Justia Tax Law Opinion Summaries

Articles Posted in US Court of Appeals for the First Circuit
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The First Circuit reversed the judgment of the district court dismissing for want of jurisdiction under the Tax Injunction Act (TIA) this lawsuit asking that the district court enjoin the collection of certain Rhode Island tolls as violative of the Commerce Clause of the United States Constitution, holding that the TIA's prohibition stating that district courts shall not enjoin levy or collection of "any tax under State law" where a remedy may be had in state courts is inapplicable to the Rhode Island tolls.A Rhode Island statute authorized the Rhode Island Department of Transportation to collect from tractor-trailers certain tolls in order to pay for replacement, reconstruction, maintenance, and operation of Rhode Island bridges. Plaintiff trucking entities brought this lawsuit. The district court dismissed the lawsuit, concluding that it lacked jurisdiction under the TIA. The First Circuit reversed, holding the the tolls in this case were not a "tax" under the statute. View "American Trucking Ass'n v. Alviti" on Justia Law

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The First Circuit reversed the decision of the Tax Court ruling that Appellants owed an excise tax for contributions made to their Roth individual retirement accounts (Roth IRAs) in violation of contribution limits, holding that a transaction Appellants entered into to reduce their federal taxes violated neither the letter nor purpose of the relevant statutory provisions.Specifically, the Tax Court found that the Commissioner of Internal Revenue appropriately recharacterized the transaction at issue under the common-law substance over form doctrine because the transaction’s sole purpose was to “shift[] millions of dollars into Roth IRAs in violation of the statutory contribution limits.” The First Circuit reversed, holding that the Commissioner did not have the power to call Appellants’ transaction a violation of the Tax Code where the transaction did not violate the plain intent of the relevant statutes. View "Benenson v. Commissioner of Internal Revenue" on Justia Law

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The First Circuit affirmed the Tax Court’s decision upholding the Commissioner’s notice of deficiency against Transupport, Inc. The notice of deficiency reduced Transport’s cost of goods sold, reduced deductions it took for compensation paid to four employee-shareholders, and assessed a twenty percent accuracy-related penalty for tax years 2006 through 2008.This was the Tax Court’s second opinion in this case, the first of which addressed whether Transupport committed fraud. The First Circuit affirmed the Tax Court’s decision in Transupport II, as to which this appeal was taken, holding that the Tax Court (1) did not make errors of law or err in its findings of fact when upholding the notice of deficiency’s adjustment to deductions Transupport took for compensation paid to the employee-shareholders; (2) did not clearly err in determining Transupport’s gross profit percentage with regard to the cost of goods sold; and (3) did not clearly err in applying the accuracy-related penalty. View "Transupport, Inc. v. Commissioner of Internal Revenue" on Justia Law