Justia Tax Law Opinion Summaries

Articles Posted in Colorado Supreme Court
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In 2015, the owners of a 13,000-acre tract of land known as 70 Ranch successfully petitioned to include their tract in a special district. After 70 Ranch was incorporated into the district, the district began taxing the leaseholders of subsurface mineral rights, Bill Barrett Corporation, Bonanza Creek Energy, Inc., and Noble Energy, Inc. for the oil and gas they produced at wellheads located on 70 Ranch. The Lessees, however, objected to being taxed, arguing the mineral interests they leased could not be included in the special district because neither they nor the owners of the mineral estates consented to inclusion, which they asserted was required by section 32-1-401(1)(a), C.R.S. (2019), of the Special District Act. The Colorado Supreme Court determined that section 401(1)(a) permitted the inclusion of real property covered by the statute into a special taxing district when (1) the inclusion occurred without notice to or consent by the property’s owners and (2) that property was not capable of being served by the district. The Court answered "no," however, 32-1-401(1)(a) required the assent of all of the surface property owners to an inclusion under that provision, and inclusion was only appropriate if the surface property could be served by the district. "Section 32-1-401(1)(a) does not require assent from owners of subsurface mineral estates because those mineral estates, while they are real property, are not territory. Thus, Lessees’ consent was not required for the inclusion of 70 Ranch in the special district." The Court therefore affirmed the court of appeals on alternate grounds. View "Barrett Corp. v. Lembke" on Justia Law

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This case asked the Colorado Supreme Court to construe the definition of residential land in section 39-1-102(14.4)(a), C.R.S. (2019). Stephen Ziegler (through the Stephen J. Ziegler Revocable Trust Dated July 17, 2008) owned four parcels of land in Park County, Colorado. One parcel was classified as “residential land” under section 39-1-102(14.4)(a) and taxed accordingly. However, the other three parcels remained “vacant land” and are thus taxed at a higher rate. Ziegler sought to reclassify those vacant parcels as residential land to receive a corresponding tax abatement. As it concluded in Mook v. Summit Cty. Bd. of Cty. Comm'rs, 2020 CO 12 (2020): (1) a residential improvement isn’t needed on each contiguous and commonly owned parcel of land for that parcel to be “used as a unit;” and (2) a landowner can satisfy the “used as a unit” requirement by using multiple parcels of land together as a collective unit of residential property. The BAA here applied the same legal standards that the Court expressly disavowed in Mook. Thus, it reversed the BAA’s order and remanded for the BAA to apply the standards articulated in this case to determine whether the vacant parcels qualified as “residential land.” View "Ziegler v. Park Cty. Bd. of Cty. Comm'rs" on Justia Law

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The common issue from three property tax cases presented to the Colorado Supreme Court for review centered on what constituted "residential land" under 39-1-102(14.4)(a), C.R.S. (2019). In Colorado, residential land was taxed as a lower rate than vacant land. The Mooks owned two parcels of land in Summit County, Colorado. One parcel contained the Mooks’ house, classified as residential land. The other parcel was undeveloped, and it was classified as vacant land (“the subject parcel”). The parties agreed that these two parcels didn't physically touch. The Homeowners’ Association (“HOA”) owned an approximately seventeen-foot-wide strip of land that completely separated the two properties (that strip provided other members of the HOA access to adjacent public land). The Mooks petitioned the Board of County Commissioners of Summit County (“BCC”) to reclassify the subject parcel from vacant land to residential land. The BCC denied their petition, and the Mooks appealed to the Board of Assessment Appeals (“BAA”). The BAA upheld the BCC’s decision. Notably, the BAA determined that contiguous parcels are those that are “physically connected.” Here, the residential and subject parcels didn't physically touch, and the BAA “was not persuaded that the use of the subject lot in conjunction with the residential lot was sufficient to defeat the plain meaning of contiguity.” Thus, the BAA concluded that the two parcels aren’t contiguous, and it denied the Mooks’ appeal. Taking the three appeals together, the Colorado Supreme Court concluded: (1) only parcels of land that physically touch qualify as “contiguous parcels of land;” (2) a residential improvement isn’t needed on each contiguous and commonly owned parcel of land and a landowner can satisfy the “used as a unit” requirement by using multiple parcels of land together as a collective unit of residential property; and (3) county records dictate whether parcels are held under “common ownership.” View "Mook v. Bd. of Cty. Comm’rs" on Justia Law

