Justia Tax Law Opinion Summaries

In these consolidated appeals from the business court's orders reversing various Boards of Assessment Appeals and rejecting the West Virginia State Tax Department's valuation of Respondents' gas wells for ad valorem tax purposes the Supreme Court affirmed in part and reversed in part the business court's judgment, holding that the business court erred in two respects.Specifically, the Court held that the business court (1) did not err in concluding that the Tax Department violated the applicable regulations by improperly imposing a cap on Respondents' operating expense deductions; (2) erred in rejecting the Tax Department's interpretation of the applicable regulations concerning the inclusion of post-production expenses in the calculation of the annual industry average operating expenses; and (3) erred in crafting relief permitting an unlimited percentage deduction for operating expenses in lieu of a monetary average. View "Steager v. Consol Energy, Inc." on Justia Law

In these actions challenging the assessment of alleged illegal real estate taxes on several properties and property owners, the Supreme Court affirmed the judgment of the superior court in favor of Defendants in the declaratory judgment action and denied and dismissed the appeal in the tax appeal action, holding that the Plaintiff did not have standing in either action.Defendants were various officials of the Town of Barrington, Rhode Island; Sweetbriar, LP; and East Bay Community Development Corporation. Plaintiff was the owner of property located in Barrington. Plaintiff filed a complaint appealing the assessment of his property (tax appeal action) and filed a separate declaratory judgment action. In essence, Plaintiff argued that he was forced to pay a higher amount on his taxes because of Sweetbriar's favorable tax treatment under R.I. Gen. Laws 44-5-12 and 44-5-13.11. The hearing justice ruled that Plaintiff lacked standing to bring either action. The Supreme Court affirmed, holding (1) Plaintiff lacked standing to bring the declaratory judgment action; and (2) the hearing justice did not err in determining that Plaintiff lacked standing to challenge Barrington's application of section 44-5-12 and 44-5-13.11 to the Sweetbriar development, along with another project. View "Morse v. Minardi" on Justia Law

The superior court affirmed a municipality’s tax valuation of a landowner’s property. The landowner argued on appeal the municipality’s valuation review board abused its discretion by excluding certain evidence of value on timeliness grounds. The landowner also argued the board applied fundamentally wrong principles of valuation by failing to consider, as definitive evidence of value, either his purchase price for the property or the price for which he sold a neighboring lot. The Alaska Supreme Court found no abuse of discretion as to either of the issues the landowner raised: the assessor explained at the hearing why he considered certain evidence of value more persuasive and more consistent with the municipality’s usual methods of appraisal, and it was well within the board’s broad discretion to accept the assessor’s explanation. Therefore, the Court affirmed the superior court’s decision upholding the board’s valuation of the property. View "Kelley v. Municipality of Anchorage, Board of Equalization" on Justia Law

Oracle was a Delaware corporation headquartered in California, and it is the parent of a worldwide group of affiliated corporations. OJH was a Delaware corporation and a wholly-owned subsidiary of Oracle, existing solely as a holding company. During the period at issue in this matter, OJH held stock in Oracle Japan, and it sold 8.7 million shares of that stock on the Tokyo Stock Exchange, realizing capital gains of approximately $6.4 billion. The tax treatment of these gains was at the center of this dispute. Specifically, the issues this case presented for the Colorado Supreme Court's review were: (1) whether the Colorado Department of Revenue could require Oracle Corporation (“Oracle”) to include its holding company, Oracle Japan Holding, Inc. (“OJH”), in its Colorado combined income tax return for the tax year ending May 31, 2000; and (2) if no, then whether the Department could nevertheless allocate OJH’s gain from the sale of shares that it held in Oracle Corporation Japan (“Oracle Japan”) to Oracle in order to avoid abuse and to clearly reflect income. For the reasons set forth in Department of Revenue v. Agilent Technologies, Inc., 2019 CO __, __ P.3d __, the Colorado Supreme Court concluded the pertinent statutory provisions and regulations did not permit the Department either to require Oracle to include OJH in its combined tax return for the tax year at issue or to allocate OJH’s capital gains income to Oracle. Accordingly, the Supreme Court concluded the district court properly granted summary judgment in Oracle's favor. View "Department of Revenue v. Oracle" on Justia Law

Agilent Technologies, Inc. was a Delaware corporation headquartered in California, and was the parent company of a worldwide family of affiliated corporations. Agilent maintains research and development and manufacturing sites in Colorado and is thus subject to Colorado corporate income tax. World Trade, Inc. is a Delaware corporation and a wholly owned subsidiary of Agilent, and existed solely as a holding company. World Trade earned substantial dividends on its shares in its noted subsidiaries, the tax treatment of dividends gave rise to the dispute before the Colorado Supreme Court. Specifically, the issues reduced to: (1) whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the Executive Director of the Department, could require Agilent to include its holding company, Agilent Technologies World Trade in its Colorado combined income tax returns for the tax years 2000–07; if not, then whether the Department could nevertheless allocate World Trade’s gross income to Agilent in order to avoid abuse and to clearly reflect income. The Colorado Court determined sections 39-22-303(11)–(12), C.R.S. (2018), did not authorize the Department to require Agilent to include World Trade in its combined tax returns for the tax years at issue because World Trade was not an includable C corporation within the meaning of those provisions. As to the second question, the Court likewise concluded the Department could not allocate World Trade’s income to Agilent under section 39-22-303(6) because: (1) that section has been superseded by section 39-22-303(11) as a vehicle for requiring combined reporting for affiliated C corporations; and (2) even if section 39-22-303(6) could apply, on the undisputed facts presented here, no allocation would be necessary to avoid abuse or clearly reflect income. View "Department of Revenue v. Agilent Technologies" on Justia Law

