The Automotive United Trades Organization (AUTO) and Tower Energy Group (Tower) brought an as-applied state constitutional challenge to a tax based on the possession of petroleum as a hazardous substance. AUTO and Tower claimed that the hazardous substances tax (HST) violated article II, section 40 of the state constitution because the revenue from motor vehicle fuel was not being "placed in a special fund to be used exclusively for highway purposes." The trial court held on summary judgment that AUTO's claim was barred because it was not filed within a reasonable time under the Uniform Declaratory Judgments Act (UDJA) and that the HST does not violate article II, section 40. Upon review, the Supreme Court reversed in part and affirmed in part. The Court reversed the trial court in barring AUTO and Tower from bringing their constitutional challenge because to do so would deprive the Supreme Court of its vested power to determine the constitutionality of specific legislation. The Court affirmed the trial court, however, in granting summary judgment to the State because article II, section 40 provides that "this section shall not be construed to include revenue from general or special taxes or excises not levied primarily for highway purposes." View "Auto. United Trades Org. v. Washington" on Justia Law

Petitioner claimed substantial tax benefits from a tax shelter on four consecutive tax returns. The IRS later disallowed petitioner's claim and determined deficiencies in tax and accuracy-related penalties, including gross valuation misstatement penalties and a negligence penalty. Petitioner conceded the deficiencies in tax, but contested the penalties. The Tax Court affirmed the IRS's imposition of the penalties. The court held that the Tax Court correctly concluded that petitioner was liable for the 40% gross valuation misstatement penalties from 2000 through 2002. In addition, the court found no error in the Tax Court's determination that petitioner failed to establish that he acted with reasonable cause and in good faith with respect to his underpayment of tax. View "Gustashaw, Jr., et al v. Commissioner of IRS" on Justia Law

Four defendants were convicted of conspiring to defraud the U.S. by impeding the functions of the IRS and of related fraud and tax offenses in connection with abusive trusts promoted by two Illinois companies. Although the system of trusts was portrayed as a legitimate, sophisticated means of tax minimization grounded in the common law, the system was in essence a sham, designed solely to conceal a trust purchaser’s assets and income from the IRS. It was promoted through a network of corrupt promoters, managers, attorneys, and accountants, but prospective customers who sought independent advice were routinely warned of its flaws. Defendants were sentenced to prison terms of 120 to 223 months. The Seventh Circuit affirmed. View "United States v. Vallone" on Justia Law

Plaintiff Sharon Wheeler appealed a judgment requiring her to pay assessments to Defendant Southport Seven Planned Unit Development ("Southport"). Upon review of the matter, the Supreme Court concluded the district court did not err finding Southport had authority to impose assessments against Wheeler as a property owner in Southport, the court did not err finding the amount Wheeler owed Southport and the court did not err in ordering Wheeler to pay Southport costs. View "Wheeler v. Southport Seven Planned Unit Dev." on Justia Law

This appeal arose from a grand jury investigation in which the target of the investigation (the witness) was subpoenaed to produce any records of foreign bank accounts he was required to keep under Treasury Department regulations governing offshore banking. The witness informed the government that he would not comply with the subpoena, citing his Fifth Amendment privilege against self-incrimination, and the government moved to compel the witness to comply. Because the court concluded that the Required Records Doctrine applied in this case, the court declined the witness's invitation to create a circuit split and accordingly reversed the district court's denial of the government's motion to compel the witness to comply with the subpoena. View "In Re: Grand Jury Subpoena" on Justia Law

Bay Mechanical & Electrical Corporation, a specialty mechanical contractor, challenged a sales-tax assessment issued by the tax commissioner with respect to Bay's purchase of allegedly taxable employment services. During the audit period, Bay purchased the services from two entities. Bay treated the personnel supplied by the entities as "permanent-assignment" employees, and therefore regarded the attendant employment services as exempt pursuant to Ohio Rev. Code 5739.01(JJ)(3). The commissioner denied the exemption on the ground that the evidence offered by Bay was insufficient to prove entitlement to the exemption. The board of tax appeals (BTA) affirmed. The Supreme Court affirmed, holding that the BTA acted reasonably and lawfully when it upheld the tax commissioner's sales-tax assessment against Bay because the contracts and testimony offered by Bay did not satisfy the one-year and permanent-assignment criteria of section 5739.01(JJ)(3). View "Bay Mech. & Elec. Corp. v. Testa" on Justia Law

Maude Williams passed away in May 2000, leaving behind both a substantial fortune and incomplete estate-planning documents. Originally believing this omission precluded transfer of the relevant estate property to a limited partnership, her Estate paid over $147 million in federal taxes. The Estate later discovered Texas state authorities supporting that Williams sufficiently capitalized the limited partnership before her death, entitling the Estate to a substantial refund. In this refund suit, the Estate claimed a further substantial deduction for interest on the initial payment, which it retroactively characterized as a loan from the limited partnership to the Estate for payment of estate taxes. The district court upheld both the Estate's contentions. The court affirmed, holding that the district court correctly concluded that Williams' intent on forming the partnership was sufficient under Texas law to transfer ownership of the Community Property bonds to the partnership. The district court also correctly concluded that the post hoc restructuring of the transfer as a loan from the partnership back to the Estate for tax purposes was a necessarily incurred administrative expense; the Estate retained substantial illiquid land and mineral assets that justified the loan, and the loan did not constitute an "indirect use" of the Community Property bonds. View "Keller, et al v. United States" on Justia Law

Petitioner, Feroleto Steel Company, did business in cutting large steel coils into smaller widths as specified by Petitioner's customers. The tax commissioner denied Petitioner an exemption from ad valorem property taxation, finding that the cutting of the steel coils to an individual customer's specifications results in a product of different utility. On appeal, the circuit court granted summary judgment to Respondents, the state tax commissioner, county assessor, and county commission. The Supreme Court reversed, holding (1) Petitioner's cutting of steel coils into narrower steel coils, as determined by the specifications of Petitioner's customers, does not result in a product of different utility for the purpose of the ad valorem property tax exemption; and (2) therefore, Petitioner's inventory of steel coils was exempt from ad valorem taxation. View "Feroleto Steel Co. v. Oughton" on Justia Law

This was an expedited election case in which Relators, taxpayers and committee members representing the petitioners supporting the issue, requested a writ of mandamus to compel Respondent, the county board of elections, to submit a levy-decrease question to the electorate at the November 6, 2012 general election. The Supreme Court denied the writ, holding that the board of elections neither abused its discretion nor clearly disregarded Ohio Rev. Code 5705.261 and 5705.192 by removing Relators' levy-decrease initiative from the November 6 ballot where the voter-approved levy did not increase the rate of the preexisting voter-approved levies. View "State ex rel. Taxpayers for Westerville Sch. v. Bd. of Elections" on Justia Law

Ann Sacks Tile and Stone, Inc.; Canac Kitchen US Limited; and Koehler Rental Power, Inc. appealed a general tax judgment against them directly to the Supreme Court. The Department of Revenue responded with a motion to determine jurisdiction, asking the Court to determine whether a defect in the manner in which the companies had served their notice of appeal on the department deprived the Supreme Court of authority to decide the appeal. The companies asserted that the defects did not deprive the court of jurisdiction. Upon review, the Supreme Court concluded it indeed lacked jurisdiction over the case, and accordingly dismissed the appeal. View "Ann Sacks Tile and Stone, Inc. v. Dept. of Rev." on Justia Law