Justia Tax Law Opinion Summaries

The North Carolina Department of Revenue (Defendant) unconstitutionally taxed the income of The Kimberly Rice Kaestner 1992 Family Trust (Plaintiff) pursuant to N.C. Gen. Stat. 105-160.2 based solely on the North Carolina residence of the beneficiaries during certain tax years because Plaintiff did not have sufficient minimum contacts with the State of North Carolina to satisfy the due process requirements of the state and federal Constitutions.Plaintiff filed a complaint alleging that Defendant wrongfully denied Plaintiff’s request for a refund because the taxes collected pursuant to section 105-160.2 violate the due process clause. The North Carolina Business Court concluded that the provision of section 105-160.2 allowing taxation of a trust income “that is for the benefit of a resident of this State” violated both the Due Process Clause and N.C. Const. art. I, 19, as applied to Plaintiff. The court therefore granted Plaintiff’s motion for summary judgment. The court of appeals affirmed. The Supreme Court affirmed, holding (1) section 105-160.2 is unconstitutional as applied to collect income taxes from Plaintiff for the tax years at issue; and (2) therefore, summary judgment was properly granted for Plaintiff. View "Kaestner 1992 Family Trust v. North Carolina Department of Revenue" on Justia Law

Because N.Y. Tax Law 471, which imposes requirements on Indian retailers located on reservation land to pre-pay the tax on cigarette sales to individuals who are not members of the Seneca Nation of Indians, does not operate as a direct tax on the retailers or upon members of the Seneca Nation, it does not conflict with either the Buffalo Creek Treaty of 1842 or N.Y. Indian Law 6.Plaintiffs brought this action seeking a declaration that Tax Law 471 is unconstitutional and a permanent injunction enjoining Defendants from enforcing the law against them. Supreme Court dismissed the complaint for failure to state a cause of action. The Appellate Division reinstated the complaint to the extent it sought a declaration and then granted judgment in favor of Defendants. The Court of Appeals affirmed, holding (1) Tax Law 471 does not constitute a tax on an Indian retailer; and (2) therefore, Tax Law 471 does not violate the plain language of the Treaty or Indian Law 6. View "White v. Schneiderman" on Justia Law

The Eighth Circuit affirmed defendant's conviction of evasion of payment of taxes and corruptly endeavoring to impede enforcement of Internal Revenue laws. The court held that the district court adequately warned defendant of the dangers of self-representation and did not err in finding that he understood them and knowingly waived his right to counsel. The court also held that the district court did nor err giving Eighth Circuit Pattern Jury Instruction No. 2.23, which instructs the jury that where a defendant represents himself, it may only consider his testimony as evidence. View "United States v. Stanley" on Justia Law

The Miccosukee Indian Tribe and one of its members raised an affirmative defense that revenue distributions from gaming activities were exempt from taxation as Indian general welfare benefits under the Tribal General Welfare Exclusion Act (GWEA), 26 U.S.C. 139E. The Eleventh Circuit held that the distribution payments could not qualify as Indian general welfare benefits under GWEA because Congress specifically subjected such distributions to federal taxation in the Indian Gaming Revenue Act (IGRA), 25 U.S.C. 2701 et seq.; the member waived any arguments as to penalties or the amount assessed against her, and the tribe lacked a legal interest in those issues; and the district court did not err in entering judgment against the tribe because the tribe intervened as of right and the Government sought to establish its obligation to withhold taxes on the distributions. View "United States v. Jim" on Justia Law

The Miccosukee Indian Tribe and one of its members raised an affirmative defense that revenue distributions from gaming activities were exempt from taxation as Indian general welfare benefits under the Tribal General Welfare Exclusion Act (GWEA), 26 U.S.C. 139E. The Eleventh Circuit held that the distribution payments could not qualify as Indian general welfare benefits under GWEA because Congress specifically subjected such distributions to federal taxation in the Indian Gaming Revenue Act (IGRA), 25 U.S.C. 2701 et seq.; the member waived any arguments as to penalties or the amount assessed against her, and the tribe lacked a legal interest in those issues; and the district court did not err in entering judgment against the tribe because the tribe intervened as of right and the Government sought to establish its obligation to withhold taxes on the distributions. View "United States v. Jim" on Justia Law

During the savings-and-loan crisis in the 1970s and 1980s, many “thrift” institutions failed. The Federal Savings and Loan Insurance Corporation, as insurer and regulator, encouraged healthy thrifts to take over failing ones in “supervisory mergers.” FSLIC provided incentives, including allowing acquiring thrifts to operate branches in states other than their home states and “RAP” rights. Regulations mandated that each thrift maintain a minimum capital of at least 3% of its liabilities, an obstacle for healthy thrifts acquiring failing ones. RAP permitted acquiring thrifts to use Generally Accepted Accounting Principles to treat failing thrifts’ excess liabilities as “supervisory goodwill,” which could be counted toward the acquiring thrifts’ minimum regulatory capital requirement and amortized over 40 years. Home Savings entered into supervisory mergers. Branching and RAP rights are considered intangible assets for tax purposes and are generally subject to abandonment loss and amortization deductions. In 2008, Home’s successor, WMI, sought a refund for tax years 1990, 1992, and 1993 based on the amortization of RAP rights and the abandonment of Missouri branching rights, proffering valuation testimony from its expert, Grabowski, about fair market value. The Ninth Circuit found WMI did “not prove[], to a reasonable degree of certainty, Home’s cost basis in the Branching and RAP rights.” WMI also filed suit in the Claims Court, seeking a refund for tax years 1991, 1994, 1995, and 1998, based on the amortization of RAP rights and the abandonment of Florida, Illinois, New York, and Ohio branching rights, with a valuation report from Grabowski. The Federal Circuit affirmed the Claims Court's rejection of the claims; Grabowski’s assumptions about the nature of RAP rights were inconsistent with market realities and, at times, unsupported. View "WMI Holdings Corp. v. United States" on Justia Law