In 2013 and 2014 attorney Gerald Markham applied for a senior citizen tax exemption on his residential property in Kodiak, Alaska. The Borough assessor denied the applications due to Markham’s prolonged absences from Alaska. When given the opportunity to prove his absences were allowed under the applicable ordinance, Markham refused to provide corroborating documentation. He appealed the denials to the Borough Board of Equalization, which affirmed the denials. He appealed the Board’s decisions to the superior court. The superior court dismissed the 2013 appeal for failure to prosecute, denied the 2014 appeal on the merits, and awarded attorney’s fees to the Borough. Markham appealed. The Alaska Supreme Court affirmed the superior court’s 2013 dismissal and the Board’s 2014 denial on the merits, but vacated the superior court’s award of attorney’s fees and remanded for further findings. View "Markham v. Kodiak Island Borough Board of Equalization" on Justia Law

After RERI claimed a charitable contribution deduction of $33 million on its 2003 federal tax return, the IRS determined that RERI was not entitled to the deduction and imposed a 40% penalty for underpayment of tax. The DC Circuit affirmed the tax court's decision upholding the IRS's determinations and agreed with the tax court that RERI fell short of the substantiation requirements of the charitable contribution deduction by omitting its basis in the donated property. Therefore, the court did not reach the IRS's further argument that RERI failed to satisfy the substantiation requirements because the appraisal it submitted was not a "qualified appraisal" within the meaning of section 1.170A-13(c)(3) of the Internal Revenue Code. The court also agreed with the tax court's finding that RERI was liable for the 40% penalty reserved for a gross valuation misstatement and rejected RERI's claims to the contrary. View "Blau v. Commissioner" on Justia Law

The Eleventh Circuit vacated the district court's order denying the IRS injunctive relief and remanded for further proceedings. The IRS sought a preliminary injunction against a serial employment-tax delinquent to ensure that it gets its due as taxes continue to pile up. Determining that the case was not moot, the court held that neither the adequate-remedy-at-law requirement nor Rule 65(d) should have precluded injunctive relief on the facts here.The court reasoned that the IRS's ability to sit on its hands until defendants fail to pay their taxes again and only then bring an action for money damages did not qualify as an adequate legal remedy. Therefore, the district court erred in applying a categorical rule that because tax liability may be calculated and sought in an action for damages, it necessarily precludes injunctive relief under section 7402(a) of the Internal Revenue Code. Furthermore, this case did not raise the sort of fair notice concerns that Rule 65(d) was designed to address. View "United States v. Askins & Miller Orthopaedics, P.A." on Justia Law

The American Jobs Creation Act of 2004 authorized the IRS to gather information about tax shelters, 26 U.S.C. 6707A. The IRS requires taxpayers and certain third parties to submit records pertaining to “reportable transaction[s]” as defined by IRS regulations, subject to significant penalties. A “material advisor” who provides material aid to a taxpayer in carrying out reportable transactions and who derives a threshold amount of gross income from that aid, faces similar penalties. A material advisor who fails to maintain a list of taxpayers that he aided in carrying out reportable transactions faces a $10,000 per day penalty. Notice 2016-66 identified “micro-captive transactions” as “transactions of interest,” a subset of reportable transactions that have “a potential for tax avoidance or evasion,” but stated that the IRS “lack[s] sufficient information” to distinguish between those that are lawful and those that are unlawful. Plaintiff, a material advisor to taxpayers engaging in micro-captive transactions, challenged the Notice under the Administrative Procedure Act, 5 U.S.C. 500, and the Congressional Review Act, 5 U.S.C. 801, arguing that it was a legislative rule that required notice-and-comment rulemaking, was arbitrary, and required submission for congressional review. The Sixth Circuit affirmed the dismissal of the complaint as barred by the Anti-Injunction Act, 26 U.S.C. 7421(a) and the tax exception to the Declaratory Judgment Act, 28 U.S.C. 2201, which divest federal district courts of jurisdiction over suits “for the purpose of restraining the assessment or collection of any tax.” The court noted that the IRS does “not have a great history of complying with APA procedures.” View "CIC Services., LLC v. Internal Revenue Service" on Justia Law

The Supreme Court affirmed the judgment of the trial court in favor of Defendants and upholding the legality of assessments of Plaintiffs' properties following a revaluation - which was a mass appraisal - conducted by the Town of Groton as a direct equalization measure in order to ensure that Plaintiffs' neighborhood was not undertaxed relative to others in the municipality, holding that the trial court properly determined that Plaintiffs' assessments were not manifestly excessive.Plaintiffs argued that Defendants violated Conn. Gen. Stat. 12-62 and numerous regulations promulgated by the state Office of Policy and Management when they applied a flat, undifferentiated adjustment factor that increased the assessed value of all properties in Groton Long Point by a certain percentage without individualized consideration of the unique characteristics of each property. The Supreme Court affirmed, holding that Defendants validly incorporated ratio studies and direct equalization via adjustment factors to neighborhood strata into the revaluation in order to ensure that Groton Long Point bore its fair share of the Town's municipal tax burden relative to the Town's other neighborhoods. View "Tuohy v. Town of Groton" on Justia Law