Justia Tax Law Opinion Summaries

Davis and his wife purchased a Philadelphia rental property in 1997 1997. A longtime member of the U.S. Army Reserve, Davis was called to active duty in 2004. A few months later, the Davises transferred the property to Global LLC, owned and managed by Davis, to “insulate themselves from liability” because “his wife was unable to manage the property.” In 2009, Davis and Global asked the Philadelphia Department of Revenue to reduce Global’s property tax debt, citing the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. 3901, which limits interest imposed on a servicemember’s delinquent property taxes during active duty to a rate of six percent and forbids additional penalties. The Department denied this request, stating that the SCRA does not apply to a business owned by a servicemember and that Davis should file an abatement petition with the Philadelphia Tax Review Board. The Review Board denied that petition. Two years later the city initiated foreclosure proceedings; the state court entered judgment in the city’s favor. Davis and Global filed suit under 42 U.S.C. 1983. The Third Circuit affirmed dismissal. SCRA extends only to servicemembers; a corporation is not a “servicemember” under the statute. View "Davis v. City of Philadelphia" on Justia Law

St. Peter’s, a non-profit healthcare entity, runs a hospital, and employs over 2,800 people. It is not a church, but has ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most members of its Board of Governors and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures and statues throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s filed an IRS application, seeking a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by more than $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan for tax purposes. The Third Circuit affirmed denial of a motion to dismiss, concluding that St. Peter’s could not establish an exempt church plan because it is not a church. View "Kaplan v. Saint Peter's Healthcare Sys." on Justia Law