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The Colorado Title Board set a title for Proposed Ballot Initiative 2019–2020 #3 (“Proposed Initiative”) that reads, in pertinent part, “An amendment to the Colorado constitution concerning the repeal of the Taxpayer’s Bill of Rights (TABOR), Article X, Section 20 of the Colorado constitution.” The Board also ultimately adopted an abstract that states, regarding the economic impact of the Proposed Initiative. A challenge to the Proposed Initiative was presented for the Colorado Supreme Court's review, and after such, the Court concluded the title and abstract were clear and not misleading, and that the phrase “Taxpayer’s Bill of Rights,” as used in the title, was not an impermissible catch phrase. Accordingly, the Court affirmed the decision of the Title Board. View "In re Proposed Ballot Initiative 2019" on Justia Law

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At issue before the Colorado Supreme Court in this case was how Colorado’s Department of State (“the Department”) charged for some of its services to fund its general operations, which included overseeing elections. It was this funding scheme that the National Federation of Independent Business (“NFIB”) argued was unconstitutional under the Colorado Taxpayer’s Bill of Rights (“TABOR”). Section 24-21-104(3)(b), C.R.S. (2019), directed the Department to “adjust its fees so that the revenue generated from the fees approximates [the Department’s] direct and indirect costs.” This fluctuating scheme for self-funding had been in place for nearly thirty years, predating TABOR by nearly a decade. There had been adjustments to charges since TABOR’s enactment; NFIB contended these adjustments violated TABOR: (1) by actually being taxes, because there was no reasonable relationship between the Department’s charges and the government functions funded by the charges; and (2) any increase in the charges after TABOR’s enactment in 1992 constituted either a new tax, an increase in a tax rate, or a tax policy change - all requiring voter approval, which never occurred. Because the Supreme Court disagreed with NFIB’s second contention, it did not address its first. Based on the stipulated facts, the Supreme Court concluded there was no evidence to establish that any post-TABOR adjustments resulted in a new tax, tax rate increase, or tax policy change directly causing a net revenue gain. Thus, the trial court properly granted summary judgment. View "Griswold v. Nat'l Fed'n of Indep. Bus." on Justia Law

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Oracle was a Delaware corporation headquartered in California, and it is the parent of a worldwide group of affiliated corporations. OJH was a Delaware corporation and a wholly-owned subsidiary of Oracle, existing solely as a holding company. During the period at issue in this matter, OJH held stock in Oracle Japan, and it sold 8.7 million shares of that stock on the Tokyo Stock Exchange, realizing capital gains of approximately $6.4 billion. The tax treatment of these gains was at the center of this dispute. Specifically, the issues this case presented for the Colorado Supreme Court's review were: (1) whether the Colorado Department of Revenue could require Oracle Corporation (“Oracle”) to include its holding company, Oracle Japan Holding, Inc. (“OJH”), in its Colorado combined income tax return for the tax year ending May 31, 2000; and (2) if no, then whether the Department could nevertheless allocate OJH’s gain from the sale of shares that it held in Oracle Corporation Japan (“Oracle Japan”) to Oracle in order to avoid abuse and to clearly reflect income. For the reasons set forth in Department of Revenue v. Agilent Technologies, Inc., 2019 CO __, __ P.3d __, the Colorado Supreme Court concluded the pertinent statutory provisions and regulations did not permit the Department either to require Oracle to include OJH in its combined tax return for the tax year at issue or to allocate OJH’s capital gains income to Oracle. Accordingly, the Supreme Court concluded the district court properly granted summary judgment in Oracle's favor. View "Department of Revenue v. Oracle" on Justia Law

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Agilent Technologies, Inc. was a Delaware corporation headquartered in California, and was the parent company of a worldwide family of affiliated corporations. Agilent maintains research and development and manufacturing sites in Colorado and is thus subject to Colorado corporate income tax. World Trade, Inc. is a Delaware corporation and a wholly owned subsidiary of Agilent, and existed solely as a holding company. World Trade earned substantial dividends on its shares in its noted subsidiaries, the tax treatment of dividends gave rise to the dispute before the Colorado Supreme Court. Specifically, the issues reduced to: (1) whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the Executive Director of the Department, could require Agilent to include its holding company, Agilent Technologies World Trade in its Colorado combined income tax returns for the tax years 2000–07; if not, then whether the Department could nevertheless allocate World Trade’s gross income to Agilent in order to avoid abuse and to clearly reflect income. The Colorado Court determined sections 39-22-303(11)–(12), C.R.S. (2018), did not authorize the Department to require Agilent to include World Trade in its combined tax returns for the tax years at issue because World Trade was not an includable C corporation within the meaning of those provisions. As to the second question, the Court likewise concluded the Department could not allocate World Trade’s income to Agilent under section 39-22-303(6) because: (1) that section has been superseded by section 39-22-303(11) as a vehicle for requiring combined reporting for affiliated C corporations; and (2) even if section 39-22-303(6) could apply, on the undisputed facts presented here, no allocation would be necessary to avoid abuse or clearly reflect income. View "Department of Revenue v. Agilent Technologies" on Justia Law

