Justia Tax Law Opinion Summaries

The Court of Appeals affirmed the order of the Appellate Division determining that certain telecommunications equipment was taxable property pursuant to N.Y. Real Prop. Tax Law (RPTL) 102(12)(i), holding that the Appellate Division properly found that the equipment was taxable under the statute.The equipment at issue was certain large cellular data transmission equipment owed by T-Mobile Northeast, LLC and mounted to the exterior of buildings throughout T-Mobile’s service area in Mount Vernon. T-Mobile brought this hybrid declaratory judgment action and N.Y. C.P.L.R. 78 proceeding seeking a declaration that the property was not taxable. Supreme Court dismissed the proceeding, holding that the property was taxable under the RPTL. The Appellate Division affirmed. The Court of Appeals affirmed, holding that T-Mobile’s arguments on appeal lacked merit. View "T-Mobile Northeast, LLC v. DeBellis" on Justia Law

The Supreme Court reversed the district court’s order granting summary judgment in favor of Plaintiffs, holding that the Tax Credit Program, which provides a taxpayer a dollar-for-dollar tax credit based on the taxpayer’s donation to a Student Scholarship Organization (SSO), violates Mont. Const. art. X, 6.SSOs fund tuition scholarships for students who attend private schools meeting the definition of Qualified Education Provider (QEP). Pursuant to its authority to implement the Tax Credit Program, Mont. Code Ann. 15-30-3111, the Montana Department of Revenue implemented Admin. R. M. 42.4.802 (Rule 1), which excluded religiously-affiliated private schools from qualifying as QEPs. Plaintiffs, parents whose children attended a religious-affiliated private school, challenged Rule 1. The district court granted summary judgment for Plaintiffs. The Supreme Court affirmed, holding that the Tax Credit Program violates Article X, Section 6’s prohibition on aid to sectarian schools and that the Department exceeded the scope of its rulemaking authority when it enacted Rule 1. View "Espinoza v. Montana Department of Revenue" on Justia Law

Appellant the School District of Lower Merion challenged a Commonwealth Court decision to quash its appeal of the grant of an injunction. Appellees were residents and taxpayers of Lower Merion Township, Montgomery County, Pennsylvania, who filed a multi-count, putative class action complaint against Appellant which asserted grievances about “proliferate spending and tax increases.” Appellees sought money damages in excess of $55,000,000 and the appointment of a trustee to undertake the responsibilities of the school board members. The amended complaint also contained a count seeking equitable relief, primarily in the form of court-supervised modifications of the procedures employed by the District’s administrators. Appellees submitted a “Petition for Injunctive Relief” seeking “immediate relief because without this [c]ourt’s intervention, the District will raise taxes and the bills for the same will go out July 1, 2016 to some 22,000 taxpayers.” Significantly, consistent with the prayer for immediate relief, the petition reflected criteria associated with a preliminary injunction, including an assertion of irreparable harm to the plaintiffs. In its written response, the District made clear -- consistent with the procedural posture of the case, the request for immediate relief, and the assertion of irreparable harm -- that it believed that Appellees were seeking a preliminary injunction, and the District proceeded to address Appellees’ petition on such terms. The dispute before the Pennsylvania Supreme Court centered on whether a post-trial motion was required, or whether the appellant was entitled to proceed with an interlocutory appeal as of right under Rule of Appellate Procedure 311(a)(4). The Supreme Court determined the common pleas court did not dispose of all claims for relief in its “Decision/Order”; therefore, “the decision” of the case was not rendered for purposes of Rule 227.1, and no post-trial motions were implicated under that rule. Rather, the District enjoyed the right to lodge an interlocutory appeal as of right under Rule of Appellate Procedure 311(a)(4). The Court reversed the Commonwealth Court's judgment holding to the contrary, and remanded this case for consideration of the merits of the District's interlocutory appeal filed as of right. View "Wolk v. Lower Merion SD" on Justia Law

The Fourth Circuit affirmed the tax court's imposition of back taxes and penalties attributable to taxpayers' use of an unlawful tax shelter. In this case, taxpayers claimed in their 2000 tax return substantial capital losses attributable to a Custom Adjustable Rate Debt Structure (CARDS) transaction. The court held that the tax court did not abuse its discretion in rejecting taxpayers' Daubert challenge; the tax court did not clearly err in finding that taxpayers' CARDS transaction failed both the subjective and objective prongs of the economic substance test; and the tax court properly found that taxpayers failed to establish reasonable cause and good faith for claiming losses based on the CARDS transaction. View "Baxter v. Commissioner" on Justia Law

This appeal stemmed from an attempt by Starr, a Swiss-domiciled company, to avail itself of a bilateral tax treaty between the United States and Switzerland to reduce its tax rate on U.S.-source dividend income. The DC Circuit reversed the district court's dismissal of Starr's tax refund claim as raising a nonjusticiable political question and remanded for further proceedings. The court explained that the question as to whether the IRS properly found Starr ineligible for treaty benefits under Article 22(6) of the Treaty did not raise a political question.Because Starr could proceed with its tax refund claim, the court held that Starr did not have a cause of action under the Administrative Procedure Act (APA). Rather, the claim was properly brought under 26 U.S.C. 7422. Therefore, the court vacated the district court's decision as to the APA claim and remanded with instructions to dismiss the claim. View "Starr International Co. v. United States" on Justia Law

