Justia Tax Law Opinion Summaries

The Supreme Court affirmed the judgment of the circuit court holding that International Paper Co. had established, by a preponderance of the evidence, that the County of Isle of Wight's tax scheme violated the requirement of the Virginia Constitution that taxation be uniform, holding that the circuit court did not err.In 2017, the County Board of Supervisors adopted a resolution authorizing an "economic development retention grant program" that would benefit certain taxpayers. International Paper filed a refund action alleging that the County's tax and retention grant scheme violated the uniformity requirement of the Virginia Constitution. The circuit court granted judgment in favor of International Paper, concluding that the County's tax scheme created an unconstitutional non-uniform tax. View "County of Isle of Wight v. International Paper Co." on Justia Law

The Supreme Court reversed the judgment of the circuit court denying a refund of Business and Professional Occupational License (BPOL) taxes Coxcom, LLC paid to Fairfax County on the grounds that the Internet Tax Freedom Act's (ITFA) grandfather clause permitted the County to impose the tax, holding that the grandfather clause did not apply.Since 2000, Cox had provided internet access service to customers in the County. In 2016, Cox filed a request for a BPOL tax refund for the tax years 2013 through 2015, asserting that the federal ITFA preempted the County from imposing the BPOL tax on internet access service revenues. The circuit court concluded that the BPOL tax qualified for the grandfather clause exemption. The Supreme Court reversed, holding (1) the circuit court correctly found that the ITFA applied to the County's BPOL tax; and (2) the grandfather clause did not rescue the County's imposition of a tax on internet access services. View "Coxcom, LLC v. Fairfax County" on Justia Law

Regulus, an LLC solely owned by Klug, is the holding company for all the rights, transactions, and income related to Klug’s literary works, which include several internationally-received legal fiction novels. In 2018, Klug filed a Virginia income tax return, attaching thereto a Schedule C to indicate that he derived business income in Charlottesville. The city could not locate a business license issued to Klug or to Regulus and requested information about Klug’s business and his income therefrom for the tax years 2015-2018. Klug responded that Charlottesville’s Ordinance does not apply to him because he “offer[s] no goods or services to the public[,]” has “no physical storefront or shingle[,]” “do[es] not advertise[,]” has no employees, has no inventory, and offers a “product” that is intangible intellectual property.The Virginia Supreme Court held that a freelance writer’s business does not provide a service and is not covered by the ordinance’s catchall provision. The court did not reach the question of whether the ordinance is unconstitutionally vague as applied to the freelance writer. The court affirmed the circuit court’s decision to order the city to refund Klug his tax payments but concluded that the circuit court erred by awarding costs not essential for the prosecution of the suit. View "City of Charlottesville v. Regulus Books, LLC" on Justia Law

The Supreme Court affirmed the judgment of the circuit court holding that the Virginia Department of Taxation's corporation income tax assessments for the years in issue were erroneous and ordering the Department to refund Lorillard Tobacco Company the amount of its overpayments on the assessments for the years in issue, holding that there was no error.Lorillard filed an application for correction of erroneous assessment of corporation income taxes challenging the denial of its refund claims for certain assessments. The circuit court held that the Department's assessments were erroneous and ordered the Department to correct the assessments by refunding Lorillard the amount of its overpayments. The Supreme Court affirmed, holding that the circuit court did not err. View "Virginia Department of Taxation v. R.J. Reynolds Tobacco" on Justia Law

The Supreme Court reversed the judgment of the circuit court dismissing a bill of review after determining that the underlying matter was an action at law and that a bill of review was inappropriate, holding that the circuit court erred.The City of Petersburg brought an action against the Emmanuel Worship Center and its trustees (collectively, EWC) for delinquent taxes. The circuit court found that EWC owed the City for delinquent real estate taxes and then issued a decree of sale. EWC paid to redeem its property and then filed a bill of review seeking reversal or modification of the decree of sale and an award of the amounts it had paid to the City, arguing that it was constitutionally exempt from paying real estate taxes because the property was owned and used exclusively for religious purposes. The circuit court denied the bill of review. The Supreme Court reversed and remanded the case for further proceedings, holding that the circuit court (1) erred in determining that the underlying action was an action at law, and (2) erred in holding that because more than three years had passed since the taxes were assessed they were beyond review. View "Emmanuel Worship Center v. City of Petersburg" on Justia Law

