Justia Tax Law Opinion Summaries

Detroit residents voted to allow the school district to increase property taxes “for operating expenses.“ In 2013, the Downtown Development Authority (DDA) announced its intent to capture some of that tax revenue to fund the construction of Little Caesars Arena for the Red Wings hockey team. In 2016, the DDA revised its plan to allow the Pistons basketball team to relocate to Arena. The Detroit Brownfield Redevelopment Authority (DBRA) agreed to contribute to the $56.5 million expenditure, including reimbursing construction costs that private developers had already advanced. The project is largely complete. Plaintiffs requested that the school board place on the November 2017 ballot a question asking voters to approve or disapprove of the agencies' use of tax revenue for the Pistons relocation. The board held a special meeting but did not put the question on the ballot. Plaintiffs filed suit. Count VIII sought a declaratory judgment that the board had authority to place the question on the ballot. Count IX sought a writ of mandamus ordering the board to place it on the ballot. The court dismissed Counts VIII and IX, noting that Plaintiffs could have filed suit in 2013. The Sixth Circuit affirmed. Plaintiffs lack Article III standing. Failure to place Plaintiffs’ question on the ballot affects all Detroit voters equally; they raised only a generally available grievance about government. Michigan statutes do not give Detroit residents the right to void a Tax Increment Financing plan by public referendum, so a referendum would not redress Plaintiffs’ injury. View "Davis v. Detroit Public School Community District" on Justia Law

Mendocino County Ballot Measure AI, which imposed a tax on commercial cannabis businesses, was approved by a simple majority of county voters. The trial court dismissed a challenge and denied plaintiffs’ motion for a preliminary injunction. The court of appeal affirmed, rejecting an argument that under a correct interpretation of article XIII of the California Constitution the tax imposed by Measure AI was not a general tax but, together with a related advisory measure, amounted to a special tax requiring approval by a supermajority of county voters. The court also rejected an alternative argument that Measure AI did not involve a tax at all, and instead imposed an unlawful fee. Because Measure AJ did not in any way limit the County’s ability to spend the proceeds collected under Measure AI, the tax necessarily and by its terms remained a general tax. View "Johnson v. County of Mendocino" on Justia Law

The City of Goose Creek (the City) collected a business license fee on persons doing business within the city limits. The amount of the fee was based upon a business's gross income from the preceding year. The issue on appeal before the South Carolina Supreme Court stemmed from Todd Olds' dispute with the City as to the meaning of "gross income" under the City's business license fee ordinance. Since Olds and the City differed on the definition of gross income, their calculations of the amount of the fee owed differed too. The circuit court ruled the City's definition of gross income was correct, and the court of appeals affirmed. The Supreme Court granted Olds a writ of certiorari to address whether the court of appeals erred in its interpretation of the term "gross income" as defined and used in the City's business license ordinance. Under the very narrow facts of this case, the Supreme Court reversed. Based on the plain language of this particular ordinance, the Court found the City adopted the definition of gross income as provided in section 61(a)(3) of the I.R.C. for Olds' particular business. For Olds' business, "gross income" therefore meant "[g]ains derived from dealings in property." For the years in dispute, Olds' business license fee had to be calculated according to Olds' gains derived from dealings in property. View "Olds v. City of Goose Creek" on Justia Law

In February 2016, Defendant Ricky Williams pled guilty to tax fraud relating to his preparation of federal income-tax returns for third-party clients for the 2010 and 2011 tax years. In his plea agreement, he agreed to pay restitution. After pleading guilty, he was initially released on bond pending sentencing. However, his release was revoked after the court discovered that he had been violating the terms of his release by again engaging in tax preparation activities for someone other than himself or his spouse. The probation officer who prepared his Presentence Investigation Report “determined that the defendant lied about his income, assets, and liabilities” to the probation officer. Among other things, the probation officer discovered several undisclosed financial transactions that Defendant had conducted with someone else’s social security number, and an attempt to unfreeze a bank account that contained approximately $37,000. The bank contacted the IRS. This lead to a sentence of thirty months in prison and an increased restitution amount to the IRS. A few months after Defendant’s sentencing, the government filed an application for post-judgment writ of garnishment against the frozen bank account. The bank objected on the grounds that the account was subject to “a prior internal USAA Federal Savings Bank hold from its Fraud Department." A magistrate judge concluded the government could not seek garnishment. The district court declined to accept the magistrate judge's recommendation pursuant to the terms of defendant's earlier restitution agreement. The Tenth Circuit found no error in the district court’s conclusion that the government was entitled to garnish Defendant’s bank account to obtain partial payment of the amount then-currently due in restitution. View "United States v. Williams" on Justia Law

Austin Ray was convicted by jury convictions for one count of conspiracy to defraud the United States, five counts of aiding in the preparation of a false tax return, and two counts of submitting a false tax return. Ray argued on appeal: (1) the government violated the Interstate Agreement on Detainers Act (IAD) of 1970; (2) the government engaged in vindictive prosecution; (3) the district court violated his rights under the Speedy Trial Act (STA) of 1974; (4) the government violated his due-process rights by destroying certain evidence; and (5) the district court constructively amended the indictment. The Tenth Circuit affirmed in all respects, finding: (1) the government never lodged a detainer against Ray, meaning the IAD didn’t apply; (2) Ray established neither actual nor presumptive vindictiveness; (3) Ray’s STA argument was waived for failing to raise it below; (4) the evidence at issue lacked any exculpatory value, and even if the evidence were potentially useful to Ray’s defense, the government didn’t destroy it in bad faith; and (5) the district court narrowed, rather than broadened, the charges against Ray. View "United States v. Ray" on Justia Law