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The Colorado School of Mines contracted with Sodexo America, LLC, to fulfill its obligations to provide meals and food options for its students. During the time at issue, Mines loaded each meal-plan student’s student identification card, with an individual meal plan choice. To use their meal plans, students swiped their “BlasterCards” at a dining facility. Sodexo had nothing to do with loading the students’ BlasterCards with their meal plans; Sodexo also had no way of knowing if a student had fully paid for his or her meal plan, and Sodexo had no way of enforcing collections against a student who hadn’t fully paid. Neither Mines nor Sodexo collected any sales tax on these meal-plan meals. When the City of Golden’s Finance Department audited Sodexo and discovered that sales tax for these meal plans had not been collected, it issued a sales and use tax assessment. Sodexo protested and lost, so Sodexo appealed to the district court. The court granted summary judgment for Golden, finding that Sodexo had engaged in taxable retail sales directly to Mines’ students, rather than tax-exempt wholesale sales to Mines. Sodexo appealed again. This time, a unanimous division of the court of appeals reversed the judgment of the district court, concluding that there were two sales transactions at issue: one between Mines and Sodexo, and the other between Mines and its students. The division further concluded that Mines and Sodexo were engaged in tax-exempt wholesale transactions. Accordingly, the division remanded for entry of judgment in Sodexo’s favor. The Colorado Supreme Court granted the City of Golden’s request to review the appellate court’s decision. After review, the Court agreed that two transactions took place. Like the division below, the Court concluded Sodexo sold the meal-plan meals to Mines at wholesale, and, accordingly, these transactions were exempt from taxation under the Code. The Court therefore affirmed the judgment of the court of appeals. View "City of Golden v. Sodexo America, LLC" on Justia Law

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Respondents were four Ranch owners who, with notice of the Lake Fork Hunting and Fishing Club’s (the Club) restrictive covenants and bylaws, purchased deeds conferring record title to their respective Ranches. In 2015, the Hinsdale County Assessor conducted valuations of the Respondents’ Ranches and assessed property taxes to their parcels. Respondents protested these valuations and assessments to the Hinsdale County Board of Equalization (the BOE), which denied their petitions. Respondents then appealed the BOE’s determination to the Board of Assessment Appeals (the BAA), arguing that because of the Club’s restrictive covenants and bylaws, the Club was the true owner of those parcels and should have been held responsible for real property taxes. The BAA denied the Respondents’ appeal and affirmed the Assessor’s valuation of the Ranch parcels. The Ranch owners then appealed the BAA’s decision to the court of appeals, which reversed the BAA’s order. Given the extent of the Club’s control over the property, the court of appeals concluded that the Club was the true owner of the parcels for purposes of property taxation and viewed the Ranch owners’ interests as akin to mere licenses to conduct certain activities on the Club’s property. The Colorado Supreme Court reversed, finding Colorado’s property tax scheme reflected the legislative intent to assess property taxes to the record fee owners of real property. “Because Respondents voluntarily agreed to the restrictive covenants and bylaws that facilitate the collective use of their property for recreational purposes, we hold that they cannot rely on these same restrictive covenants and bylaws to avoid property tax liability that flows from their record title ownership.” Accordingly, the court of appeals erred in relying on the Club’s restrictive covenants and bylaws to conclude that the Club is the “owner” of the Ranch parcels and that the Ranch owners hold mere licenses to use Club grounds. The court further erred in holding that the Assessor therefore improperly valued the Respondents’ parcels. View "Hinsdale County v. HDH Partnership" on Justia Law

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Whites Corporation donated a conservation easement (CE), and transferred a portion of the resulting CE tax credit to John and Debra Medved. In 2006, the Medveds filed a return claiming the credit. In 2007, Whites Corporation claimed the credit. In 2011, the Colorado Department of Revenue (the Department) disallowed the credit in its entirety. The Medveds claimed the Department acted too late because their 2006 filing triggered the four-year limitations period within which the Department could invalidate a CE tax credit. The Department disagreed, claiming that Whites Corporation’s 2007 filing triggered the limitations period, and therefore the disallowance stood. The Colorado Supreme Court determined that the plain language of the applicable regulation meant the statute of limitations period began when the CE donor claimed the CE tax credit. This accrual applied to and bound any transferees of the credit. So, the limitations period here began when Whites Corporation filed its tax return in 2007, and the Department’s disallowance occurred before the period expired. The Court reversed the judgment of the court of appeals and remanded for further proceedings. View "Colorado v. Medved" on Justia Law