Barbara, an analyst at the Cleveland Clinic, and Anthony, a stay-at-home father for two-year-old triplets and ten-year-old, filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, 11 U.S.C. 701. On Schedule B listing assets, they included a joint interest in “Anticipated 2009 Income Tax Refund,” value “unknown.” On their joint returns for 2009, they listed: adjusted gross income: $59,402; total tax liability: $2,934; total credits: $2,934; payroll taxes withheld: $6,777; and total federal tax refund: $8,542. On line 51, “Tax and Credits,” they listed $2,903 for the Child Tax Credit (CTC). On line 65, “Payments,” they listed $1,097 for additional CTC. They amended Schedule B, changing the unknown value of their tax refund. They specified $4,000 as the portion of their refund due to the CTC and $4,542 for the portion not due to the CTC. They amended Schedule C of the bankruptcy petition, to list the $4,000 portion as exempt pursuant to Ohio Rev. Code 2329.66(A)(9)(g). The Trustee objected, arguing that $2,903 of the CTC, the so-called “non-refundable portion,” was not exempt. The bankruptcy court sustained the Trustee’s objection, reducing the exemption to $1,907. The Bankruptcy Appellate Panel affirmed. The Sixth Circuit affirmed View "Zingale v. Rabin" on Justia Law

During tax years at issue, State Farm filed consolidated returns for life insurance and non-life subgroups. The IRS determined deficiencies. State Farm responded that, using a revised method for calculating alternative minimum tax, rather than owing $75 million in additional taxes, it was entitled to $500 million in additional refunds. State Farm also raised a loss reserve issue. The Tax Court ruled that State Farm should not have included a $202 million award of compensatory and punitive damages for bad faith in its insurance loss reserve for 2001 and 2002 returns. The Seventh Circuit affirmed, regarding punitive damages. Pending clearer guidance from the National Association of Insurance Commissioners (to whom Congress has commanded deference), punitive damages should be treated as regular business losses that are deductible when actually paid rather than deducted earlier as part of insurance loss reserves. With regard to the compensatory damages portion of the award, the court reversed. Extra-contractual obligations like compensatory damages for bad faith have long been included in insurance loss reserves; NAIC guidance supports that result. The court affirmed rejection of State Farm’s recalculation of alternative minimum tax, which would result in “creation from thin air of a virtual tax loss some $4 billion larger than” actual loss. View "State Farm Mut. Auto. Ins. Co. v. Comm'r of Internal Revenue" on Justia Law

The Property Appraiser and the Tax Collector appealed from an order of the district court affirming the final order of the bankruptcy court. The bankruptcy court held that debtor's request for the bankruptcy court to redetermine her ad valorem tax liability for the year 2009 was timely filed under 11 U.S.C. 108(a) and 505. The court concluded that the bankruptcy court erred in ruling that debtor's request was timely under section 108(a). The bankruptcy court's interpretation of the language in section 505(a)(2)(C) failed to give full effect to Congress's intent. Accordingly, the court reversed the judgment of the district court affirming the bankruptcy court's holding. View "Dubov, et al. v. Read" on Justia Law

Chapman was convicted of six counts of forging checks (18 U.S.C. 513(a)) that were made payable to the IRS and given to him by a client who had hired Chapman to resolve a tax dispute. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence and to the district court’s admission of a previous forgery conviction. View "United States v. Chapman" on Justia Law

William Jefferson & Co., Inc. (William Jefferson) lost a state administrative appeal in which William Jefferson challenged the Orange County Tax Assessor's valuation of a parcel of real property. William Jefferson then filed a suit in federal district court, alleging that its procedural due process rights were violated in the course of the administrative appeal hearing. The court affirmed the district court's conclusion that the state administrative appeal did not deny William Jefferson procedural due process. In a separate memorandum disposition filed concurrently with this opinion, the court affirmed the lower court's grant of the agency's motion for a protective order and its denial of class certification. View "William Jefferson & Co., Inc. v. Board of Assessment and Appeal, et al." on Justia Law