After CIC entered into a tax avoidance scheme and claimed over $27 million in capital losses, the IRS issued a Final Partnership Administrative Adjustment (FPAA) disallowing CIC's claimed capital loss and fee deductions on its 2000 tax return. The IRS also applied a gross valuation misstatement penalty pursuant to 26 U.S.C. 6662 and 6664.The Eleventh Circuit affirmed the tax court's judgment upholding the IRS's decisions. The court held that the tax court did not err in concluding that CIC's CARDS transaction lacked economic substance or business purpose, nor in finding that CIC was liable for a 40% gross valuation misstatement penalty for its 2000 tax return. The court also held that the tax court did not clearly err in determining that CIC lacked reasonable cause and good faith in making an understatement on its 2000 tax return. View "Curtis Investment Co., LLC v. Commissioner" on Justia Law

At issue before the Mississippi Supreme Court in this case was whether NRG Wholesale Generation’s proffered expert used an acceptable method to determine the “true value” of its power plant in computing ad valorem tax. The expert used a mixture of the sales-comparison approach, the income approach, and the cost approach to determine the true value of the facility. Lori Kerr, the tax assessor for Choctaw County, and Choctaw County, Mississippi (collectively, the “County”), contended that Mississippi law mandates a trended historical cost-less-depreciation approach to calculate the true value of industrial personal property. The circuit court found in favor of the County and excluded NRG’s proffered expert testimony. NRG argued the circuit court abused its discretion. In addition, NRG also argued the circuit court erred in denying its motion to change venue because because many of the jurors knew the county officials named as defendants in this case, a fair trial in Choctaw County was impossible. The Supreme Court held the Mississippi Department of Revenue (the “DOR”) regulation controlled and that NRG’s expert applied an unacceptable method to determine true value. Therefore, the circuit court did not err in excluding NRG’s proffered expert testimony. Additionally, because NRG was afforded a fair and impartial jury, the circuit court did not abuse its discretion in denying the motion to change venue. View "NRG Wholesale Generation LP v. Kerr" on Justia Law

Plaintiffs Ivan Smith, Jr. and Gloria G. Smith (collectively “Taxpayers”), were Louisiana residents and part owners of several limited liability companies (“LLC”) and Subchapter S corporations (“S corporation”) that transacted business in Texas, Arkansas, and Louisiana. Taxpayers filed suit seeking recovery of income taxes paid under protest against Defendant Kimberly Robinson, in her capacity as Secretary of the Department of Revenue of the State of Louisiana (the “Department”). . At issue was whether Act 109, which amended La.R.S. 47:33, a state income tax statute that provides a credit to taxpayers for income taxes paid in other states, violated the dormant Commerce Clause of the United States Constitution. After review, the Louisiana Supreme Court concurred with the trial court that Act 109 violated the dormant Commerce Clause of the United States Constitution. View "Smith v. Robinson" on Justia Law

The Supreme Court reversed the decision of the Tax Court determining that Richardson’s RV owed no Indiana sales tax because it took RVs it sold to certain out-of-state customers into Michigan before handing over the keys, holding that Richardson’s structured the Michigan deliveries solely to avoid taxes with no other legitimate business purpose.After an audit, the Department of Revenue issues proposed assessments to Richardson’s totaling nearly $250,000 in unpaid taxes and interest for the Michigan deliveries and deliveries to other states. The Tax Court granted summary judgment for Richardson’s, concluding that Indiana’s exemption statute did not apply to any of these transactions because, as a matter of law, the sales transactions at issue were not made ‘in Indiana.’” The Supreme Court reversed and remanded the case, holding (1) the Michigan deliveries were subject to sales tax because Richardson’s executed the Michigan deliveries solely to avoid paying Indiana sales tax with no other legitimate business purpose; and (2) the Tax Court must determine if the non-Michigan deliveries were taxable. View "Richardson's RV, Inc. v. Indiana Department of State Revenue" on Justia Law

The Supreme Court affirmed the decision of the tax court upholding the decision of the Commissioner of Revenue to include Pell grants in its calculation of Relators’ household income, holding that “nontaxable scholarship or fellowship grants” as used in Minn. Stat. 290A.03(3)(a)(2)(xiii) is plain and unambiguous and includes Pell grants.Household income is used to determine eligible for, and the amount of, a property tax income and includes “nontaxable scholarship or fellowship grants.” Relators argued that Pell grants are not scholarships or fellowships and therefore cannot be included in the income calculation made to determine the amount of the property tax refund. The Supreme Court disagreed, holding that Pell grants are nontaxable and therefore includable in calculating household income. View "Waters v. Commissioner of Revenue" on Justia Law