Articles Posted in US Court of Appeals for the Ninth Circuit

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Plaintiff, for 22 years, contested in administrative proceedings a California Franchise Tax Board ruling that he owed close to $7.4 million in taxes, penalties, and interest. The Ninth Circuit affirmed the district court's dismissal of plaintiff's action under 42 U.S.C. 1983, which arose from his administrative proceedings. The panel held that the Tax Injunction Act, 28 U.S.C. 1341, barred plaintiff's suit because plaintiff could either pay now and litigate later, or the pay-then-protest remedy provided plaintiff a speedy remedy, even if the protest-then-pay remedy had not. The court also held that, if plaintiff pays and then protests, the California state courts would likely allow plaintiff to add constitutional claims to a state court action challenging the tax. View "Hyatt v. Yee" on Justia Law

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Plaintiffs, tax preparation and refund-advance businesses, filed suit against the IRS under the Federal Tort Claims Act (FTCA), alleging several causes of action stemming from plaintiffs' cooperation in a federal criminal investigation. The district court granted the government's motion to dismiss, concluding that the IRS was immune from liability for its conduct under 28 U.S.C. 2680(c). The Ninth Circuit held that section 2680(c) did not confer absolute immunity on the IRS, and, construing the facts in the light most favorable to plaintiffs, the IRS's sting operation did not arise in respect of the assessment or collection of any tax. Accordingly, the panel reversed and remanded for further proceedings. View "Snyder & Associates Acquisitions LLC v. United States" on Justia Law

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An entity's disregarded status did not preclude its classification as a pass-thru partner under the Tax Equity and Fiscal Responsibility Act (TEFRA), 26 U.S.C. 6231. In this case, Robert Kotick and his father formed Seaview Trading. Kotick filed a petition challenging a notice of Final Partnership Administrative Adjustment (FPAA). The Ninth Circuit affirmed the tax court's dismissal of the petition, holding that Seaview provided no compelling reason to contravene the consistent stance of the IRS and the tax courts, which have uniformly treated disregarded single-member LLCs as pass-thru partners. The panel also held that, because a party (Kotick) other than Seaview's tax matters partner filed a petition for readjustment of partnership items after AGK had done the same and within 90 days of the IRS's mailing of the FPAA, the tax court lacked jurisdiction under 26 U.S.C. 6226. View "Seaview Trading v. CIR" on Justia Law

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Consents to extend the statute of limitations for the assessment of tax attributable to a partnership item, signed by the taxpayer-partner, are not invalid in this case because of a third party’s alleged conflict of interest or duress. This case arose out of an elaborate tax sheltering scheme that resulted in a massive IRS investigation, multiple criminal indictments and convictions, and a U.S. Senate investigation and hearing. The Ninth Circuit held that, an alleged third-party conflict of interest, without more, did not vitiate the individual consent personally executed by the taxpayer. Even crediting Intervenor Gonzales' allegations, the alleged actions by the IRS agent did not constitute legal duress warranting relief. Accordingly, the panel affirmed the district court's grant of summary judgment to the government. View "Birch Ventures v. United States" on Justia Law