Justia Tax Law Opinion Summaries

Plaintiff Signal Aviation Services, Inc. (Signal) appealed a superior court grant of summary judgment in favor of defendant City of Lebanon (City) in this action by Signal for, among other things, breach of contract. The City cross-appealed a portion of the trial court’s order interpreting the contract. Signal leased 8.91 acres at the Lebanon Municipal Airport (airport) as assignee of a Lease and Operating Agreement (LOA). The City owned the airport and was the lessor under the LOA. The LOA granted Signal the nonexclusive right and obligation to provide fixed based operator (FBO) services at the airport. In granting this nonexclusive right, the City agreed in paragraph 3M(2) of the LOA that “[a]ny other operator of aeronautical endeavors or activities will not be permitted to operate on the Airport under rates, terms [or] conditions which are more favorable than those set forth in this Agreement.” In 2006, the City increased the assessed value of the land leased by Signal, not including the improvements, resulting in a corresponding increase in Signal’s property tax liability. Signal applied for an abatement of taxes for the years 2006 and 2007. The City’s assessors denied abatement, and Signal appealed to the New Hampshire Board of Tax and Land Appeals (BTLA). The BTLA dismissed the appeals because Signal failed to present evidence of the property’s market value. Signal did not appeal that decision, bringing instead this suit, claiming, among other things, breach of contract. Its writ alleged that the City “materially breached its obligations under the [LOA] by providing more favorable and disproportionate tax assessments and taxation schemes under agreements with other entities at the Airport providing commercial aeronautical services there.” After review, the Supreme Court affirmed, having concluded that paragraph 3M(2), so far as it concerned taxation, merely obligated the City to require all other operators to pay all lawfully levied or assessed taxes. View "Signal Aviation Services, Inc. v. City of Lebanon" on Justia Law

Respondent City of Concord appealed a superior court order granting summary judgment to petitioner Granite State Management & Resources (GSMR), and denying summary judgment to the City, based upon a finding that GSMR is a charitable organization eligible for a tax exemption under RSA 72:23, V (2012) for tax years 2008 and 2009. The trial court found that “there [could] be no serious dispute that the fundamental purpose of GSMR is to service educational loans” and that its only assets “likely to generate income are the loan servicing assets.” GSMR derived income from origination fees paid by borrowers, loan servicing and origination fees paid by institutions, and interest stemming from the education loans that GSMR administered. It used its income to pay expenses, for uncollectible loans and collection expenses, to fund loan default reserves, to "provide student[s], parent[s], and institution[s] information and counseling, . . . to pay for new educational loan related activities and services,” and to market its services. In 2008 and 2009, GSMR serviced approximately $2.5 billion in loans, earned a substantial net profit, maintained investments, and retained a surplus. The Supreme Court disagreed with the City that by virtue of servicing other lenders' loans GSMY was categorically ineligible for a charitable tax exemption, and affirmed the trial court with respect to denying the City's motion. The Court found genuine issues of material facts with regard to GMSR's motion, and reversed and remanded for further proceedings. View "Granite State Management & Resources v. City of Concord" on Justia Law

Respondent Town of Danville appealed a Superior Court order abating "land use change tax" (LUCT) assessments issued to petitioners Maplevale Builders, LLC, Hoyt Real Estate Trust, and John H. and Maryann Manning, on the basis that the LUCT bills were untimely under RSA 79-A:7 (Supp. 2006) (amended 2009, 2010, 2012). Upon review, the Supreme Court concluded that the superior court erred in ruling that all of the lots of the subdivision in question changed in use in 2009, when the Planning Board granted final subdivision approval. Because the trial court did not follow the caselaw in its consideration of when each lot changed in use, the Supreme Court vacated its abatement order. The parties did not ask the Court to determine on appeal when each lot changed in use or whether the exception in RSA 79-A:7, V(a) applied. Thus, the Court remanded for a redetermination of when each lot changed in use, and whether in light of the change in use date, the LUCT bills were timely. The Court concluded that the amended version of RSA 79-A:7, II(c) applied to any notice or discovery of change in use occurring on or after April 1, 2009. View "Maplevale Builders, LLC v. Town of Danville" on Justia Law

The City of Nashua appealed a New Hampshire Board of Tax and Land Appeals (BTLA) ruling that taxpayer Marijane Kennedy was entitled to an "elderly exemption" under RSA 72:39-a (2012) for the 2011 tax year. Upon review of the applicable statute and the facts on record in this case, the Supreme Court found that the BTLA erred in its interpretation and accordingly reversed. View "Appeal of City of Nashua" on Justia Law

