sought review. The trial court ordered refunds, holding that prepaid wireless was not covered by the 1997 law. The court of appeals reversed. The Supreme Court reversed, holding that the pre-2010 statute does not tax prepaid service. View "TracFone Wireless, Inc. v. Comm'n on State Emergency Commc'ns" on Justia Law

Appellants challenged the IRS's deficiency finding, as well as an accuracy-related penalty. On appeal, appellants argued that the Tax Court misunderstood relevant law when it affirmed the IRS's calculation of their remaining basis in their S corporation. They also challenged the factual basis for the Tax Court's decisions affirming the Service's rejection of their over-reporting claim and upholding its imposition of the penalty. The court rejected defendant's first challenge, concluding that a shareholder's basis was decreased "for any period" by the amount of that shareholder's pro rata share of the corporation's losses, and a shareholder incurred previously unabsorbed losses in the first year the shareholder had adequate basis to do so. In regards to the over-reporting claim, the court held that the Tax Court made no clear error when it upheld the IRS's determination not to reduce the sole proprietorship's income. Consequently, there was no dispute that appellants' 2003 tax return understated their taxes by an amount that qualified as substantial. Accordingly, the court affirmed the judgment. View "Barnes, et al v. Commissioner, IRS" on Justia Law

After years of paying taxes on wages he received for his work as a carpenter, Scheuneman stopped paying federal income tax in 1998. In 1999, in an effort to prevent the IRS from discovering his income, Scheuneman purchased a sham tax avoidance system from an Arizona company, Innovative Financial , and formed a limited liability corporation, Larch, and two illegitimate trusts, Soned and Jokur. Scheuneman retained complete control of all three. Scheuneman was eventually convicted of three counts of tax evasion, 26 U.S.C. 7201 and one count of interference with the Internal Revenue laws, 26 U.S.C. 7212(a). The Seventh Circuit affirmed, first rejecting arguments that that a clerical error in the indictment’s description of the relevant date rendered two counts legally insufficient and that the government constructively amended the indictment by introducing proof regarding dates other than those described in the indictment. Schueneman also claimed that the district court improperly ordered restitution for losses that are unrelated to his tax evasion offenses. The court rejected the argument; although those losses were not caused by the conduct underlying his tax evasion offenses, they are properly included as restitution because they were attributable to his interference with the Internal Revenue laws. View "United States v. Scheuneman" on Justia Law

Appellants raised a constitutional challenge to a fee legislated on cigarettes distributed through Mississippi for sale outside the state, claiming separate violations of the Commerce and Due-Process Clauses. In 2009, the Mississippi Legislature passed a law imposing a fee on the sale, purchase, and distribution in Mississippi of cigarettes manufactured by companies that did not enter into settlement agreements with the State as a result of a 1997 lawsuit (the "nonsettling manufacturer" or "NSM" law), "including cigarettes sold, purchased or otherwise distributed in this state for sale outside of this state." In October 2009, the chancery court entered a temporary restraining order enjoining the Commissioner of Revenue from assessing and collecting the challenged fee, and later ruled that the legislative amendment did not apply retroactively, denied Appellants' motion for reconsideration, and granted the Commissioner's motion for final judgment. However, the chancery court did not enter final judgment at that time. In 2011, the chancellor entered final judgment, which incorporated an August 2010 order (denying Appellants’ request for a permanent injunction and declaratory relief) and a May 2011 order (denying motion for rehearing and granting motion for final judgment). Appellants raised several issues on appeal; the Supreme Court found that the provision of the NSM law imposing a fee on NSM cigarettes distributed through Mississippi for sale outside the state was not internally consistent in violation of the Commerce Clause. The Court declined to address Appellants' due process argument. Furthermore, the Court found that the chancery court erred in granting claims for attorney fees asserted under 42 U.S.C. 1988 for Appellants' section 1983 challenge to the constitutionality of the NSM law. The Court found that all Appellants had an adequate remedy at state law (declaratory relief under Mississippi Rule of Civil Procedure 57), and as such, the chancery court should have "refrain[ed] from considering Section 1983 claims in tax cases, mooting Section 1988 claims for fees. That being said, no basis exist[ed] for a claim by Appellants for attorney fees." View "Commonwealth Brands, Inc. v. Morgan" on Justia Law