Justia Tax Law Opinion Summaries

Tesoro Corporation challenged its income taxes assessed for 1994 through 1998. The state Department of Revenue (DOR) calculated Tesoro’s Alaska income by applying a three-factor apportionment formula to Tesoro’s worldwide income, including that of its non-Alaskan subsidiaries. An administrative law judge ruled Tesoro was a unitary business that could be subject to formula apportionment, and that DOR could permissibly assess penalties against Tesoro. Tesoro appealed to the superior court, which affirmed. On appeal to the Supreme Court, Tesoro argued that only the income of its Alaska-based subsidiaries should have been subject to taxation in Alaska because Alaska’s tax scheme violates the Due Process and Interstate Commerce Clauses of the United States Constitution. Because Tesoro’s business was unitary, the Supreme Court rejected Tesoro’s challenge to the constitutionality of taxing all of its income under formula apportionment. Because Tesoro lacked standing to challenge the formula’s constitutionality, the Court did not reach the internal consistency issue Tesoro raised. Furthermore, the Court concluded that DOR permissibly imposed penalties on Tesoro. Therefore the Court affirmed the superior court decision that affirmed the administrative law judge’s decision and order. View "Tesoro Corporation v. Alaska Dept. of Revenue" on Justia Law

A tour company claimed fraud and misconduct on the part of a borough in the course of a fraudulent conveyance trial concerning liability for property taxes. Specifically, the company argued that a police officer falsely testified at trial concerning a conversation he allegedly had with the company president regarding the company's obligation to pay borough taxes. The superior court denied relief under Rule 60(b)(3), finding that the company had failed to establish clear and convincing evidence of fraud. The company appealed, arguing that the superior court applied the incorrect legal standard and that the company presented clear and convincing evidence of fraud. The company also appealed various orders relating to discovery and the award of attorney's fees. Because the superior court applied the correct legal standard and did not abuse its discretion in finding that there was not clear and convincing evidence of fraud, the Supreme Court affirmed its denial of the Rule 60(b) motion. Furthermore, the Court affirmed the lower court's refusal to reopen discovery or awarding attorney's fees. View "Alaskan Adventure Tours, Inc. v. The City and Borough of Yakutat" on Justia Law

When passing a 1997 ordinance, the Anchorage Municipal Assembly amended the boundaries of a proposed Downtown Improvement District to exclude some properties on K and L Streets. The building at 420 L Street, the property owned by appellant L Street Investments, was in the original proposal but was subsequently carved out by the Assembly. In 2000 the Assembly extended the life of the District for ten years. Beginning in 2009, the Anchorage Downtown Partnership canvassed businesses hoping to extend the term of the District and expand it to include businesses between I and L Street. After the majority of business owners in the proposed District approved the extension and expansion, the Assembly extended the term of the District and expanded it to include businesses between I and L Streets, including the building at 420 L Street. L Street Investments filed suit, arguing: (1) Section 9.02(a) of the Municipality of Anchorage's Charter did not authorize the Municipality to finance services within the District by an assessment; and (2) the District is a "service area," and AS 29.35.450(c) prohibits the expansion of a service area unless a majority of voters in the area to be added vote in favor of expanding the service area. The Anchorage Downtown Partnership intervened, and all parties filed cross-motions for summary judgment. The superior court granted summary judgment to the Municipality and the Anchorage Downtown Partnership. Finding no error, the Supreme Court affirmed the grant of summary judgment. View "L Street Investments v. Municipality of Anchorage" on Justia Law

Appellant Fredrick Williams appealed the superior court's decision affirming the Ketchikan Gateway Borough's ruling that a house was not exempt from Ketchikan Gateway Borough taxation. In 2002 Williams received a grant to rebuild his house from the Bureau of Indian Affairs Housing Improvement Program. Because Williams has owned the home for ten years, the repayment amount annually decreased by ten percent of the original amount, resulting in no repayment for a transfer occurring 20 years or more after Williams received the grant. Williams executed a deed of trust securing the federal government's right to repayment under the grant. Williams claimed that under the grant and the deed of trust, "[t]he federal government own[ed] . . . the $115,000 it took to build the home," and that Williams was therefore exempt from paying property taxes on it. On appeal, the superior court rejected this argument, upholding the Ketchikan Gateway Borough's view that the deed of trust securing the grant did not divest Williams of the ownership interest in his real property. The Supreme Court agreed with the superior court's conclusion and affirmed and adopted its decision. View "Williams v. Ketchikan Gateway Borough" on Justia Law

