Justia Tax Law Opinion Summaries

Articles Posted in U.S. 8th Circuit Court of Appeals
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Debtors appealed from the order of the bankruptcy court confirming their amended Chapter 13 plan. At issue was whether the bankruptcy court erred when it confirmed debtors' plan that did not provide for payment of unsecured non-priority tax claims and tax preparation fees ahead of other non-priority unsecured creditors. Because a plan proposed by debtors providing for special treatment of the tax claims would unfairly discriminate against other unsecured non-priority creditors, the Bankruptcy Appellate Panel held that the bankruptcy court's confirmation of the plan was proper. View "Copeland, et al v. Fink" on Justia Law

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Kindred Hospital appealed the district court's order upholding DHHS' decision that Kindred Hospital should have reduced a state tax expense by the amounts it received from a privately administered pool fund on its Medicare Cost Reports for the years 2000-2003. The court followed the well-reasoned opinion of the district court and affirmed the Administrator's decision. View "Kindred Hospitals East v. Sebelius" on Justia Law

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Plaintiff appealed the district court's grant of summary judgment, arguing that the district court erred in ruling that her failure to submit a physician's statement as required by the IRS Revenue Procedure 99-21 was fatal to her claim of financial disability. Because plaintiff failed to submit a physician's statement altogether, the court agreed with the district court that she did not provide the IRS with probative evidence of financial disability, and therefore her claim was properly denied as time-barred by 26 U.S.C. 6511(b)(2)(A). View "Abston v. CIR" on Justia Law

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The United States Tax Court assessed income tax deficiencies and penalties against DKD Enterprises, Inc. (DKD) and Debra Dursky for the years 2003 to 2005. The Eighth Circuit Court of Appeals (1) affirmed the tax court's decisions that (i) DKD's cattery operations were not legitimate trade or business expenses under 26 U.S.C. 162(a), (ii) funds spent by DKD to operate the cattery were taxable to Dursky as a constructive dividend, and (iii) funds spent by DKD in payment of Durksy's health insurance plan were not a deductible accident or health plan under 26 U.S.C. 106(a) nor an excludable ordinary and necessary business expense under section 162(a); (2) reversed the tax court's decisions that DKD's contributions to the profit-sharing pension plan for two 2003 and 2004 did not qualify for a 26 U.S.C. 401 and 501 deduction; and (3) remanded for further consideration as to (i) whether DKD's 2006 contribution to the profit-sharing pension plan qualified for the 401 and 501 deduction in tax year 2005, and (ii) whether that distribution was taxable to Dursky as a constructive dividend. View "DKD Enters. v. Comm'r of Internal Revenue" on Justia Law

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Appellant sought judicial review of the Commissioner's notice of determination sustaining a proposed levy to collect his delinquent income tax liabilities for 1996-2002 and a tax-lien filing for 1998 and 2000-2002 tax liabilities. Appellant also sought review of the Commissioner's denial of collection due process (CDP) hearings to his purported nominees and alter egos. Following trial, the tax court upheld the Commissioner's determinations and appellant appealed. The court agreed with the tax court that appellant was not denied a fair CDP hearing based on the IRS settlement officer's purported reliance on information that was not part of the administrative record in making his determination where the officer provided a complete administrative record to the tax court. Even assuming that the officer did rely on documents outside of the administrative record, the error was harmless. The court also held that the tax court lacked jurisdiction to review letters from an IRS revenue officer to the purported alter egos and nominees because that court's jurisdiction under 26 U.S.C. 6330(d)(1) was limited to reviewing determinations by the IRS Appeals Office. View "Gillum v. CIR" on Justia Law

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This case concerned the Federal Insurance Contribution Act (FICA), 26 U.S.C. 3101 et seq., and certain employment taxes FICA imposed upon employers. After a bench trial on the merits, the district rendered a tax deficiency judgment against DEWPC for unpaid FICA taxes and DEWPC appealed. The court held that the district court did not abuse its discretion in admitting the government's expert testimony on the issue of reasonable compensation and, because the district court applied the correct legal standard, its determination on Watson's FICA wages was affirmed. Accordingly, the judgment of the district court was affirmed. View "David E. Watson, P.C. v. United States" on Justia Law

