Justia Tax Law Opinion SummariesArticles Posted in Supreme Court of Alabama
Ex parte Mobile County Board of Equalization.
The Mobile County Board of Equalization ("the Board") petitioned the Alabama Supreme Court for a writ of mandamus directing the Mobile Circuit Court ("the trial court") to dismiss, for lack of subject-matter jurisdiction, an appeal filed by Atwood Drilling, Inc. ("Atwood"), challenging the Board's final assessment of ad valorem property taxes. This case concerns a dispute between Atwood and the Board as to the assessed value of personal property owned by Atwood ("the property"). Atwood timely filed a notice of appeal to the trial court, challenging the assessment as too high. the Board moved to dismiss Atwood's appeal, alleging: (1) taxes on the property had become delinquent because they had not been paid by January 1, 2021; and (2) by failing to pay the disputed amount before January 1, 2021, Atwood had not satisfied a jurisdictional requirement in § 40-3-25 -- specifically, the requirement that, when appealing a tax assessment, a taxpayer who has not executed a supersedeas bond must pay the assessed taxes before they become delinquent. In support of the motion to dismiss, the Board attached a receipt from the office of the Mobile County Revenue Commissioner ("the Commissioner") indicating that Atwood had not paid the assessed taxes as of January 19, 2021. Atwood alleged that it had sent the Commissioner via certified mail on December 10, 2020, and suggested that delivery had been likely delayed because of service disruptions related to the COVID-19 pandemic. The Board argued that the "mailbox rule" in § 40-1-45 did not extend to undelivered tax payments. At some point following the Board's filing of the motion to dismiss, Atwood paid the tax bill, including penalties and interest, with a second check. After holding several hearings on the matter, the trial court, without stating the findings on which its decision was based, entered an order denying the Board's motion to dismiss on September 10, 2021. Because the appeal was not perfected, the Alabama Supreme Court determined the trial court lacked subject matter jurisdiction, and should have granted the Board's motion to dismiss. The petition was thus granted and the writ issued. View "Ex parte Mobile County Board of Equalization." on Justia Law
Alabama Department of Revenue v. Greenetrack, Inc.
In 2003, the Alabama Legislature and the citizens of Greene County voted to allow nonprofit organizations in that county to operate bingo games for fundraising purposes. Greenetrack, Inc. ("Greenetrack"), which was not a nonprofit organization, almost immediately began offering live and electronic bingo games at its gambling facility. From 2004 to 2008, Greenetrack reaped vast profits under the guise that its whole casino-style bingo operation was constantly being leased and operated by a revolving slate of local nonprofit organizations, whose nominal role earned them a tiny fraction of the bingo proceeds. Eventually, the Alabama Department of Revenue ("the Department") audited Greenetrack, found that its bingo activities were illegal, and concluded that it owed over $76 million in unpaid taxes and interest. Following a decade of litigation, the Alabama Tax Tribunal voided the assessed taxes on the threshold ground that Greenetrack's bingo business (regardless of its legality) was tax-immune under a statute governing Greenetrack's status as a licensed operator of dog races. The Department appealed, and the Alabama Supreme Court reversed, rejecting the statutory analysis offered by the Tax Tribunal and circuit court. Judgment was rendered in favor of the Department. View "Alabama Department of Revenue v. Greenetrack, Inc." on Justia Law
Hamilton v. Guardian Tax AL, LLC, et al.