The Supreme Court reversed the judgment of the circuit court dismissing Plaintiffs' three separate complaints against the County of Northampton (the County) and the Town of Cape Charles (the Town) with prejudice, holding that the circuit court abused its discretion in excluding one of Plaintiffs' witnesses as an expert.In their complaint, Plaintiffs alleged that their real property had been overvalued in recent tax assessments. The County and Town each filed a motion in limine and motion to dismiss arguing that Plaintiffs' two experts should be excluded because Plaintiffs had not complied with the court's uniform pretrial scheduling order. The court granted the motion to exclude both witnesses as experts and dismissed the case with prejudice. The Supreme Court reversed, holding that the trial court abused its discretion by excluding one of Plaintiffs' intended expert witnesses from testifying at trial. View "Galloway v. County of Northampton" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the circuit court granting Isle of Wight County's motion to strike International Paper Company's application for correction of a machinery and tools tax assessment that International Paper claimed was nonuniform, invalid, and illegal, holding that the court erred in sustaining the County's motion to strike as to counts 4 and 5 regarding uniformity.International Paper owned a paper production facility in the County that utilized paper-making machinery for its manufacturing operations. International Paper filed an application for a correction of the County's "nonuniform, invalid & illegal" assessment of International Paper's machinery and tools taxes for tax year 2017. The refund action had five counts. After a bench trial, the County moved to strike International Paper's evidence and claims. The circuit court granted the motion to strike and dismissed the refund action with prejudice. The Supreme Court reversed in part and remanded this case for further proceedings, holding (1) the circuit court did not err in sustaining the County's motion to strike as to three counts regarding vested rights, separation of powers, and the County's alleged lack of statutory authority; but (2) the circuit court erred in sustaining the County's motion to strike as to two counts regarding uniformity. View "International Paper Co. v. County of Isle of Wight" on Justia Law

In this tax assessment dispute the Supreme Court affirmed in part and reversed and remanded in part the trial court's judgments in two cases consolidated for trial, holding that a real estate appraiser need not be licensed in Virginia to offer expert testimony in a tax assessment dispute and that the taxpayer failed to meet its burden of proving that the assessment overvalued the subject property.Virginia International Gateway, Inc.'s (VIG) believed the assessments for its real and personal property were above fair market value and filed separate applications to correct the 2015-16 real estate and personal property assessments. At trial, VIG offered expert testimony to support its position that the actual fair market value of the real property was lower than the City of Portsmouth's assessment. The trial court did not recognize the appraiser as an expert because he lacked Virginia licensure at the time of trial. The trial court ultimately dismissed both of VIG's applications. The Supreme Court reversed the real estate case but affirmed the personal property case, holding (1) the trial court's exclusion of the appraiser's testimony was an abuse of discretion; but (2) the trial court did not err in ruling that VIG failed to overcome the presumption of the personal property assessment's correctness. View "Virginia International Gateway v. City of Portsmouth" on Justia Law

The Supreme Court reversed the judgment of the circuit court upholding Augusta County's tax assessments against McKee Foods Corporation for the years 2011 through 2014 and remanded the matter for a new trial, holding that the assessments were not entitled to a presumption of validity.McKee filed an application for relief from erroneous assessment for real property taxes, alleging that the assessments were above the property's fair market value, were not uniform in application, and were otherwise invalid or illegal. After a trial, the circuit court upheld the assessments. The Supreme Court reversed, holding (1) because the appraiser did not properly use any of the three generally accepted approaches to valuation the Supreme Court erred in applying the presumption of validity to his 2011 assessment; (2) the 2012 and 2013 assessments were based on the same improper methodology and were not entitled to the presumption of correctness; and (3) the 2014 assessment was not entitled to a presumption of validity because it was based on a single approach to the determination of market value. View "McKee Foods Corp. v. County of Augusta" on Justia Law

The Supreme Court affirmed the judgment of the circuit court granting summary judgment in favor of the Tax Department on the Corporate Executive Board Company’s (CEB) complaint alleging that its income tax assessments violated the “dormant” Commerce Clause and the Due Process Clause of the United States Constitution and that the assessments were “inequitable” under the Tax Department’s regulations, holding that the circuit court did not err in declining to grant relief.CEB sought relief from the assessments for the years 2011, 2012, and 2013 and requested a redetermination of its income tax. The circuit court found in favor of the Tax Department. The Supreme Court affirmed, holding (1) the Tax Department’s apportionment of CEB’s income tax was in accord with constitutional requirements; and (2) the regulation allowing relief did not apply under its plain language. View "The Corporate Executive Board Co. v. Department of Taxation" on Justia Law