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Appellee received a notice of deficiency from the IRS and she contested the assessments, asserting the time bar in 26 U.S.C. 6501(a). Claiming an interest in this issue, the government of the United States Virgin Islands (USVI) sought to intervene, either as of right under Civil Rule 24(a)(2), or permissively under Civil Rule 24(b)(2). The tax court denied intervention and the USVI appealed. The court concluded the USVI had standing to intervene where the IRS did not dispute the last two elements of standing, causation and redressability, and where the USVI had presented sufficient evidence of an injury in fact. The court also held that the tax court abused its discretion by using an incorrect legal standard to deny permissive intervention where the tax court erred by ignoring the principal consideration of whether the USVI's intervention would cause undue delay or prejudice. Accordingly, the judgment of the tax court was reversed.

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This case arose out of a dispute between Union Pacific, the owner of mineral rights to three parcels of land, and Linn Farms, the surface rights owner to the parcels who purchased the mineral rights from the Arkansas Commissioner of State Lands. Union Pacific was unaware of the forfeiture of the mineral rights due to tax delinquency and leased the mineral rights to Chesapeake Exploration, who then recorded the lease. Discovering the lease, Linn Farms sued to quiet title to the mineral rights. The district court denied Linn Farms' motions for summary judgment and granted summary judgment to Union Pacific and Chesapeake Exploration, concluding that the sale of the mineral rights by the state was invalid because the Commissioner failed to provide adequate notice of the impending forfeiture in violation of Union Pacific's due process rights. The court affirmed and held that the notice provided by the Commissioner was inadequate under the circumstances of the case even though it complied with Arkansas law. Accordingly, the court affirmed the district court's judgment.

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Midwest sued the Department, seeking a declaration that South Dakota had a taxation scheme that violated a provision of the federal Railroad Revitalization and Regulatory Reform Act (4-R Act), 49 U.S.C. 11501(b)(4). The complaint alleged in part that the 4-R Act's bar on discriminatory taxes against rail carriers extended to Midwest. The district court denied Midwest's motion for summary judgment and granted the Department's, concluding that court precedent did not support extending the protections of the 4-R Act to Midwest. The court held that, in light of Midwest's bare assertions that South Dakota's tax had the effect of discriminating against rail carriers, the district court did not err in ruling as it did. Any ruling to the contrary would have required the district court to rely upon speculation with respect to whether South Dakota's taxes on railcar repair services performed by a privately owned, third-party service provider and any tangible personal property used therein impermissibly resulted in discriminatory treatment of a rail carrier. Accordingly, the judgment was affirmed.

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Defendants, Brian Keith Ellefson and Mark Edward Ellefsen, were convicted of conspiracy to defraud the United States by obstructing the IRS in the assessment and collection of federal taxes. Brian was also convicted of three counts of filing false income tax returns while Mark was convicted of three counts of aiding and assisting the preparation of false income tax returns. Defendants appealed their convictions and challenged the restitution order. The court held that because the undisclosed information at issue was not material, there was no Brady violation. The court also held that, although the defense should have been allowed to cross-examine a certain government witness regarding a tax-loss calculation and whether she considered Brian's additional payments, any error in denying the cross-examination was harmless beyond a reasonable doubt. The court further held that the district court did not abuse its discretion in excluding defendants' proposed expert testimony under Federal Rule of Evidence 403. The district court also did not err in denying the motion for judgment of acquittal and did not abuse its discretion in denying the motion for a new trial where the record was replete with evidence to support the jury's finding that defendants acted willfully. The court finally held that there was no clear error in the district court's judgment of restitution where the government met its burden of proof and deducted Brian's additional payments from the amount of restitution owed to the IRS. Accordingly, the convictions and restitution orders were affirmed.