Shamblin Hamilton appealed a circuit court judgment concluding he had no interest in a Birmingham property, and ejected him from the property. In 1992, the property was conveyed to Shamblin and Carol Hamilton by general warranty deed. The Hamiltons owned the property in fee simple subject to a mortgage to Compass Bank recorded in 2003. In 2004, Shambin and Carol divorced, and pursuant to that divorce judgment, Shamblin was awarded sole ownership of the property. In 2009, the divorce judgment was modified by an agreement of the parties, and a court order adopting that agreement declared that Shamblin had assumed sole responsibility of a home-equity line of credit that Shamblin and Carol had jointly executed with Compass Bank. In his filings in the circuit court in this case, Shamblin asserted that he was still making payments on the home-equity line of credit as the litigation ensued. The Hamiltons failed to pay the ad valorem real-property taxes on the property, and in 2014, the State sold the property at auction to Mercury Funding, LLC ("Mercury"). Mercury conveyed its interested to Guardian Tax AL, LLC (“Guardian”) by quitclaim deed. In 2018, Guardian filed a complaint for ejectment and to quiet title to the property against the Hamiltons and Compass Bank. Shamblin denied not paying the ad valorem property taxes on the property, and he asserted that he had no notice of delinquency even though he had retained physical ownership of the property since 1992. Shamblin asserted a counterclaim for judicial redemption of the property, arguing he, not Carol as part title-holder, had a right to redeem. The Alabama Supreme Court determined the trial court erred in holding Carol had a right to redeem, and reversed. View "Hamilton v. Guardian Tax AL, LLC, et al." on Justia Law
Wilbert of Birmingham, LLC, et al. v. Jefferson County
Jefferson County ("the county") filed a complaint against Wilbert of Birmingham, LLC ("Wilbert"), Lisa D. Turner, and Marvin Lands ("the taxpayers") seeking an order requiring the taxpayers to pay various taxes and license fees they allegedly owed to the county. The circuit court ruled in favor of the county and ordered the taxpayers to pay to the county $112,728.96 plus accrued interest and court costs. The taxpayers appealed. The merits of the circuit court's ruling were not actually before the Alabama Supreme Court in this appeal. Instead, the issue raised in the taxpayers' brief was whether the circuit court obtained jurisdiction over the matter pursuant to the Alabama Taxpayers' Bill of Rights and Uniform Revenue Procedures Act, 40-2A-1 et seq., Ala. Code 1975 ("the TBOR"). The Supreme Court found the taxpayers demonstrated that, by failing to schedule a conference with the taxpayers concerning the preliminary assessments, the county's department of revenue did not strictly comply with the procedural requirements of the TBOR. That failure to strictly comply with the procedural requirements of the TBOR deprived the circuit court of jurisdiction over the county's action against the taxpayers, and, thus, the order entered in favor of the county was void. Therefore, the Supreme Court dismissed the taxpayers' appeal and instructed the circuit court to vacate its judgment in favor of the county and to dismiss the case. View "Wilbert of Birmingham, LLC, et al. v. Jefferson County" on Justia Law
Blankenship et al. v. City of Irondale
The Jefferson County, Alabama Board of Education ("the Board") and several of its employees sought to avoid the application of an occupational tax imposed by the City of Irondale ("City"). The Board and its employees argued that public-school employees were exempt from the occupational tax because, they contended they provided an essential government service. "But the importance of a state employee's role, even a role as important as a public-school employee, does not remove that employee's obligation to pay a duly owed occupational tax." The Alabama Supreme Court affirmed the trial court's judgment in favor of the City. View "Blankenship et al. v. City of Irondale" on Justia Law
Campbell v. City of Gardendale
Jay Campbell, on behalf of himself and a certified class of "other persons similarly situated," appealed the grant of summary judgment on claims challenging the constitutionality of two municipal taxes adopted in 2013 by the City of Gardendale in connection with Gardendale's planned creation of a municipal school system. After review, the Alabama Supreme Court concluded Campbell did not demonstrate that the Gardendale school taxes were rendered invalid by operation of Local Amendment 14. The Court therefore pretermitted discussion of the alternate arguments for affirmance presented by Jefferson County and Smallwood. The judgment of the trial court was affirmed. View "Campbell v. City of Gardendale" on Justia Law
Alabama Department of Revenue v. Panama City Wholesale, Inc.
