Justia Tax Law Opinion Summaries

This appeal relates to TOT Holdings' execution of a deed that donated to Foothills Land Conservancy, a conservation easement encumbering nearly all its property. The IRS disallowed the deduction claimed by the taxpayer, and the Tax Court upheld that decision because the deed conveying the easement contained a formula for the distribution of proceeds that did not comply with the extinguishment proceeds requirement and the deed was not saved by purported interpretive provisions. The taxpayer appealed.The Eleventh Circuit concluded that the Tax Court correctly determined that the taxpayer did not comply with the extinguishment proceeds requirement and that the deed was not saved by the disputed provisions because they constitute an unenforceable condition-subsequent savings clause. The court also held that the Tax Court did not commit reversible error in approving the penalties assessed. Accordingly, the court affirmed the judgment. View "TOT Property Holdings, LLC v. Commissioner of Internal Revenue" on Justia Law

28 U.S.C. 1346(a)(1) does not confer jurisdiction, concurrent with the United States Court of Federal Claims, over a taxpayer's civil action against the government solely for overpayment interest owed to the taxpayer.The Eleventh Circuit affirmed the district court's order dismissing plaintiffs' amended complaint for lack of subject matter jurisdiction over their standalone claim for overpayment interest allegedly owed to them by the government. Plaintiffs are victims of Bernie Madoff's Ponzi scheme and seek to recoup their losses. They filed multiple claims with the IRS, subsequently received tentative refunds of approximately ten million dollars, and now seek interest on the tax overpayments for the tax years at issue. The Court of Federal Claims denied the government's motion to dismiss as moot after finding that it lacked jurisdiction over plaintiffs' claim because it was untimely under the Tucker Act. The Court of Federal Claims, however, transferred the case to the Southern District of Florida because it was not evident how the Southern District of Florida or this Court would address jurisdiction over a standalone claim for overpayment interest.Read in context of the entire statute, the court concluded that the "any sum" category of section 1346(a)(1) does not encompass standalone overpayment interest claims against the government and that under the Tucker Act, the Court of Federal Claims has exclusive jurisdiction over such standalone claims exceeding $10,000. Therefore, the district court correctly determined that it lacked jurisdiction over plaintiffs' overpayment interest claim and properly dismissed their amended complaint. View "Paresky v. United States" on Justia Law

The Eleventh Circuit affirmed the Tax Court's decision upholding the Commissioner's determination that petitioner owes an income tax deficiency for 2011. The court concluded that the Tax Court did not clearly err in finding that petitioner failed to substantiate his claimed net operating loss (NOL) deduction in 2011. The court also concluded that the Tax Court did not abuse its discretion by overruling petitioner's objections to the Commissioner's deficiency computations under Rule 155, which included the income, but not the deductions, from petitioner's late-filed 2011 tax return. Finally, the court could not say that the Tax Court abused its discretion in refusing to reopen the case to litigate an issue that petitioner never attempted to raise. View "Barker v. Commissioner of Internal Revenue" on Justia Law

The Government filed suit to enforce the IRS assessment of a penalty against defendant for failing for the year 2007 to file a Report of Foreign Bank and Financial Accounts (FBAR) pursuant to 31 U.S.C. 5321. The district court granted summary judgment in favor of the Government and enforced the IRS assessment of a penalty for a willful violation.The Eleventh Circuit agreed with the district court that there are no genuine issues of material fact regarding defendant's willfulness or recklessness where the evidence was overwhelming that defendant sought to hide his overseas accounts from the United States government. The court joined its sister circuits and held that the maximum penalty is established by the 2004 amendment to 31 U.S.C. 5321, not by the regulation in 31 C.F.R. 1010.820(g)(2). The court also concluded that defendant's several arguments that the IRS factfinding proceedings were so insufficient as to warrant de novo review—in departure from the usual arbitrary and capricious review—are wholly without merit; the IRS's actions were not arbitrary and capricious; and defendant's arguments regarding the imposition of interest and late fees are without merit. Accordingly, the court affirmed the judgment. View "United States v. Rum" on Justia Law

The Eleventh Circuit affirmed the tax court's denial of taxpayer's request to sever her liability for unpaid tax liabilities from joint tax returns for the 2008, 2009, and 2010 tax years based on the innocent spouse doctrine. The court concluded that the tax court did not abuse its discretion in balancing the factors for determining equitable relief and concluding that the knowledge or reason-to-know factor weighed strongly against relief. In this case, taxpayer signed the couple's returns, was aware of their shared financial troubles, and knew of their prior problems with the IRS. Furthermore, the tax court did not abuse its discretion by placing too much weight on this factor. View "Sleeth v. Commissioner of Internal Revenue" on Justia Law

