Justia Tax Law Opinion Summaries
Articles Posted in Kansas Supreme Court
In an appeal of a Board of Tax Appeals (BOTA) summary decision granting a compensating use tax refund to BHCMC, L.L.C., doing business as Boot Hill Casino & Resort, the Kansas Supreme Court addressed whether such a tax could be imposed on Boot Hill for electronic gaming machines it did not (and, under the law and its management agreement with Kansas Lottery, could not) own. Boot Hill challenged its payment of $801,588.95 in compensating use tax for the years 2009 through 2011. The amount assessed was based on the sale price for electronic gaming machines (EGMs) that Boot Hill purchased out of state for use at the casino it manages in Dodge City. The Court held that Boot Hill did not exercise a right or power incident to ownership of personal property in order to be subject to a compensating use tax for that property. Because Boot Hill has not exercised such a power or right, the Supreme Court affirmed BOTA's refund and the Court of Appeals panel decision that upheld it. View "In re Tax Appeal of BHCMC video" on Justia Law
In 2011, Johnson County appraised the value of Kristin Wagner’s property at $569,000. Wagner filed a protest form with the Court of Tax Appeals (COTA), which determined that the appraised value for tax year 2011 should be reduced to $553,600. Wagner appealed. While the 2011 appeal was pending, the County appraised Wagner’s property for the 2012 tax year at $537,000. Wagner challenged the 2012 appraisal. On remand, with regard to the 2011 tax appeal, COTA established the the value of Wagner’s home at $494,200. COTA then established the value of Wagner’s property for the 2012 tax year at $494,200 - the same amount as the property’s 2011 final appraised value. Wagner filed a petition for judicial review. The court of appeals affirmed COTA’s decision, ruling that COTA properly used the 2011 valuation to determine the home’s value for the 2012 tax year. The Supreme Court reversed, holding that COTA ignored evidence in the record establishing that Wagner’s home suffered a 2.94 percent decrease in value between 2011 and 2012. Remanded with directions that Wagner’s home be valued at $479,600 for the 2012 tax year. View "In re Equalization Appeal of Wagner" on Justia Law
Posted in: Government & Administrative Law, Kansas Supreme Court, Real Estate & Property Law, Tax Law
The taxpayers in this case were out-of-state natural gas marketing companies, out-of-state local distribution companies that were certified as public utilities in their states, and out-of-state municipalities. Each taxpayer bought natural gas from producers or other marketers then delivered it to pipelines under contracts allowing the taxpayers to withdraw equivalent amounts of gas at a later time from out-of-state distribution points. The taxpayers filed requests for ad valorem tax exemption, claiming the natural gas was exempt under Kan. Const. art. 11, 1, which exempts merchants' inventory from ad valorem taxation but does not exempt tangible personal property owned by a public utility. The Kansas Court of Tax Appeals determined the natural gas was not exempt because the taxpayers were public utilities pursuant to Kan. Stat. Ann. 79-5a01. The Supreme Court held (1) the taxation at issue did not violate the Commerce Clause or the Due Process Clause of the U.S. Constitution; (2) section 79-5a01 was constitutional as applied to the out-of-state local distribution companies; but (3) section 79-5a01 was unconstitutional as applied to the out-of-state natural gas marketing companies and those taxpayers that were out-of-state municipalities because those entities were not public utilities under the meaning of the statute. View "In re Property Valuation Appeals of Various Applicants" on Justia Law
Posted in: Civil Rights, Constitutional Law, Government & Administrative Law, Kansas Supreme Court, Tax Law
After Ian Burch's motor home was stopped by a highway patrol trooper, the trooper found drugs, drug paraphernalia, and $15,000 in cash in the vehicle. The State filed criminal charges against Burch. The district court found the trooper had unlawfully extended the scope and length of the stop and suppressed the evidence found in the vehicle. The charges against Burch were later dismissed. The Kansas Department of Revenue (KDOR) subsequently issued a tax assessment notice indicating Burch owed $17,761 in taxes and penalties on the drugs found in his motor home. The Court of Tax Appeals (COTA) granted summary judgment to KDOR on its assessment of taxes and civil penalties against Burch under the Kansas Drug Tax Act. The Supreme Court reversed, holding that COTA erred in granting summary judgment to KDOR because it failed to consider and apply the exclusionary rule to the drugs upon which the taxes were assessed. Remanded to COTA for consideration of the exclusionary rule. View "In re Tax Appeal of Burch" on Justia Law
