Justia Tax Law Opinion Summaries

With issues common to three appeals consolidated for review, the Government filed suit to collect unpaid taxes. In Appeal No. 17-4083, the Government appealed a district court’s determination that its state-law contract claim was time-barred because it was subject to a Utah state six-year state statute of limitations. The Tenth Circuit concluded the state-law claim was governed by the ten-year statute of limitations set out in 26 U.S.C. 6502(a) because the Government was proceeding in its sovereign capacity. Appeal No. 17-4093 was a cross-appeal of the district court’s ruling that the Government’s transferee-liability claim, brought pursuant to 16 U.S.C. 6324(a)(2), was timely. Here, the Tenth Circuit concluded the transferee-liability claim was timely filed because the limitations period applicable to the 6324(a)(2) transferees was the same as the limitations period applicable to the estate. In Appeal No. 18-4036, the Government appealed the district court’s order awarding attorney’s fees to Appellees. The Tenth Circuit concluded Appellees were not entitled to attorney’s fees because the Government’s position in this litigation was substantially justified. View "United States v. Johnson" on Justia Law

The Court of Appeals held that N.Y. Real Prop. Law 339-y(4) allows a standing authorization issued by a condominium unit owner to confer authority upon a condominium board of managers to act on behalf of that owner for the tax year in which that authorization was issued and in all subsequent tax years.At issue were various tax assessments made with respect to property that consisted of individually-owned condominium units. The condominium units were assessed for four tax years during which Petitioner, the condominium board of managers, acting as the agent for individual owners, filed a grievance complaint with Respondents with respect to those assessments. Respondents denied the complaints. Acting as agent for each of the unit owners, Petitioner filed one petition for each of the tax years, alleging that Respondents had incorrectly assessed the units. Supreme Court ruled that the only unit owners who would receive a refund would be those who subscribed to a separate authorization for each of the separate tax years at issue. The Court of Appeals reversed, holding that where an owner subscribes to a standing agency authorization conferring authority on a board of managers to act on behalf of that owner, section 339-y(4) allows that authorization to remain effective until it is cancelled or retracted. View "Eastbrooke Condominium v. Ainsworth" on Justia Law

Plaintiffs Justin and Gwen Ulrich and Raymond and Pam Alleman purchased and installed residential solar systems with the expectation of receiving an income tax credit of up to $12,500 pursuant to La. Rev. Stat. 47:6030(B)(1). In 2016, when plaintiffs filed their Louisiana income tax returns for the 2015 tax year, asserting entitlement to the solar electric system tax credits under La. Rev. Stat. 47:6030, the tax credits were denied or reduced by the Department of Revenue, citing Acts 2015, No. 131, which limited the maximum amount of solar tax credits to be granted by the Department of Revenue to $25,000,000. In letters sent by the Department of Revenue to plaintiffs in August 2016, they were informed that Act 131 of the 2015 Regular Session had amended La. Rev. Stat. 47:6030 “to establish the maximum amount of solar tax credits that may be granted;” that “[f]or fiscal years 2015-2016 and 2016- 2017, the cap limit was $10,000,000 per year;” that “[t]he credits are required to be granted based on a first-come, first served basis;” and that the “cap limits were met prior to [their] claim being filed.” This appeal challenged the district court’s judgment declaring unconstitutional 2015 La. Acts, No. 131, section 1, which amended La. Rev. Stat. 47:6030 by placing a cap on the total amount of solar electric system income tax credits available to Louisiana taxpayers, because it retroactively deprived plaintiffs of a vested property right and substantially impaired the obligations of private contracts. The district court also implicitly found the plaintiffs had standing to bring the constitutional claim and that a justiciable controversy existed because the constitutional issue was not moot. The Louisiana Supreme Court found the district court erred in overruling the Department of Revenue’s peremptory exception of mootness, and reversed. View "Ulrich v. Robinson" on Justia Law