In 2017, the Oregon legislature enacted a law that imposed a tax imposed on each vehicle dealer "for the privilege of engaging in the business of selling taxable motor vehicles at retail in this state.” The issue in this case was whether that tax was subject to Article IX, section 3a, of the Oregon Constitution. As relevant here, Article IX, section 3a, provided that taxes “on the ownership, operation or use of motor vehicles” “shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state.” Petitioners AAA Oregon/Idaho Auto Source, LLC (Auto Source), AAA Oregon/Idaho, and Oregon Trucking Associations, Inc. argued the Section 90 tax fell within paragraph (1)(b) because it was a tax “on the owner- ship *** of motor vehicles.” Specifically, petitioners contended that taxes “on the ownership *** of motor vehicles” included taxes levied on the exercise of any of the rights of ownership, including the rights to sell and use. Petitioners posited that the voters would have understood “the concept of ownership” to include “multiple segregable rights or incidents, principal among which were the rights to sell and to use,” and, therefore, it is likely that the voters would have understood taxes levied “on the ownership *** of motor vehicles” to include taxes levied on the sale or use of motor vehicles. The Oregon Supreme Court disagreed with petitioners' contention: the Section 90 and Section 91 taxes worked together, so that the Section 91 privilege tax could be imposed on in-state vehicle dealers without placing them at a competitive disadvantage to out-of-state vehicle dealers, which supported the conclusion that the Section 90 tax was a business privilege tax. Therefore, the Court held the Section 90 tax was not a tax “on the ownership, operation or use of motor vehicles,” as that phrase is used in Article IX, section 3a. View "AAA Oregon/Idaho Auto Source v. Dept. of Rev." on Justia Law

The Supreme Judicial Court held that an individual resident of Maine was not entitled to a Maine income tax credit for any portion of business taxes imposed by New Hampshire on a New Hampshire limited liability company of which the Maine resident was a member.Appellants, Maine residents, appealed from the judgment of the Business and Consumer Docket affirming the State Tax Assessor’s denial of a tax credit for a share of a New Hampshire business taxes paid by a New Hampshire LLC proportional to the membership interest that Appellants had in the LLC. The court reasoned that no income tax credit applied because (1) the New Hampshire business taxes were imposed on the LLC and were not an “amount of income tax imposed on [an] individual,” Me. Rev. Stat. 36, 5217-A; and (2) Maine’s tax statutes do not violate the Commerce Clause of the federal Constitution. The Supreme Judicial Court affirmed, holding (1) the lower court correctly interpreted Maine’s income tax statutes; and (2) the court did not err in concluding that Maine’s tax statutes are constitutionally sound. View "Goggin v. State Tax Assessor" on Justia Law

The Supreme Court held that the tax court erred in determining that the timeliness of an appeal of real property tax assessments was determined by county ordinance and not state law.Appellant filed a notice of appeal to the tax court for each of fourteen parcels challenging the City Council of the City and County of Honolulu’s assessment notices. The notices of appeal were filed the next business day following the deadline set by a county real property tax ordinance. The appeal deadline fell on a Sunday and was followed by a State holiday. The tax court dismissed the appeals, concluding that the county ordinance superseded the “weekend rule” established by Hawai’i state law. The Supreme Court vacated the tax court, holding (1) the City did not possess the constitutional authority to invalidate via an ordinance the statutory weekend rule as it applied to the tax court’s jurisdiction; and (2) therefore, Appellant’s notices of appeal were timely filed. View "Kalaeloa Ventures, LLC v. City & County of Honolulu" on Justia Law

The Eighth Circuit affirmed the tax court's dismissal of a petition for relief from a determination that petitioner owed additional employment tax. The court held that there was no actual controversy involving a determination that petitioner was an employee for Federal Insurance Contributions Act (FICA) purposes. Even assuming there was an actual controversy, it did not involve a determination that petitioner was an employee for FICA purposes. In this case, the only issue the Commissioner examined was the amount of remuneration for petitioner's services and this determination did not give the tax court jurisdiction. View "Martin S. Azarian, P.A. v. Commissioner" on Justia Law

The American Recovery and Reinvestment Act of 2009 provides a cash grant to entities that “place[] in service” certain renewable energy facilities. The amount is determined using the basis of the tangible personal property of the facility. Alta placed windfarm facilities into service and sought $703 million in grants. The government awarded $495 million. Alta filed suit, seeking an additional $206 million. The government counterclaimed, asserting that it had overpaid $59 million. The difference was attributable to the calculation of basis. The portion of the purchase prices attributable to grant-ineligible tangible property (real estate, transmission equipment, and buildings) must be deducted: Alta argued that the entire remainder can be allocated to grant-eligible tangible personal property, with none allocated to intangibles. The Claims Court found in favor of Alta, rejecting the government’s argument that basis must be calculated using the residual method of 26 U.S.C. 1060, which applies to the acquisition of a business. The court reasoned that no intangible goodwill or going concern value could have attached to the windfarms at the time of the transaction.The Federal Circuit vacated. The Alta purchase prices were well in excess of their development and construction costs (book value), and the transactions involved numerous related agreements, such as the leasebacks and grant-related indemnities. Goodwill and going concern value could have attached, so those assets constitute a “trade or business” within the meaning of section 1060; the transactions count as “applicable asset acquisitions.” View "Alta Wind v. United States" on Justia Law