Justia Tax Law Opinion Summaries

Articles Posted in Iowa Supreme Court
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The Supreme Court affirmed the judgment of the district court concluding that "repowering" a wind plant, or replacing a substantial proportion of its parts, does not change the analysis for valuing wind plants for property tax purposes under Iowa Code 427B.26, holding that the district court did not err.Story County Wind, LLC (SCW) owned a wind energy conversion property. In 2019, a repowering project began for the wind plants. Because the Story County Assessor continued to value and assess the wind plants as before, in 2021, SCW filed a protest seeking to modify the assessment. The Board declined to modify the assessment. The Supreme Court affirmed, holding that, under section 427B.26, repowering a wind plant by replacing component parts does not charge the plants' valuation for property tax purposes. View "Story County Wind, LLC v. Story County Bd. of Review" on Justia Law

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The Supreme Court affirmed in part and reversed in part the judgment of the district court upholding the ruling of the Property Assessment Appeal Board (PAAB) concluding that bins that primarily hold raw material until it is needed in the manufacturing process do not themselves constitute "machinery," holding that some, but not all, of the ingredient bins qualify for a tax exemption.At issue was when bins for holding ingredients qualify for a tax exemption as machinery used in manufacturing establishments under Iowa Code 427A.1(1)(e). The court of appeals disagreed with the PAAB's interpretation of the statute, finding that bins that are integrated into the manufacturing process and used for temporary storage of ingredients fell within the statutory exemption. The Supreme Court vacated the court of appeals' decision and reversed in part the district court's judgment, holding (1) customized overhead bins within a building where feed is manufactured constitute part of a continuous piece of machinery within that building; and (2) two large stand-alone corn silos, while connected by an underground conveyor to the feed manufacturing facility, do not meet the definition of machinery. View "Stateline Cooperative v. Iowa Property Assessment Appeal Board" on Justia Law

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The Supreme Court affirmed the judgment of the district court affirming the determination of the Iowa Department of Revenue that capital gains Taxpayer earned from the sale of farmland she inherited from her father and leased on a cash-rent basis did not qualify for the exclusion from Iowa income tax allowed under Iowa Code 422.7(21)(a), holding that the assessment of additional taxes and related penalties and interest was not irrational, illogical, or wholly unjustifiable.At issue was whether the Department's interpretation of section 422.7(21)(a), as delineated in Iowa Administrative Code rule 701-40.38(1)(c), or the director's application of that rule to the facts was irrational, illogical, or wholly unjustified. The Supreme Court affirmed, holding (1) the Department acted within its discretion when it promulgated distinct rules for farm leases and other types of real property leases in rule 701-40.38(1)(c); and (2) Taxpayers' attempt to avoid the farm-specific rules is rejected. View "Christensen v. Iowa Department of Revenue" on Justia Law

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The Supreme Court upheld the Iowa Department of Revenue’s sales tax assessment on labor installing building components sold by Lowe’s Home Centers, LLC, except as to those transactions in which the predominant service or only service provided was carpentry installation work, holding that because the Department’s own regulations limit the definition of carpentry services subject to sales tax to those performed for repairs and omits installations services, the sales tax did not apply.The parties here disagreed whether the sales tax applied to labor installing items sold by Lowe’s to homeowners through installation contracts. The Supreme Court held that the sales tax did not apply to carpentry for installations other than repairs but that installation services by electrical and plumbing subcontractors, which involved no structural changes to the homes of customers, did not fall within the statutory exemption for “new construction, reconstruction, alteration, remodeling, or the services of a general building contractor.” See Iowa Code 423.3(37). View "Lowe's Home Centers, LLC v. Iowa Department of Revenue" on Justia Law

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The court of appeals erred in ruling that a taxpayer avoided in Iowa inheritance tax through a private postmortem family settlement agreement (FSA).Here, the decedent, before his death, signed a beneficiary form listing the taxpayer as a contingent beneficiary of his brokerage account. That account transferred to the taxpayer upon the decedent's death. The Iowa Department of Revenue (IDOR) determined that the estate owed the inheritance tax on the full account value. The decedent’s grandchildren sued the taxpayer claiming that they were entitled to the brokerage account under the decedent’s will because the decedent lacked the mental capacity to execute an enforceable beneficiary designation for the account. The taxpayer settled the suit by transferring half the account value to the plaintiffs under an FSA. The taxpayer then sought a refund of part of the inheritance tax already paid. The IDOR denied a refund, determining that the taxpayer failed to establish incapacity. The district court affirmed. The court of appeals reversed, concluding that the FSA controlled the tax issue. The Supreme Court vacated the decision of the court of appeals and affirmed the district court judgment, holding that, without an adjudication of incapacity, the FSA was not binding on the IDOR and could not avoid the inheritance tax. View "Nance v. Iowa Department of Revenue" on Justia Law