During the savings-and-loan crisis in the 1970s and 1980s, many “thrift” institutions failed. The Federal Savings and Loan Insurance Corporation, as insurer and regulator, encouraged healthy thrifts to take over failing ones in “supervisory mergers.” FSLIC provided incentives, including allowing acquiring thrifts to operate branches in states other than their home states and “RAP” rights. Regulations mandated that each thrift maintain a minimum capital of at least 3% of its liabilities, an obstacle for healthy thrifts acquiring failing ones. RAP permitted acquiring thrifts to use Generally Accepted Accounting Principles to treat failing thrifts’ excess liabilities as “supervisory goodwill,” which could be counted toward the acquiring thrifts’ minimum regulatory capital requirement and amortized over 40 years. Home Savings entered into supervisory mergers. Branching and RAP rights are considered intangible assets for tax purposes and are generally subject to abandonment loss and amortization deductions. In 2008, Home’s successor, WMI, sought a refund for tax years 1990, 1992, and 1993 based on the amortization of RAP rights and the abandonment of Missouri branching rights, proffering valuation testimony from its expert, Grabowski, about fair market value. The Ninth Circuit found WMI did “not prove[], to a reasonable degree of certainty, Home’s cost basis in the Branching and RAP rights.” WMI also filed suit in the Claims Court, seeking a refund for tax years 1991, 1994, 1995, and 1998, based on the amortization of RAP rights and the abandonment of Florida, Illinois, New York, and Ohio branching rights, with a valuation report from Grabowski. The Federal Circuit affirmed the Claims Court's rejection of the claims; Grabowski’s assumptions about the nature of RAP rights were inconsistent with market realities and, at times, unsupported. View "WMI Holdings Corp. v. United States" on Justia Law

Neither Nev. Rev. Stat. 361.227(2)(b) nor Nev. Rev. Stat. 361.227(5)(c) required the Washoe County Assessor to value fully developed but unsold condominium units as a single unit or to apply the discounted cash flow method to determine their full cash value.The State Board of Equalization found that the county assessor properly assessed each unsold condominium unit at issue based on its retail price. On appeal, Appellant argued that because the condominium building qualified as a subdivision, the unsold condominium units should have been valued together as a single unit and discounted to determine the net sellout or wholesale value to a single buyer. The district court upheld the State Board’s decision. The Supreme Court affirmed, holding that the State Board did not apply a fundamentally wrong principle in assessing the condominiums as individual units and utilizing the sales comparison method to ensure that the taxable value did not exceed the full cash value. View "Montage Marketing, LLC v. Washoe County ex rel. Washoe County Board of Equalization" on Justia Law

Neither Nev. Rev. Stat. 361.227(2)(b) nor Nev. Rev. Stat. 361.227(5)(c) required the Washoe County Assessor to value fully developed but unsold condominium units as a single unit or to apply the discounted cash flow method to determine their full cash value.The State Board of Equalization found that the county assessor properly assessed each unsold condominium unit at issue based on its retail price. On appeal, Appellant argued that because the condominium building qualified as a subdivision, the unsold condominium units should have been valued together as a single unit and discounted to determine the net sellout or wholesale value to a single buyer. The district court upheld the State Board’s decision. The Supreme Court affirmed, holding that the State Board did not apply a fundamentally wrong principle in assessing the condominiums as individual units and utilizing the sales comparison method to ensure that the taxable value did not exceed the full cash value. View "Montage Marketing, LLC v. Washoe County ex rel. Washoe County Board of Equalization" on Justia Law

At issue was whether the Ohio use tax applied to Lafarge North America, Inc.’s purchases of fuel and repair parts for equipment used to break up and transport solidified slag, a by-product from molten ore during steelmaking, from the “slag mountain," a large slag mass. Whether the tax applied depended on whether the activity was part of Lafarge’s “manufacturing operation” under Ohio Rev. Code 5739.02(B)(42)(g).The Department of Taxation assessed a use tax and penalty against Lafarge for purchases for the equipment at issue. Lafarge challenged the assessment. The tax commissioner determined that the breaking up and transport of slag from the slag mountain preceded Lafarge’s manufacturing operation and that equipment used to move raw materials prior to the start of the manufacturing process was taxable. The Board of Tax Appeals affirmed the tax assessment and penalty. The Supreme Court reversed, holding that Lafarge’s manufacturing operation began once Lafarge cut slag from the mountain and continued as the material was crushed, placed in dump trucks, and transported to a screening plant. View "Lafarge North America, Inc. v. Testa" on Justia Law