Alyeska Pipeline Service Company (Alyeska), the agent for the owners of the Trans Alaska Pipeline System (TAPS), leases the TAPS right-of-way from the Alaska Department of Natural Resources (Department). Alyeska appealed the Department's 2002 appraisal of the TAPS lease price to Michael Menge, the Commissioner of the Department, and then to the superior court. Both affirmed the Department's appraisal. Alyeska appealed to the Supreme Court, arguing: (1) the Department misinterpreted AS 38.35.140(a); (2) the Department was required to adopt its interpretation of AS 38.35.140(a) as a regulation under the Administrative Procedure Act (APA); and (3) the appraisal improperly included submerged lands within the right-of-way when the Department failed to establish that the State holds title to those lands. Finding no misinterpretation, the Supreme Court affirmed. View "Alyeska Pipeline Service Co. v. Alaska" on Justia Law

The issue before the Supreme Court in this case concerned the validity of two 2005 Kenai Peninsula Borough (Borough) ordinances: one enacted by the Borough Assembly and the second enacted by voter initiative. The Borough Assembly enacted an ordinance in June 2005 that increased the sales tax rate from two percent to three percent. In an October 2005 election, Borough voters passed an initiative that required prior voter approval for all Borough capital projects with a total cost of more than one million dollars. The Alliance for Concerned Taxpayers (ACT) challenged the sales tax increase and sought to enforce the capital projects voter approval requirement. The superior court granted summary judgment to the Borough on both matters: on the sales tax issue, reasoning that a 1964 voter action allowed the increase and the 2006 referendum defeat ratified it; and on the capital projects voter approval issue, reasoning that Proposition 4 was an unconstitutional use of the initiative power to appropriate a public asset. ACT appealed. Upon review, the Supreme Court affirmed the superior court's grant of summary judgment on the sales tax issue and the capital project voter approval issue, concluding the 1964 voter authorization of a three-percent sales tax preserved the Borough's right to raise the rate to three percent, and that the 2006 defeat of the referendum to repeal the rate increase constituted a ratification of the increase. On the voter approval issue, the Court concluded that allowing voters to veto any capital improvement projects of over $1 million had the effect of diluting the Borough Assembly's exclusive control over the budget and was therefore an impermissible appropriation. View "Alliance of Concerned Taxpayers, Inc. v. Kenai Peninsula Borough" on Justia Law

Native nonprofit corporation Dena Nena Henash (d/b/a Tanana Chiefs Conference) applied to the Fairbanks North Star borough assessor for charitable-purpose tax exemptions on several of its properties. The assessor denied exemptions for five of the parcels, concluding that they did not meet the exemption’s requirements. The superior court affirmed the denial as to four of the properties and remanded the case for consideration of one property back to the assessor, who granted the exemption. The Nonprofit appealed the denial of exemptions for three of the remaining properties plus a portion of the fourth, and appealed the superior court’s award of attorney’s fees to the Borough. Because the properties in question were used exclusively for charitable purposes, the Supreme Court reversed the assessor’s determination on the four appealed properties, vacated the attorney’s fees award, and remanded for an award of fees.

In 2005 the Department of Revenue denied Permanent Fund Dividends (PDFs) to Appellants In and Peggy Harrod and their children. The Harrods appealed to the superior court where they argued that the Department lacked the authority to adopt residency requirements for the dividend program, that the denial of their applications violated the U.S. and State constitutions, and that their 2002 and 2003 dividend applications were wrongfully denied. The superior court affirmed the denial of the dividends. From 1997 to 2000, the Harrods resided outside of Alaska and did not apply for PDFs. In 2001 they unsuccessfully applied. Because they had been absent from Alaska for more than five years, a presumption arose that they did not intend to return and remain in state. The DOR applied the presumption and the Harrods did not rebut it. The presumption was applied in the Harrods' 2002 and 2003 applications, and the DOR found that despite returning in state on infrequent or short trips, the Harrods had not remained in-state for five years. Having reviewed the parties' arguments and the record on appeal, the Supreme Court affirmed the superior court's decision.

This appeal stemmed from the 2008 valuation of a parcel of real property owned by Appellant Martha Dunnagan. Larry Varilek, the personal representative of Ms. Dunnagan’s estate, argued that the Board of Equalization overvalued the property and appealed the Board’s decision. The superior court held that Mr. Varilek failed to prove that the property was overvalued. Mr. Varilek appealed to the Supreme Court. Upon careful consideration of the record and the applicable legal authority, the Supreme Court affirmed the Board’s assessment. The Court found that Mr. Varilek failed to meet his burden by showing that the Board’s valuation was improper.