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The Supreme Court reversed the decision of the district court reversing the Iowa Department of Economic Development’s (IDED) decision (the 2016 action) to revoke tax credits that had previously been awarded by IDED to Ghost Player, LLC (the 2012 action). On appeal, IDED argued that the district court erred in ruling that the 2016 action revoking the tax credits was an invalid collateral attack on the agency’s 2012 action and was barred under the doctrine of claim preclusion. The Supreme Court agreed, holding that the IDED’s decision to award tax credits to Ghost Player in the 2012 action was not entitled to preclusive effect that would prohibit IDED from attempting to revoke those tax credits in light of the discovery of fraud. View "Ghost Player, LLC v. Iowa Department of Economic Development" on Justia Law

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Myria Holdings, Inc. is a Delaware corporation with its primary place of business in Texas. Myria held an ownership interest in two subsidiaries doing business in Iowa. The Iowa Department of Revenue issued a final order concluding that Myria was ineligible to join a consolidated tax return with its subsidiaries because it did not derive taxable income from within Iowa under Iowa Code 422.33(1). The district court affirmed. The Supreme Court affirmed, holding that Myria lacked a taxable nexus with the State of Iowa, and therefore, the Department correctly concluded that Myria lacked taxable income from within the State. View "Myria Holdings Inc. v. Iowa Department of Revenue" on Justia Law

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Plaintiff filed a class action petition against J.C. Penney asserting that the internet retailer unlawfully charged Iowa sales tax on shipping and handling charges. J.C. Penney forwarded the tax to the Iowa Department of Revenue (IDOR) pursuant to the Iowa version of the Streamlined Sales and Use Tax Act (SSUTA). The district court granted summary judgment in favor of J.C. Penney. The Supreme Court affirmed, holding (1) the district court correctly granted J.C. Penney’s motion for summary judgment on Plaintiff’s statutory claims grounded in SSUTA, as the SSUTA does not create a private cause of action; (2) the district court did not err in granting summary judgment on Plaintiff’s claims related to the alleged unlawful payment of taxes on the ground that the remedies under Iowa Code 423.45(3) and 423.47 are exclusive remedies barring other claims for relief for wrongful payment of taxes under SSUTA; and (3) Plaintiff was not entitled to recover on her claims alleging shipping and handling misrepresentations. View "Bass v. J.C. Penney Co., Inc." on Justia Law

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A citizens group and a school district (collectively, Appellants) challenged a city’s amendment of an economic development urban renewal plan. Specifically, Appellants challenged the use of tax increment financing (TIF) for economic development purposes and argued that the plan violated Iowa law by unlawfully extending the duration of a TIF area, unlawfully using revenue from that TIF area to support development in other parts of the city, and failing to conform to the terms of the city’s general plan. The district court ruled in favor of the city. The Supreme Court affirmed in part and reversed and remanded in part, holding (1) the city impermissibly extended the duration of the TIF area; (2) revenue may be shared within the consolidated, larger TIF area subject to certain time limits; and (3) the city’s general plan and the urban renewal plan were not inconsistent with each other. View "Concerned Citizens of Southeast Polk Sch. Dist. v. City of Pleasant Hill" on Justia Law

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The Polk County assessor set the 2011 valuation of Wellmark, Inc.’s corporate headquarters located in Des Moines at $99 million. Wellmark protested. The Polk County Board of Review denied the protest. On appeal, the district court found the value of the property on January 1, 2011 was $78 million. At issue in this case was whether the property should have been valued as if it were a multi-tenant office building, which would likely be the result if the property were sold, or whether the property should have been valued according to its current use as a single-tenant headquarters building. The Supreme Court reversed, holding that while there had been a showing of no active market for a single-tenant office building such as the Wellmark property, value should be based on the presumed existence of a hypothetical buyer at the property’s current use. View "Wellmark, Inc. v. Polk County Bd. of Review" on Justia Law