Petitioner Signal Aviation Services, Inc. appealed a superior court order which granted a motion to dismiss filed by the City of Lebanon. The City entered into a twenty year lease with HL Leasing for certain municipal airport lands. HL Leasing assigned its rights to Sierra Nevada Helicopters, which then assigned the rights to its affiliate, Signal. In the lease, the City agreed it would not allow any other provider of commercial aeronautical services to operate at the airport under terms more favorable than those set forth in the lease. In 2006, the City increased the assessed value of Signal's leased land. Signal claimed that the city assessed its land disproportionately as compared to other entities operating and leasing land at the airport. Signal was unsuccessful in seeking an abatement of its 2006 and 2007 taxes. The New Hampshire Board of Tax and Land Appeals (BTLA) dismissed Signal's appeals, holding that Signal failed to present any evidence of the market value of its property. Signal did not appeal the BTLA's decision nor did it contest the City's 2008 and 2009 assessments. Signal then filed suit in superior court to challenge all of the assessments. The trial court concluded that though Signal's petition was styled as a breach of contract, but that it was actually a request for tax abatement and outside the court's jurisdiction. The trial court then dismissed Signal's petition for failing to state a claim upon which relief could be granted. Upon review, the Supreme Court upheld the trial court's decision insofar as it related to Signal's allegations of "disproportionate taxation." However, to the extent that Signal's breach of contract claim sought relief from "unequal treatment," specifically with respect to the amount of taxable land the City attributed to Signal and to other airport tenants with which the City contracts, Signal could pursue this claim without complying with the tax abatement statutory process. View "Signal Aviation Services, Inc. v. City of Lebanon" on Justia Law

Respondent City of Concord appealed a superior court order that denied it summary judgment in favor of Petitioner EnergyNorth National Gas (d/b/a National Grid NH, or "National Grid"). The City argued that the trial court erroneously determined that RSA 231:185 (2009) and RSA 236:11 (2009) preempted the City's ordinance authorizing it to charge certain roadway fees. The issue between the parties arose from National Grid's desire to excavate certain streets to install, maintain or replace its underground pipes that delivered natural gas. The fees covered damage for damages arising from the excavation. Upon review, the Supreme Court concluded that granting summary judgment in favor of National Grid was in error. The City argued that its roadway fees are consistent with the pertinent statutes because they "cover[ ] maintenance costs to repair the roadway after it has been initially patched, which [are] used to restore the excavated roadway to the condition that existed prior to the excavation." The Court was not persuaded that when the legislature enacted the statutes at issue, it made any assumption or finding, implied or otherwise, as to whether repaving a paved excavated roadway restored the roadway's original life expectancy. The Court was thus left with a factual dispute whether patching an excavated roadway with new pavement diminished or restored its original life expectancy. Because of that "genuine issue of material fact," the Court remanded the case for further proceedings. View "EnergyNorth Natural Gas, Inc. v. City of Concord" on Justia Law

Plaintiff Lebanon Hangar Associates, Ltd. (LHA) appealed a superior court decision that vacated an arbitrator's decision that it was not required to pay taxes under a lease agreement with Defendant City of Lebanon. LHA leased property at the City's airport. Although the terms of the lease require LHA to pay "taxes . . . lawfully levied or assessed, "between 1991 and the first half of 2006, the City did not tax LHA on the value of the land itself, limiting its assessment of taxes to the value of the buildings. In October 2006, the City assessed a tax upon the value of the land, thereby increasing the total valuation subject to taxation. After unsuccessfully requesting an abatement from the City, LHA petitioned the superior court, pursuant to RSA 76:17 (2003), to rule that the leasehold is not taxable. LHA subsequently moved to amend its petition to add a claim that the City breached the lease by demanding the payment of taxes. In response, the City invoked an arbitration clause in the lease. In April 2009, the arbitrator issued the first of two decisions, concluding that, while the written lease unambiguously allows the City to assess a tax upon the value of LHA’s leased land, other evidence submitted by LHA could serve as the basis for reforming the lease based upon mutual mistake. At the next hearing, LHA asserted its reformation argument over the objections of the City, which contended that the arbitrator’s authority was limited to deciding the meaning of the four corners of the lease agreement. After reviewing the evidence, the arbitrator issued a second, and final, decision in March 2010, concluding that LHA "is not and has not been obligated to pay real estate taxes to the City" under the lease. The issue on appeal to the Supreme Court was whether the arbitrator exceeded the scope of his authority by reforming the lease based upon mutual mistake. Upon review, the Supreme Court agreed with LHA that the arbitrator did not exceed the scope of his authority in this case, and reversed the superior court's decision, and remanded the case for further proceedings. View "Lebanon Hangar Associates, Ltd. v. City of Lebanon " on Justia Law