Alabama imposed a license or privilege tax on tobacco products stored or received for distribution within the State ("the tobacco tax"). Under Alabama law, the Department of Revenue could confiscate tobacco products on which the tobacco tax had not been paid. Panama City Wholesale, Inc. ("PCW") was a wholesale tobacco-products distributor located in Panama City, Florida, and owned by Ehad Ahmed. One of PCW's customers, Yafa Wholesale, LLC ("Yafa"), was an Alabama tobacco distributor owned by Sayeneddin Thiab ("Thiab"). On October 10, 2018, Hurricane Michael destroyed the roof on PCW's warehouse. Department surveillance agents observed observed one of Thiab's vehicles being unloaded at two of the recently rented storage units. The day after that, agents observed one of Thiab's delivery vehicles being loaded with tobacco products from a recently rented unit following the storm. On October 23, 2018, the Department confiscated 1,431,819 cigars from four storage units leased by persons connected to Yafa and Thiab. It is undisputed that the tobacco tax had not been paid on the cigars. Ahmed filed an action against Vernon Barnett, as Commissioner of the Department, seeking a judgment declaring that the cigars were Ahmed's and that they were not subject to confiscation. The case was transferred to the Jefferson Circuit Court, PCW was substituted for Ahmed, and the parties were realigned to make the Commissioner of the Department the plaintiff and PCW the defendant in a civil forfeiture action. On PCW's motion, the circuit court entered a summary judgment in PCW's favor, ruling that the Commissioner failed to present substantial evidence that the cigars were in the possession of a retailer or semijobber, as the court believed was required by the confiscation statute. The Commissioner appealed. A divided Alabama Supreme Court reversed, concluding the circuit court erred in interpreting the confiscation statute to apply only to untaxed tobacco products in the possession of retailers and semijobbers, and because the Commissioner presented substantial evidence that the cigars were subject to confiscation under a correct interpretation of the statute, the Court reversed summary judgment and remanded for further proceedings. View "Alabama Department of Revenue v. Panama City Wholesale, Inc." on Justia Law
Ex parte Russell County Community Hospital, LLC, d/b/a Jack Hughston Memorial Hospital.
Between 2012 and 2014, Medhost of Tennessee, Inc. ("Medhost"), sold Russell County Community Hospital, LLC, d/b/a Jack Hughston Memorial Hospital ("the taxpayer"), computer software and accompanying equipment, which Medhost contracted to install in a hospital operated by the taxpayer. The software and equipment assists the taxpayer in operating various aspects of its hospital. Medhost collected a little less than $18,000 in sales tax in connection with the transactions, which it remitted to the Alabama Department of Revenue ("the Department"). Later, the taxpayer petitioned the Department for a refund of the sales tax it had paid on the transactions with Medhost. The Department denied that request, and the taxpayer appealed to the Alabama Tax Tribunal, which reversed the Department's decision and directed the Department to grant the taxpayer's request for a refund. The Department then filed an action in the trial court requesting de novo review of the tax tribunal's decision. After a hearing, during which testimony was presented ore tenus, the trial court overturned the tax tribunal's decision and affirmed the Department's denial of the taxpayer's refund petition. The taxpayer appealed to the Court of Civil Appeals, which affirmed the trial court's judgment. The Alabama Supreme Court granted the taxpayer's petition for a writ of certiorari. Under the ore tenus rule, which the taxpayer has conceded was applicable here, "a judgment based on [ore tenus] evidence is presumed to be correct and will not be disturbed on appeal unless a consideration of the evidence and all reasonable inferences therefrom reveals that the judgment is plainly and palpably erroneous or manifestly unjust." Under that standard, the Court found the evidence sufficient to support the trial court's judgment. Accordingly, the Court of Civil Appeals correctly affirmed that judgment, and the Supreme Court affirmed its judgment. View "Ex parte Russell County Community Hospital, LLC, d/b/a Jack Hughston Memorial Hospital." on Justia Law
Burnett v. Chilton County Health Care Authority and Chilton County
