The county assessor determined that the fair market value of a tax parcel, which was improved by a department store operated by respondent Federated Retail Holdings, Inc., was $17,000,000 for the year 2006. The assessor included the value of a leasehold interest held by Federated in the parcel adjacent to the tax parcel in its value determination. Federated timely filed petitions challenging the assessor's market value determinations. The tax court held that Federated's ownership interest in the tax parcel included the leasehold interest in the adjacent property, but concluded that the value of the leasehold interest was not subject to the jurisdiction of the tax court and therefore did not include it. The county appealed. The Supreme Court reversed, holding that the tax court had subject-matter jurisdiction to consider the value of Federated's leasehold interest in adjacent property because it constituted real property of the tax parcel under Minn. Stat. 272.03, 1 and affected the fair market value of the tax parcel. View "Federated Retail Holdings, Inc. v. County of Ramsey " on Justia Law

The Companies manufacture and distribute high-speed cigarette rolling machines that retailers offer to customers who want to roll their own roll cigarettes. Treasury and the Bureau are charged with enforcing the excise tax on tobacco products, 26 U.S.C. 5701. Before the Bureau issued Ruling 2010-4, retailers offering the Companies’ machines to customers were not liable for the excise tax because they were not considered manufacturers. The Ruling deems the retailers manufacturers, and requires them to acquire manufacturer permits and pay the excise tax. The Companies sought, and the district court granted, a preliminary injunction prohibiting enforcement of the Ruling. During the pendency of appeal, Congress passed and the President signed into law the Moving Ahead for Progress in the 21st Century Act, which authorized funding for highways and other transit programs, with partial funding to come from amendment of the definition of “manufacturer of tobacco products” to include retailers who make roll-your-own machines available to customers, thereby achieving the same result as the Ruling. The Sixth Circuit vacated and directed that the case be dismissed. The statutory amendment mooted the controversy and the Anti-Injunction Act precluded the court’s exercise of jurisdiction View "Ryo Mach. Rental, LLC, v. U.S. Dep't of Treasury" on Justia Law

Lesley and Fogg presented the Benistar 419 Plan to the Ouwingas, their accountant, and their attorney, providing a legal opinion that contributions were tax-deductible and that the Ouwingas could take money out tax-free. The Ouwingas made substantial contributions, which were used to purchase John Hancock life insurance policies. In 2003, Lesley and Fogg told the Ouwingas that the IRS had changed the rules; that the Ouwingas would need to contribute additional money; and that, while this might signal closing of the “loophole,” there was no concern about tax benefits already claimed. In 2006, the Ouwingas decided to transfer out of the Plans. John Hancock again advised that there would be no taxable consequences and that the Plan met IRS requirements for tax deductible treatment. The Ouwingas signed a purported liability release. In 2008, the IRS notified the Ouwingas that it was disallowing deductions, deeming the Plan an “abusive tax shelter.” The Ouwingas filed a class action against Benistar Defendants, John Hancock entities, lawyers, Lesley, and Fogg, alleging conspiracy to defraud (RICO, 18 U.S.C. 1962(c), (d)), negligent misrepresentation, fraudulent misrepresentation, unjust enrichment, breach of fiduciary duty, breach of contract, and violations of consumer protection laws. The district court dismissed. The Sixth Circuit reversed, View "Ouwinga v. Benistar 419 Plan Servs., Inc." on Justia Law

This dispute arose in the context of a multi-million dollar tax refund case pending in the district court. The government filed a petition for a writ of mandamus, requesting that the court vacate four district court orders directing the government to be represented at an initial court settlement conference by a representative with full authority to settle a civil tax refund lawsuit. The court held that the district court had the authority to order parties, including the federal government, to participate in mandatory settlement conferences, but that the exercise of such authority was subject to review for abuse of discretion. Based on the facts of this case, the court concluded that the district court abused its discretion in ordering a government representative with full settlement authority to appear at an initial settlement conference. Accordingly, the court granted mandamus relief and directed the district court to vacate the dispute orders. View "USA v. USDC, Mariana" on Justia Law

Kindred Hospital appealed the district court's order upholding DHHS' decision that Kindred Hospital should have reduced a state tax expense by the amounts it received from a privately administered pool fund on its Medicare Cost Reports for the years 2000-2003. The court followed the well-reasoned opinion of the district court and affirmed the Administrator's decision. View "Kindred Hospitals East v. Sebelius" on Justia Law

In 1998, Harchars filed a Chapter 13 petition. The government was a creditor because of a tax arrearage. A reorganization plan was confirmed, requiring that they pay in full priority tax claims and pay five cents on the dollar, over 43 months, unsecured, nonpriority claims by the government and similarly-situated creditors. In 2000, Harchars pursued an adversary proceeding, alleging injury caused by the government’s practice of “freezing” computer-automated refunding of tax overpayments to Chapter 13 debtors and refusal to issue a refund for their 1999 return until after the bankruptcy court resolved its motion to modify the plan to include the refund in plan funding. Harchars opposed the motion, explaining that they had separated, husband was no longer employed, and the refund was needed for living expenses. After Harchars filed amended schedules, the IRS withdrew its motion and issued the refund with interest. The bankruptcy court concluded that the IRS had not violated the automatic stay by manually processing or withholding the tax refund. The district court affirmed and held that a due-process claim was barred by sovereign immunity and that Harchars did not identify any provision of the plan that had been violated. The Sixth Circuit affirmed and dismissed the claims. View "Harchar v. United States" on Justia Law