Petitioner Town of Seabrook appealed an order of the New Hampshire Department of Environmental Services (DES) which granted Respondent NextEra Energy Seabrook, LLC (NextEra), several tax exemptions under RSA 72:12-a (Supp. 2011). Upon review of the record, the Supreme Court found that the record supported DES' decisions except for one: the Court found no evidence in the record to support an increase in a percentage allocation allowed under the statute. Accordingly, the Court partly affirmed, partly reversed the DES' decision, and remanded the case for further proceedings. View "Appeal of Town of Seabrook " on Justia Law

Petitioner Liberty Assembly of God (Assembly) appealed a decision of the New Hampshire Board of Tax and Land Appeals (BTLA) which upheld a 2008 decision of Respondent City of Concord (City), denying the Assembly's request for a religious use tax exemption. Assembly owns 26.13 acres of land in Concord; approximately twenty acres are in "current use." The undeveloped land is used primarily for agricultural or forestry purposes, although there is a "prayer trail" around its perimeter. From 1994, when Assembly acquired its property, until 2008, the City granted Assembly a religious use tax exemption on all of its property. However, in 2008, the City granted Assembly an exemption on only forty percent of its property, concluding that sixty percent of the property was not used and occupied for religious training or other religious purposes, and was therefore taxable. The City subsequently revised its determination and exempted sixty percent of the property. The City considered the entire second floor of the main building taxable as not being used for religious purposes. Following appeal, the BTLA upheld the City’s apportionment for tax year 2008. Assembly asserted that the BTLA’s ruling was erroneous on three interrelated grounds: (1) the City and the BTLA misinterpreted RSA 72:23, III because it should be read as fully exempting houses of worship from taxation; (2) the City’s inquiries into the religious uses and purposes of each room within the church building unconstitutionally “entangled” the government with religion; and (3) even if the statute and constitution permit parsing taxable from exempt space within a house of worship, all of Assembly's space should be exempt as serving a religious purpose. Having decided that the City’s methodology was not flawed, the Supreme Court deferred to the BTLA’s judgment in determining the weight to be given evidence: "Because Assembly has not demonstrated by a clear preponderance of the evidence that the second-floor restroom was "owned, used and occupied directly for religious training or for other religious purposes," the Court could find error in the BTLA's finding such space taxable. View "Appeal of Liberty Assembly of God" on Justia Law

The New Hampshire Department of Revenue Administration (DRA) appealed a superior court order that reversed its decision assessing a real estate transfer tax against Petitioners Say Pease, LLC and Say Pease IV, LLC. Two International Group, LLC (TIG) is a real estate holding company. It owned a ground lease on property near Pease International Tradeport that it wanted to use to secure a mortgage loan. To obtain the loan, TIG’s prospective lender required that TIG, and all of its members, be "single purpose bankruptcy remote entities." To comply with the lender’s requirement, the members of Say Pease formed Say Pease IV, a new limited liability company (LLC) with the same members. Say Pease IV’s LLC agreement provides that it was "formed for the sole purpose of being a Managing Member and Member of [TIG]" and was not authorized "to engage in any other activity[,] business or undertaking so long as [TIG] shall be indebted under any mortgage or other securitized loan." Say Pease’s interest in TIG was transferred to Say Pease IV, and Say Pease IV replaced Say Pease as TIG’s managing member. As a result of these transactions, Say Pease IV owned a 47.5% interest in TIG as a sole purpose remote bankruptcy entity, Say Pease held no interest in TIG, and TIG obtained the loan. Based upon this transfer, DRA issued notices assessing the real estate transfer tax against Say Pease and Say Pease IV. After appealing unsuccessfully through DRA’s administrative appeal process, Say Pease and Say Pease IV appealed to the superior court. The parties filed cross-motions for summary judgment, and the trial court reversed DRA's order, ruling that the transfer at issue was not a "[c]ontractual transfer," RSA 78-B:1-a, II (2003), and, therefore, the real estate transfer tax did not apply. Upon review, the Supreme Court found that the parties did not employ a business entity as a shield for an otherwise taxable exchange of value for an interest in property. Instead, those that executed Say Pease IV’s LLC agreement sought to maintain TIG’s original ownership while placing it in a suitable financing vehicle; the promises exchanged related to the creation of the financing vehicle, Say Pease IV, not the subsequent property transfer. Thus, the substance of the transaction here failed to create a bargained-for exchange because there was no "exchange of money, or other property and services, or property or services valued in money for an interest in real estate." View "Say Pease IV, LLC v. New Hampshire Dept. of Rev. Admin. " on Justia Law