Sears, Roebuck & Company appealed a judgment which concluded as a matter of law that the Supreme Court's holding in "Linnehan Leasing v. State Tax Assessor," (898 A.2d 408) applied retroactively. Sears argued that Maine recognizes the practice of retroactively applying certain legal holdings of a decision in a case to the parties in that case but only prospectively in all other instances. Sears urged the Supreme Court to adopt the three-part test enumerated in "Chevron Oil Co. v. Huson" (404 U.S. 97, 106-07 (1971)) when deciding whether to apply the holding of a decision retroactively to other cases. Sears further argued that "Linnehan Leasing" should not apply retroactively because the three Chevron factors weigh in favor of applying the holding with selective prospectivity. Finally, Sears argued that the Court should have reaffirmed its holding in "Myrick v. James" (444 A.2d 987, 1001-02 (Me. 1982)). Without addressing the issue of retroactivity, the Court applied the plain meaning of the statute at issue and affirmed. View "Sears, Roebuck & Company v. State Tax Assessor" on Justia Law

This case stemmed from plaintiff's suit to recover overpayments from the IRS and his subsequent appeal of the district court's judgment which did not award him an overpayment related to his 1999 tax year. The court held that a taxpayer's claim for credit of an overpayment was limited to the amount of the overpayment made within the applicable look-back period in I.R.C. 6511(b)(2)(A). Any claim for refund based on an amount claimed as credit but paid outside of the look-back period was time-barred and uncollectible. Therefore, the court affirmed the district court's judgment where plaintiff's claim for credit of his overpayment of his 1999 taxes was time-barred under section 6511(b)(2)(A). View "Reynoso v. United States" on Justia Law

The New Jersey Sports and Exposition Authority, a state agency which owned a leasehold interest in the East Hall, also known as “Historic Boardwalk Hall”, on the boardwalk in Atlantic City, was tasked with restoring it. After learning of the market for federal historic rehabilitation tax credits (HRTCs) among corporate investors, and of the additional revenue which that market could bring to the state through a syndicated partnership with one or more investors, NJSEA created Historic Boardwalk Hall, LLC (HBH) and sold a membership interest to a subsidiary of Pitney Bowes. Transactions admitting PB as a member of HBH and transferring ownership of East Hall to HBH were designed so that PB could earn the HRTCs generated from the East Hall rehabilitation. The IRS determined that HBH was simply a vehicle to impermissibly transfer HRTCs from NJSEA to PB and that all HRTCs taken by PB should be reallocated to NJSEA. The Tax Court disagreed. The Third Circuit reversed. PB, in substance, was not a bona fide partner in HBH. View "Historic Boardwalk Hall, LLC v. Comm'r of Internal Revenue" on Justia Law

The target witness learned in 2009 that the IRS had opened a file on him, and that an IRS special agent and DOJ tax division prosecutor were assigned to investigate whether he used secret offshore bank accounts to evade income taxes. Two years later, a grand jury issued a subpoena requiring that he produce all records required to be maintained pursuant to 31 C.F.R. 1010.420 relating to foreign financial accounts that he had a financial interest in, or signature authority over. The requested records are required under the Bank Secrecy Act of 1970. The Government argued that the Required Records Doctrine overrides the Fifth Amendment privilege. The district court quashed the subpoena, concluding that the required records doctrine did not apply because the act of producing the required records was testimonial and would compel the witness to incriminate himself. The Seventh Circuit reversed, finding the Doctrine applicable. View "In re: February 2011-1 Grand Jury Subpoena" on Justia Law

Plains Capital and Boardwalk appealed a judgment finding them liable for conversion of the proceeds from a sale of a car that was subject to a tax lien. Boardwalk sold the car and gave the proceeds to Plains Capital to get Plains Capital to release the title, and Plains Capital applied the money to the taxpayer's debt. The IRS attempted to obtain the proceeds by levy after Plains Capital had applied the money to the debt, so Plains Capital claimed it no longer had any of the property. The court held that neither party was liable for conversion under Texas law but that Plains Capital was liable for failure to honor a tax levy. Because the court found that Plains Capital was liable for failure to honor a tax levy, interest accrued from the date it failed to honor the levy until the date the judgment was satisfied, at the underpayment rate in I.R.C. 6621(a)(2). Accordingly, the court reversed the judgment and remanded for further proceedings. View "United States v. Boardwalk Motor Sports, Ltd., et al." on Justia Law