Justia Tax Law Opinion Summaries

The Eighth Circuit affirmed the disqualification of tax-exempt status of an Employee Stock Ownership Plan (ESOP) because it exceeded the I.R.C. 415 contribution limit. In this case, the Tax Court did not clearly err in basing its findings of fact on the IRS's uncontested Explanation of Items, which established that DNA Pro Ventures' 2008 contribution to Dr. Daniel Prohaska's ESOP account substantially exceeded the section 415 contribution limit for that year. View "DNA Pro Ventures v. Commissioner" on Justia Law

Taxpayer appealed the district court's grant of summary judgment for the government in this action to reduce a tax lien to judgment and foreclose upon real property. The court concluded that an underlying Tax Court appeal taxpayer filed in March 2006 served to toll the limitations period applicable to the government's current collection efforts. The court explained that, in the unique circumstances of this extremely tardy challenge, taxpayer cannot rely upon the absence of evidence of a date of mailing to carry her own heavy burden to disprove the Tax Court's jurisdiction over her 2006 appeal. Accordingly, the court affirmed the judgment. View "United States v. Giaimo" on Justia Law

Diversified filed suit seeking a declaratory judgment that the Interstate Income Act (IIA), 15 U.S.C. 381, deprives Ohio of jurisdiction to assess and collect the Commercial Activity Tax (CAT) on Diversified's sales of goods manufactured and shipped from outside Ohio to locations in Ohio, and an order enjoining the State Tax Commissioner from asserting that jurisdiction. The district court dismissed the suit as barred by the Tax Injunction Act (TIA), 28 U.S.C. 1341, and by long-standing principles of comity. The court held that the TIA applies to a suit in federal court seeking to enjoin assessment, levy or collection of a state tax “where a plain, speedy and efficient remedy may be had in the courts of such State.” Here, Diversified's argument that the Ohio CAT does not provide a "plain" state court remedy is without merit. In this case, the Ohio Revenue Code provides taxpayers an appeal of right to an Ohio appellate court which will “hear and decide” a claim that a state tax has been invalidly assessed or collected. The court explained that this obviously includes authority to decide that imposing the CAT on Diversified’s out-of-state transactions violates the IIA, regardless of the Ohio Legislature’s contrary intention. The court further concluded that its decision that the TIA effectively transferred jurisdiction over Diversified’s equitable claims to the Ohio state courts is not at odds with comity principles. Accordingly, the court affirmed the judgment. View "Diversified Ingredients v. Testa" on Justia Law

After Little Salt failed to pay its taxes, the Commissioner issued notices of transferee liability to the former shareholders. The tax court concluded that the former shareholders are liable for a portion of Little Salt's tax deficiency and the IRS appealed. The court agreed with the IRS that the Tax Court should have considered whether the stock sale should be recharacterized as a liquidating distribution to the shareholders under Nebraska law. However, the court declined to resolve the issue in the first instance. Accordingly, the court vacated the judgment and remanded to the tax court to consider whether the IRS is entitled to a full recovery from the former shareholders as transferees under Nebraska law. View "Stuart, Jr. v. CIR" on Justia Law

Bruce A. Hauptman, an investment consultant, sought judicial review of the Commissioner's notices of determination permitting a levy to collect Hauptman’s unpaid income tax liabilities for tax years 1992 through 1996. The tax court upheld the IRS’s determinations. The court rejected Hauptman’s challenge to the tax court’s jurisdiction where Hauptman cites to no authority to support his claim that there are additional requirements before a tax court can exercise jurisdiction over supplemental notices. The court agreed with the tax court’s conclusion that the Office of Appeals did not abuse its discretion when it rejected Hauptman’s offer-in-compromise based on its well-supported findings that Hauptman had not complied with his income tax obligations, that he had not fully disclosed his financial circumstances during the collection due process proceedings, and that he had not prioritized payment of his tax liabilities. Accordingly, the court affirmed the judgment. View "Hauptman v. Commissioner" on Justia Law

The IRS disallowed all deductions and losses reported by RJT on its 2001 partnership return. It also determined that a 40-percent accuracy-related penalty for gross misstatement of partnership basis would be applied to any underpayment of tax by RJT partners resulting from the adjustments made to the RJT partnership return. RJT and Thompson challenged these adjustments in a partnership-level proceeding before the Tax Court, but the adjustments, including imposition of the penalty, were affirmed by the Tax Court and by this court on appeal. Then the Thompsons filed a petition in the Tax Court to challenge both the tax deficiency and the penalty. The IRS contends that the Thompsons are prohibited from challenging the Tax Court’s jurisdiction over the penalty issue under the law-of-the-case doctrine. The court affirmed the judgment, concluding that the Tax Court did not err by dismissing the penalty issue for lack of jurisdiction. View "Thompson v. Commissioner" on Justia Law

About five hours prior to filing for bankruptcy, debtor received an income tax refund for her federal and state income taxes, including an earned income tax credit (EIC). The bankruptcy court exempted some of debtor’s 2012 income tax refund, but denied her claimed exemption of the EIC under Mo. Rev. Stat. 513.430.1(10)(a), requiring her to turn over the nonexempt portion. The court determined that the language of section 513.430.1(10)(a) does not exempt “public assistance benefit[s]” received by the debtor prior to filing for relief in bankruptcy court. In this case, the parties do not dispute that debtor received the EIC prior to filing for bankruptcy. Therefore, the district court correctly affirmed the bankruptcy court's judgment. View "Dittmaier v. Sosne" on Justia Law