Municipalities sued other municipalities to recover revenue under the Use Tax Act (35 ILCS 105/1). Use tax is imposed on the privilege of using in Illinois tangible personal property purchased at retail from a retailer outside the state. Retailers who have a sufficient physical presence in Illinois and have out-of-state facilities from which Internet, telephone, and mail-order sales are made of tangible personal property to be used in Illinois must collect use tax from the purchaser and remit the tax to the Illinois Department of Revenue (IDOR) to prevent avoidance of sales tax. The general rate for both sales tax and use tax is 6.25% of the sale price with 5% allocated to the state. For sales tax, the remaining amount is distributed to the municipality and county where the sale occurred. For use tax, the remaining share is distributed to Chicago, the RTA Fund, the Madison County Mass Transit District, and the Build Illinois Fund. The balance is distributed to all other municipalities based on their proportionate share of the state population. The Illinois Supreme Court reinstated the dismissal of the suit. IDOR has been vested, for purposes of plaintiffs’ claims, with exclusive authority to audit the reported transactions that plaintiffs dispute and to redistribute the tax revenue due to an error. In addition, under Municipal Code section 8-11-21, the General Assembly must give a municipality the right to bring suit about missourcing or misreporting of use taxes. View "Chicago v. Kankakee" on Justia Law

The Supreme Court vacated the order and judgment of the circuit court granting the State’s motion to dismiss for lack of jurisdiction this challenge to the State’s implementation of Haw. Rev. Stat. 248-2.6, holding that the State’s application of section 248-2.6 was consistent with the statute’s plain language and legislative intent and that the statute does not violate the state or federal constitutions.Section 248-2.6 authorizes the State to be reimbursed for its costs in administering a rail surcharge on state general excise and use taxes on behalf of the City and County of Honolulu. Tax Foundation of Hawai’i filed a class action on behalf of all taxpayers in the City and County of Honolulu challenging the State’s application of section 248-2.6. The circuit court granted the State’s motion to dismiss. The Supreme Court reversed and remanded with instructions to grant the State’s motion for summary judgment on the merits, holding (1) the circuit court had jurisdiction to hear Tax Foundation’s claims; (2) Tax Foundation had standing; (3) the State did not violate the statute by retaining ten percent of the surcharge gross proceeds; and (4) the State’s application of section 248-2.6 did not violate the state or federal constitutions. View "Tax Foundation of Hawaii v. State" on Justia Law

The Supreme Court reversed a consolidated order of the Circuit Courts of Randolph, Barbour and Upshur Counties pursuant to which the Tax Commissioner’s determination was upheld that Penn Virginia Operating Company’s (Penn) forest properties were not eligible for lower valuation for tax year 2016, holding that Penn was deprived of its right to an administrative appeal of the denial of its application.Penn sought to have its timberland taxed at a lower appraised value subject to a cooperative contract with the State Division of Forestry (Forestry) pursuant to the Division’s Managed Timberland Program. The consolidated order in this case denied relief from the Commissioner’s determination that Penn’s forest properties were not eligible for lower valuation because Penn filed its application with Forestry for certification of its properties as managed timberland sixteen days after the deadline. The Supreme Court reversed and remanded this case with directions to allow Penn to appeal the denial of its application to Forestry’s Director, holding that Penn received incorrect information from Forestry and could have appealed the denial but was advised otherwise. View "Penn Virginia Operating Co., LLC v. Honorable Phyllis K. Yokum" on Justia Law

The State of Washington taxes “motor vehicle fuel importer[s]” who bring large quantities of fuel into the state by “ground transportation,” Wash. Code 82.36.010(4), (12), (16). Cougar, a wholesale fuel importer owned by a member of the Yakama Nation, imports fuel over Washington’s public highways for sale to Yakama-owned retail gas stations located within the reservation. In 2013, the state assessed Cougar $3.6 million in taxes, penalties, and licensing fees for importing motor vehicle fuel. Cougar argued that the tax, as applied to its activities, is preempted by an 1855 treaty between the United States and the Yakama Nation that reserves the Yakamas’ “right, in common with citizens of the United States, to travel upon all public highways,” 12 Stat. 953. The Washington Supreme Court and the U.S. Supreme Court agreed. The statute taxes the importation of fuel, which is the transportation of fuel, so travel on public highways is directly at issue. In previous cases involving the treaty, the Court has stressed that its language should be understood as bearing the meaning that the Yakamas understood it to have in 1855; the historical record adopted by the agency and the courts below indicates that the treaty negotiations and the government’s representatives’ statements to the Yakamas would have led the Yakamas to understand that the treaty’s protection of the right to travel on the public highways included the right to travel with goods for purposes of trade. To impose a tax upon traveling with certain goods burdens that travel. View "Washington State Department of Licensing v. Cougar Den, Inc." on Justia Law