On January 21, 2014, House Bill 331 (H.B. 331) was introduced in the Alabama House of Representatives "to authorize the [Chilton] county commission to levy an additional one cent sales tax which shall be used exclusively for the construction, maintenance, and operation of a hospital in Chilton County; to provide for an expiration date for the tax; and to provide for a referendum and subsequent referendums." H.B. 331 was approved by both the Alabama House and Senate. The Governor signed the bill into law, designated as Act 2014-162. Notices had been placed in a county newspaper containing the full text of a second bill, introduced as Senate Bill 462 (S.B. 462), "to levy additional sales and use taxes to be used for the construction, maintenance, and operation of hospital facilities in Chilton County; to provide for certain matters relating to the administration, collection, and enforcement of such taxes; to provide for the effective date and termination of such taxes; to provide for an advisory referendum regarding the levy of the taxes; to provide that such taxes may not be abated pursuant to Chapter 9B, Title 40, Code of Alabama 1975, or otherwise; and to authorize the pledge of such taxes by Chilton County or a public corporation acting as its agent to secure indebtedness issued for the purposes for which the taxes are authorized." S.B. 462 was approved by both the House and Senate, and again forwarded to the Governor, who declined to sign it so that it be amended so that it repealed the earlier bill as a duplicative Act. The Legislature approved an amended version of S.B. 462, and the amended bill was signed into law as Act 2014-422. No notice of 2014-422 was ever published to Chilton County. An advisory referendum was held in Chilton County pursuant to Act No. 2014-422, and voters approved the tax. Roy Burnett filed a complaint on behalf of himself and others who paid the tax pursuant to 2014-422, arguing the act was unconstitutional because the bill was designed to raise revenue and did not originate in the House,and was not published after it was amended and signed into law. The Alabama Supreme Court determined 2014-422 was not unconstitutional because it was designed to "raise revenue" as that phrase was contemplated by section 70 of the Alabama Constitution. However, the Court found the Act violated section 107 of the Constitution because no published notice of the Act informed the people of Chilton County it was repealing Act 2014-162. Judgment was reversed that the matter remanded for further proceedings. View "Burnett v. Chilton County Health Care Authority and Chilton County" on Justia Law
Bennett v. Jefferson County
Jefferson County and the Jefferson County Commission (collectively "the County parties") appealed a circuit court judgment denying a petition for validation of the warrants filed by the County parties, pursuant to section 6-6-750 et seq., Ala. Code 1975, and opposed by the taxpayers and citizens of Jefferson County. Andrew Bennett, Mary Moore, John Rogers, and William Muhammad cross-appealed the portion of the trial court's judgment declining to address alternative arguments they raised. In 2004 and 2005, Jefferson County issued warrants to raise funds to make certain grants to local boards of education to construct school buildings and to retire other debt. All the revenue from Jefferson County's existing 1% education sales and use taxes levied under section 40-12-4, Ala. Code 1975, was pledged and required to pay the debt service on the outstanding warrants and certain related costs. Jefferson County experienced severe financial difficulties in recent years that eventually resulted in the County's filing a petition in bankruptcy. In 2009, the Alabama Supreme Court held that Jefferson County's occupational tax, imposed since 1987, was unconstitutional. In 2015, Jefferson County and its legislative delegation proposed local legislation in an effort to bolster the County's finances without an occupational tax. Jefferson County proposed a new 1% sales tax and a 1% use tax to replace its existing 1% education sales and use taxes, the purpose of which was to fund new warrants at lower interest rate and a lower required debt service that would allow the County to retire its existing warrants. In 2015, Bennett, Moore, Rogers, and Muhammad ("the class plaintiffs") filed a class action against Jefferson County challenging the constitutionality of Act No. 2015-226 which enacted the new Jefferson County sales and use taxes. The circuit court declared Act 2015-226 unconstitutional, and the County parties appealed. Finding that the circuit court erred in finding the Act unconstitutional, and finding no merit in the alternative grounds on which the taxpayers argued the Act was unconstitutional, the Supreme Court reversed (Case No. 1150326) and dismissed (Case No. 1150327). View "Bennett v. Jefferson County" on Justia Law