Posted in: Civil Rights, Constitutional Law, Criminal Law, Government & Administrative Law, Kansas Supreme Court, Tax Law
LaFarge Corporation operated a cement manufacturing facility on a tract of property that included a contiguous limestone quarry on one side at which LaFarge used its Caterpillar equipment to load the raw material and haul it across the property to the hammermills that performed the initial step in the cement manufacturing process. LaFarge paid sales taxes to Martin Tractor Company on the purchase of repair parts for its loaders and haulers, but then unsuccessfully sought a refund of the sales taxes from the Kansas Department of Revenue. Ultimately, the court of tax appeals (COTA) determined that the equipment, and therefore the repair parts, was exempt under Kan. Stat. Ann. 79-3606(kk)(2)(D) as being an integral or essential part of the integrated production operation of the cement manufacturing facility. The Supreme Court affirmed COTA's refund of sales taxes, agreeing that the equipment was being primarily used in the cement manufacturing business and at the manufacturing facility was was therefore subject to the exemption. View "In re Tax Appeal of LaFarge Midwest" on Justia Law
This was an administrative appeal by the Shawnee County Board of County Commissioners from a decision by the Board of Tax Appeals (BOTA) setting aside tax assessments the County claimed on three executive-style business aircraft for tax years 2000-2002. The dispute arose after the County had agreed in earlier proceedings that the aircraft were not subject to taxation and BOTA ordered them exempted. A few years later, the County attempted to reassess the aircraft for back taxes, interest, and penalties. The aircrafts' owners objected and commenced this action to avert the taxation. BOTA and the district court agreed with the owners but with different reasons for their rulings. The Supreme Court affirmed, holding that claim and issue preclusion barred the County from initiating new taxation efforts for the same tax years after the initial BOTA exemption orders became final. Remanded to BOTA for it to set aside the County's correction orders and assessment notices for the aircraft and tax years at issue.
Property owners appealed a special tax assessment the Board of County Commissioners levied against real property for cleanup costs the County claimed it incurred while removing dangerous structures and unsightly conditions on that property. The district court found subject matter jurisdiction lacking and granted the County's summary judgment motion. The court of appeals affirmed. At issue on appeal was whether the property owners' claims could be brought on direct review under Kan. Stat. Ann. 60-907(a), which provides injunctive relief against an illegal levy or enforcement of any tax, charge, or assessment. The Supreme Court affirmed and in part and reversed in part, holding (1) the property owners satisfied the jurisdictional burdens under section 60-907(a) on two of its three issues; and (2) because the district court went beyond the jurisdiction question and found for the County on the merits and the court of appeals stopped short of considering the merits of any claims when it found the entire case was jurisdictionally barred, the court of appeals erred in part in its jurisdictional ruling. Remanded to the court of appeals to determine whether the district court properly granted summary judgment as to the remaining claims.
Posted in: Civil Rights, Constitutional Law, Government & Administrative Law, Kansas Supreme Court, Real Estate & Property Law, Tax Law
Pursuant to an oil and gas lease with Appellee Trees Oil Company (Trees), Appellant Arthur Hockett had a 1/8-royalty interest in the production from a Haskell County well that produced natural gas. Trees operated the well, and sold the gas produced to âfirst purchasers.â Before paying Trees for production, the first purchasers deduct taxes and fees imposed by the state. Trees then pays Appellant 1/8 of the net sales proceeds. In 2009, Appellant filed a complaint against Trees, seeking recovery of the amount in tax deducted from the sales proceeds from the first purchasers. Trees moved to dismiss the suit, arguing that it could not be held liable for complying with state law by paying the sales taxes. The district court held that the taxes and fees were to be imposed on all owners in the venture, including royalty owners. Appellant appealed. The Supreme Court found that state law does not require royalty owners pay the oil and gas taxes and fees if they do not operate the well. The fees withheld by the first purchaser are an expense attributable to the oil company as the well operator. In computing Appellantâs royalties, Trees was not permitted to deduct the amount of its fees expenses from the gross sale price under contract with the first purchaser. Accordingly, the Court held that the district court erred in ruling in favor of Trees. The Court remanded the remanded the case for further proceedings.