Justia Tax Law Opinion SummariesArticles Posted in Kentucky Supreme Court
State of Ohio v. Great Lakes Minerals, LLC
In this action brought by Great Lakes Minerals, LLC against the State of Ohio and Joseph Testa, the Supreme Court reversed the decision of the circuit court denying Ohio's motion to dismiss, holding that Ohio was protected by sovereign immunity and that Testa was immune from suit in his official capacity as Tax Commissioner of Ohio and that Testa, in his personal capacity, was dismissed based on the principle of comity. Great Lakes sued Defendants seeking a declaratory judgment that it was not subject to Ohio's commercial activity tax, monetary relief for the forced collection of taxes not owed, and a determination that it would be inequitable to require Great Lakes to defend an action in a foreign state. Ohio unsuccessfully moved to dismiss the complaint. The Supreme Court reversed, holding (1) the State of Ohio and Testa in his official capacity were protected by sovereign immunity; and (2) under the principle of comity Testa is dismissed in his personal capacity. View "State of Ohio v. Great Lakes Minerals, LLC" on Justia Law
Commonwealth, Finance & Administration Cabinet, Department of Revenue v. Interstate Gas Supply Inc.
Ky. Const. section 170 does not exempt a qualifying charitable institution from the use tax imposed by Ky. Rev. Stat. 139.310. The Finance and Administration Cabinet’s Department of Revenue, the Board of Tax Appeals, and the circuit court concluded that the section 170 constitutional exemption speaks only to ad valorem property taxes and does not relieve a “public charity” from the use tax imposed by section 139.310. The court of appeals disagreed, ruling that the use tax imposed under section 139.310 is similar enough to an ad valorem tax to render its enforcement on governmental entities unconstitutional under section 170. The Supreme Court reversed, holding (1) section 170 of the Kentucky Constitution provides for exemptions from property taxes only; and (2) the holding in Commonwealth ex rel. Luckett v. City of Elizabethtown, 435 S.W.2d 78 (Ky. 1968), that the section 170 exemption applies to the use tax is not sustainable. View "Commonwealth, Finance & Administration Cabinet, Department of Revenue v. Interstate Gas Supply Inc." on Justia Law
Kentucky CATV Ass’n v. City of Florence
A provision in the Multichannel Video Programming and Communications Services Tax (the Telecom Tax) prohibiting “every political subdivision of the state” from collecting franchise fees or taxes on franchises subject to the Telecom Tax is unconstitutionally void as applied to protesting cities. Four Kentucky cities and the Kentucky League of Cities, Inc. (collectively, Cities) filed a petition for declaratory relief alleging that the Telecom Tax’s Prohibition Provision violated their right to grant franchises and to collect franchise fees as provided in sections 163 and 164 of the Kentucky Constitution. The circuit court dismissed the petition. The court of appeals vacated the judgment of the circuit court and remanded, concluding that the Telecom Tax’s Prohibition Provision violated sections 163 and 164. The Supreme Court affirmed, holding that the Telecom Tax’s Prohibition Provision was unconstitutionally void as applied to the Cities. View "Kentucky CATV Ass’n v. City of Florence" on Justia Law
Estate of McVey v. Dep’t of Revenue, Fin. & Admin. Cabinet
The Department of Revenue assessed additional inheritance taxes on an estate. The court of appeals affirmed the Department’s assessment of tax. At issue on appeal was whether inheritance taxes may be deducted from the value of distributive shares of an estate and whether inheritance tax paid from the estate on behalf of a beneficiary - a bequest of tax - is itself a taxable event. The Supreme Court affirmed, holding (1) a reviewing court does not owe any deference to the Kentucky Board of Tax Appeals as to questions of law; (2) inheritance taxes paid by the estate on behalf of a beneficiary of the estate are not “costs of administration” under a will’s tax-exoneration provision but, rather, are separate bequests that are subject to inheritance taxes; (3) the payment of inheritance tax by an estate on behalf of a beneficiary under a tax-exoneration clause is itself a taxable “bequest of tax”; and (4) like the Department, the court of appeals did not properly apply the law to the facts of this case, but because the end result of the court of appeals’ opinion was to uphold the Department’s assessment of additional tax, its judgment upholding the assessment is affirmed. View "Estate of McVey v. Dep’t of Revenue, Fin. & Admin. Cabinet" on Justia Law
Dep’t of Revenue v. Cox Interior, Inc.
The Department of Revenue audited Appellant for a three-year period. The Department determined that Appellant had omitted certain tangible personal property from its tax returns during the relevant years and billed Appellant for $151,943 in ad valorem taxes. Appellant paid the new assessments without protest. Appellant later filed a refund claim for a portion of the taxes, that the Department had improperly classified certain machinery, resulting in Appellant's overpayment. The Department denied the refund claim because Appellant had paid without protest. The Board of Tax Appeals reversed, and the circuit court and court of appeals affirmed. The Supreme Court affirmed, holding that Appellant properly followed the appropriate administrative remedies in accordance with the Court's recent decision in Cromwell Louisville Associates, LLP v. Commonwealth. View "Dep't of Revenue v. Cox Interior, Inc." on Justia Law
Tax Ease Lien Invs. 1, LLC v. Commonwealth Bank & Trust
This case required the Supreme Court to decide whether a mortgage lienholder has standing to an agreed judgment between the property owner and the purchaser of the property owner's delinquent property tax liens. The court of appeals determined that the mortgage lienholder in this case (Appellee, Commonwealth Bank & Trust Company) did have standing to contest the agreed judgment between the property owner (Appellee, Teretha Murphy) and the owner of the owner's delinquent property tax liens (Appellant, Tax Ease Lien Investments 1, LLC). The Supreme Court affirmed, holding that Commonwealth Bank had standing to contest the monetary amount awarded in the agreed judgment. View "Tax Ease Lien Invs. 1, LLC v. Commonwealth Bank & Trust" on Justia Law
Posted in: Bankruptcy, Constitutional Law, Kentucky Supreme Court, Real Estate & Property Law, Tax Law
Hancock v. Prestonsburg Indus. Corp.
Prestonsburg Industrial Corporation (PIC) was founded in 1968 as a private, nonprofit corporation to attract business and industry to the City for economic development. To accomplish this goal, PIC would buy property, make improvements, then sell the property to various businesses. The profits were rolled back into PIC for additional purchases and improvements. In 2001, PIC purchased a parcel from the City. The county property valuation administrator then sought to tax the property. PIC claimed it was tax exempt and filed for a tax exemption from the Kentucky Revenue Cabinet. Revenue denied the application. The board of tax appeals affirmed, concluding that the property was not tax exempt under section 170 of the Kentucky Constitution, which exempts institutions of purely public charity from paying ad valorem taxes. The circuit court reversed and found the property tax exempt. The court of appeals affirmed, concluding that PIC was a purely charitable organization as defined under section 170 and was thus exempt from taxation. The Supreme Court reversed, holding that the evidence did not establish that PIC was a purely public charity or that its property was employed for a purely charitable purpose. Remanded. View "Hancock v. Prestonsburg Indus. Corp." on Justia Law