The Town of Belmont appealed a New Hampshire Board of Tax and Land Appeals (BTLA) decision that, pursuant to RSA 72:36-a (2012) respondent Robin M. Nordle 2013 Trust was entitled to a 100% real estate tax exemption for a homestead in Belmont. RSA 72:36-a provided that a person who met certain qualifications set forth in the statute, and “who owns a specially adapted homestead which has been acquired with the assistance of the Veterans Administration,” qualified for a property tax exemption. Louis Nordle served during the Vietnam War and was honorably discharged in 1969. In 1998, Louis and his wife, Robin Nordle, purchased a summer camp in Belmont. In 2007, the Nordles demolished the original home and built a new home. The house was later transferred to the Robin M. Nordle 2013 Trust, in which Louis had a life estate in the trust and Robin was the trustee. In 2015, the United States Department of Veterans Affairs determined that Louis was totally and permanently disabled due to his service-connected disabilities. In 2016, Louis received a “Specially Adapted Housing Grant” from the Veterans Administration (VA), and used the funds to modify his home to accommodate his disability. The town originally denied Nordle's application for tax-exempt status, determining that the “home was not ‘acquired’ or ‘purchased’ by or with the assistance of a VA loan.” In making its determination, the town relied upon advice from the New Hampshire Department of Revenue that, in order to be entitled to the property tax exemption, the VA “had to help ‘purchase’ the home not adapt it.” The BTLA reasoned that “the word ‘acquired’ in the statute had a plain meaning broader than simply ‘purchased,’” and that because Louis “obtained, and is now in possession of, a specially adapted homestead . . . only because of the financial assistance he received from the VA,” the taxpayer was entitled to the tax exemption set forth in RSA 72:36-a. The New Hampshire Supreme Court determined that once the remodeling was completed, the taxpayer owned a specially adapted homestead which was “acquired with the assistance of the Veterans Administration.” and affirmed the BTLA’s determination that the taxpayer was entitled to a 100% real estate tax exemption for the homestead in Belmont. View "Appeal of Town of Belmont" on Justia Law

Freedom From Religion Foundation (FFRF), a nonprofit organization, “[t]akes legal action challenging entanglement of religion and government, government endorsement or promotion of religion.” FFRF paid its co-presidents a portion of their salaries in the form of a housing allowance, seeking to challenge 26 U.S.C. 107, which provides: In the case of a minister of the gospel, gross income does not include— (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home. Having unsuccessfully sought refunds from the IRS based on section 107 they sued. The district court granted FFRF and its employees summary judgment, finding that the statute violates the Establishment Clause of the First Amendment. The Seventh Circuit reversed, applying the “Lemon” test. The law has secular purposes: it is one of many per se rules that provide a tax exemption to employees with work-related housing requirements; it is intended to avoid discrimination against certain religions in favor of others and to avoid excessive entanglement with religion by preventing the IRS from conducting intrusive inquiries into how religious organizations use their facilities. Providing a tax exemption does not “connote[] sponsorship, financial support, and active involvement of the [government] in religious activity.” FFRF offered no evidence that provisions like section 107(2) were historically viewed as an establishment of religion. View "Gaylor v. Peecher" on Justia Law

The Ninth Circuit affirmed the tax court's decision to sustain a deficiency against an estate for overstating the amount of a charitable deduction and to sustain an accuracy-related penalty. In Ahmanson Foundation v. United States, 674 F.2d 761, 772 (9th Cir. 1981), the panel underscored the principle that the testator may only be allowed a deduction for estate tax purposes for what was actually received by the charity. Applying Ahmanson, the panel held that the tax court correctly considered the difference between the deduction and the property actually received by the charity due to the executor's manipulation of the redemption appraisal value. The panel also found nothing in the record that suggested that the tax court's findings were clearly erroneous. Finally, there was no error in the tax court's holding that the commissioner properly imposed the accuracy-related penalty under I.R.C. 6662(a). View "Dieringer v. Commissioner" on Justia Law