The tax court found underpayment of $8,553 on Brown’s 2005 income tax and assessed a penalty of $1,171, based on failure to include income realized upon cancellation of a $100,000 whole life insurance policy, issued in 1982. Brown did not receive any cash upon cancellation; he had already used policy dividends and taken loans to pay premiums. The IRS took the policy’s cash value, $37,356.06 and subtracted Brown’s “investment” of $8,271.76 to arrive at $29,093.30 in taxable income. The Seventh Circuit affirmed. The cash value of a surrendered (whether or not voluntarily surrendered) life insurance policy is includable in gross income to the extent it exceeds the taxpayer’s investment. The fact that this income was used to pay a debt to the insurance company is irrelevant, because it was a personal rather than a business debt and therefore was not deductible. It is also irrelevant that no money changed hands. By surrendering the policy (albeit involuntarily) Brown gave up the prospect of receiving $100,000 if he died but at the same time freed himself from having to pay $1,837 each year to maintain that prospect. View "Brown v. Comm'r of Internal Revenue" on Justia Law

Customers who rent rooms from the online travel companies pay those companies a higher “retail” rate; the online travel companies pay the hotels an agreed-upon “wholesale” rate, plus any taxes applicable to the “wholesale” price. Ohio allows municipalities and townships to levy excise taxes on “transactions by which lodging by a hotel is or is to be furnished to transient guests.” Ohio Rev. Code 5739.08.The municipalities alleged that the online travel companies violated local tax laws by failing to pay the local occupancy tax on the revenue they collect in the form of the difference between the “wholesale” room rate and the higher “retail” rate charged by the online travel companies. In granting the travel companies’ motion to dismiss, the district court determined that the companies had no obligation under any of the ordinances, regulations, or resolutions to collect and remit guest taxes because the laws created tax-collection obligations only for “vendors,” “operators,” and “hotels.” The Sixth Circuit affirmed. The language of the laws is aimed expressly at taxing the cost of furnishing hotel lodging, and does not purport to tax the additional fees charged by the online travel companies. View "City of Columbus v. Hotels.com, L.P." on Justia Law

As a partner of E&Y, Hartman received restricted shares in Cap Gemini as part of a 2000 sale. The agreement provided for an initial sale of 25 percent of the shares to satisfy each partner’s tax liability as a result of the transaction. In 2001 Hartman received a Form 1099-B reflecting that he was deemed to have received $8,262,183, valuing his unsold Cap shares at $148 per share. Hartman’s return for 2000, reported the entire amount as capital gains income. After closing, the value of Cap shares dropped to $56 per share. Hartman voluntarily terminated his employment, forfeiting 10,560 shares of stock. He received a credit for taxes paid on those shares under I.R.C. 1341. In 2003, Hartman filed an amended return for 2000, claiming that he had received only the 25 percent of Cap shares that had been monetized in 2000, with the remainder received in 2001 and 2002. He sought a refund of $1,298,134. The IRS failed to act on the claim. The Claims Court found that Hartman had constructively received all 55,000 shares in 2000 and was not entitled to a tax refund. The Federal Circuit affirmed. View "Hartman v. United States" on Justia Law

At issue before the Supreme Court was whether the common pleas court appropriately decertified a class based on its conclusion that a necessary element of the plaintiffs' proof (the presence of a confidential relationship) was not amenable to class treatment. In 1993, Sandra J. Basile commenced a civil action against H&R Block, Inc., H&R Block Eastern Tax Services, Inc. and Mellon Bank. She alleged, among other things, that the Block companies maintained maintained and breached fiduciary duties in connection with their "Rapid Refund" program. Basile sought to assert claims on behalf of herself and others who were similarly situated. However, summary judgment subsequently was awarded in Block's favor on the ground that it had no fiduciary relationship with the plaintiffs. The common pleas court's conclusion, in this respect, was based on the premises that Block was not the plaintiffs' agent and that no confidential relationship otherwise existed between the parties. In the ensuing appellate litigation, the court's decision on the agency score ultimately was conclusively sustained. In 2001, the Superior Court overturned the common pleas court's summary-judgment award, finding that Ms. Basile had proffered sufficient evidence to establish a prima facie case of a confidential relationship. In 2003, upon consideration of the appellate rulings, the common pleas court determined that class treatment was no longer appropriate. The common pleas court found that the need for individualized inquiries on the dispositive question of trust precluded a finding that common issues predominated. Upon review of the matter, the Supreme Court held that that the common pleas court did not err in decertifying the class based on its conclusion that the presence of a confidential relationship was not amenable to class treatment. The order of the Superior Court was reversed, the common pleas court's decertification order was reinstated, and the matter was remanded for further proceedings. View "Basil. v. H & R Block, et al." on Justia Law