After taxpayers filed suit challenging the IRS's deficiency findings and penalties, the tax court sustained the deficiency determinations but rejected the accuracy-related penalties. In this case, the Miccosukee Tribe shared profits from its casino with Tribe members and encouraged its members to hide their payments from the IRS. The taxpayers here followed the Tribe's advice, and they are now subject to hundreds of thousands of dollars in tax deficiencies.The Eleventh Circuit affirmed the tax court's judgment and rejected taxpayers' assertion that any taxes are barred by the Miccosukee Settlement Act that exempted an earlier land transfer from taxation. Even if the court interpreted the Act as providing an indefinite tax exemption for the "lands" conveyed under it or the agreement, the casino revenues still do not fit the bill because the casino's land was not conveyed under either the Act or the agreement. Furthermore, an exemption for "lands" only exempts income "derived directly" from those lands, and this court has already held that casino revenues do "not derive directly from the land." The court also rejected taxpayers' assertion that the payments are merely nontaxable lease payments from the casino, citing factual and legal problems. Rather, the court concluded that the payments are taxable income. View "Clay v. Commissioner of Internal Revenue" on Justia Law

The government was not required to separately assess a transferor's tax liabilities against a transferee under I.R.C. 6901 in order to collect those tax liabilities from the transferee. The government appeals the district court's order dismissing its complaint against the Caceres Defendants, contending that the government had not timely assessed tax liabilities against them as transferees of Henco under section 6901.As a preliminary matter, the Eleventh Circuit concluded that the government is not bound by Georgia's statute of limitations where it is well settled that the United States is not bound by state statutes of limitation in enforcing its rights. The court reversed the district court's dismissal of the complaint as to the Caceres Defendants, holding that it was bound by the United States Supreme Court's decision in Leighton v. United States, 289 U.S. 506 (1933), which held that a suit was properly brought against the shareholders without a separate assessment against them as transferees. In this case, the government was not required to separately assess the Caceres Defendants for Henco's assessed tax liabilities under section 6901. View "United States v. Henco Holding Corp." on Justia Law

Appellants, a medical doctor and the subchapter S Corporation for which he works, filed suit against the IRS due to penalties it assessed against them for their failure to inform the IRS about questionable deductions the Corporation took for contributions it made for life insurance benefits. The district court granted summary judgment to the IRS.The Eleventh Circuit affirmed the district court's decision determining that the IRS was correct to issue penalties based on the ground that appellants did not file the required notice. In this case, the multi-employer welfare benefit plan is at least substantially similar to the type of plans that the IRS has indicated do not qualify for the exemption from IRC 419 and the corresponding IRC 419A(f)(6) deduction. Therefore, the district court correctly decided to grant summary judgment to the IRS. View "Turnham v. Commissioner" on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment in favor of TriNet in an action brought by TriNet, as the successor-in-interest of Gevity, a professional employer organization (PEO). Gevity claimed tax credits from 2004 to 2009 based on its payment of FICA taxes on the tip income of its client companies' employees. The IRS asserts that such credits were not allowed because Gevity was not the "employer" entitled to claim the credits as that term is defined in 26 U.S.C. 3401(d). The court concluded that, under the statutes applicable to the period at issue, Gevity was the statutory employer entitled to claim the FICA tip credit because it—not its client companies—controlled the payment of the wages subject to withholding. View "TriNet Group, Inc. v. United States" on Justia Law

After Pine Mountain granted North American Land Trust conservation easements, Pine Mountain claimed tax deductions for the easements under I.R.C. 170. The IRS denied the deductions and the tax court held that the 2005 and 2006 easements were not "granted in perpetuity" within the meaning of section 170(h)(2)(C) because, although Pine Mountain had agreed to extensive restrictions on its use of the land, it had reserved to itself limited development rights within the conservation areas; that the 2007 easement complied with section 170(h)(5)(A)'s requirement that the easement's conservation purposes be "protected in perpetuity," notwithstanding its inclusion of a clause permitting the contracting parties to bilaterally amend the grant; and that the value of the 2007 easement is $4,779,500—which, it turns out, is almost exactly midway between the parties' wildly divergent appraisals.The Eleventh Circuit affirmed in part, reversed in part, and remanded for further proceedings. The court held that the 2005 and 2006 easements satisfy section 170(h)(2)(C)'s granted-in-perpetuity requirement; that the existence of an amendment clause in an easement does not violate section 170(h)(5)(A)'s protected-in-perpetuity requirement; and that the tax court applied the wrong method for valuing the 2007 easement. View "Pine Mountain Preserve, LLLP v. Commissioner" on Justia Law