Justia Tax Law Opinion Summaries

The Georgia Department of Revenue denied New Cingular Wireless PCS, LLC; Chattanooga MSA LP; Georgia RSA No. 3, LP; and Northeastern Georgia RSA Limited Partnership (collectively “AT&T”) a tax refund. The appellants alleged that from November 1, 2005 until September 7, 2010, they sold wireless Internet access services to Georgia customers, which were exempt from state sales tax under OCGA 48-8-2. In November 2010, the appellants filed refund claims with the Department for sales tax that they claimed was, until September 2010, erroneously charged to Georgia customers on the purchase of wireless Internet access service. The Department officially refused to pay the requested refund claims. On April 17, 2015, the appellants filed their complaint to challenge this denial. The Department answered and moved to dismiss for a lack of subject-matter jurisdiction and the failure to state a claim, because: (1) appellants did not reimburse the alleged illegally collected sales tax to customers before seeking a refund from the Department, in violation of Department Regulation 560-12-1-.25; (2) the appellants lacked standing to file sales-tax-refund claims on behalf of customers for periods prior to May 5, 2009; and (3) the action was barred by Georgia class-action law. Following a hearing on the motion to dismiss, the trial court granted it on all three grounds. The Court of Appeals affirmed. The Georgia Supreme Court granted certiorari review to determine whether Ga. Comp. R. & Regs. R. 560-12-1-.25 (2) properly required a dealer seeking a sales tax refund reimburse its customer before applying for a refund from the Department of Revenue. The Supreme Court determined this was not a requirement, and that the Court of Appeals’ opinion had to be vacated in part and reversed in part, and that the case remanded with direction. View "New Cingular Wireless PCS, LLC v. Georgia Dept. of Revenue" on Justia Law

The Ninth Circuit affirmed the district court's judgment in an action under 42 U.S.C. 1983, challenging the constitutionality of California Revenue and Tax Code 19195, which establishes a public list of the top 500 delinquent state taxpayers, and California Business and Professions Code 494.5, which provides for suspension of the driver's license of anyone on the top 500 list. The panel held that taxpayer was not deprived of procedural due process and rejected taxpayer's claim that he had an inadequate opportunity to be heard prior to license revocation; taxpayer was not deprived of substantive due process and the panel rejected his claims that the statutory scheme impermissibly burdened his right to choose a profession and that the scheme was retroactive; taxpayer's equal protection claim failed because there was a rational basis for state action against a citizen for failing to pay two years' worth of past-due taxes; and the panel rejected taxpayer's claim that the combined effect of the challenged statutes was to single out the largest 500 tax debtors for legislative punishment, amounting to a bill of attainder View "Franceschi v. Yee" on Justia Law

The First Circuit reversed the decision of the Tax Court ruling that Appellants owed an excise tax for contributions made to their Roth individual retirement accounts (Roth IRAs) in violation of contribution limits, holding that a transaction Appellants entered into to reduce their federal taxes violated neither the letter nor purpose of the relevant statutory provisions.Specifically, the Tax Court found that the Commissioner of Internal Revenue appropriately recharacterized the transaction at issue under the common-law substance over form doctrine because the transaction’s sole purpose was to “shift[] millions of dollars into Roth IRAs in violation of the statutory contribution limits.” The First Circuit reversed, holding that the Commissioner did not have the power to call Appellants’ transaction a violation of the Tax Code where the transaction did not violate the plain intent of the relevant statutes. View "Benenson v. Commissioner of Internal Revenue" on Justia Law

Plaintiff 1901 First Street Owner, LLC (First Street), appealed a judgment which interpreted the meaning and application of Government Code section 65995 (b)(1), in a manner favorable to defendant Tustin Unified School District (the District). First Street developed an apartment complex. The underlying dispute arose after the City of Santa Ana (the City) had calculated the square footage of the development for purposes of assessing a school impact fee. The District disputed the City’s method of calculating the assessable space and filed an administrative appeal. Before that appeal was resolved, the City revised its calculation in the District’s favor, prompting First Street to file an administrative appeal. First Street prevailed in its administrative appeal and subsequently filed the present lawsuit against the District, alleging various tort causes of action and seeking declaratory relief and a writ of mandate ordering the District to refund the excess school fees. The court dismissed the tort claims pursuant to an anti-SLAPP motion, which the Court of Appeal affirmed in a separate appeal. The case proceeded on the declaratory relief claim and writ petition, as well as a cross-complaint by the District for an administrative writ of mandate. The court found in favor of the District, and First Street appealed. At issue was whether the square footage of interior space outside the individual apartment units should have been included in the calculation of school impact fees. Finding no reversible error, the Court of Appeal affirmed the judgment in favor of the District. View "1901 First Street Owner v. Tustin Unified School District" on Justia Law

The Supreme Court reversed the circuit court’s order granting Defendants’ motion to dismiss Plaintiff’s refund action pursuant to Ark. R. Civ. P. 12(b)(8) based on the doctrine of res judicata, holding that res judicata did not bar Plaintiff’s suit.After receiving the Faulkner County Assessor’s valuation of its personal property, Plaintiff challenged the assessments. The Faulkner County Board of Equalization upheld the assessments, as did the Faulkner County Court. The circuit court dismissed Plaintiff’s valuation appeal for lack of subject matter jurisdiction. During the discovery process in the valuation appeal, Plaintiff learned of errors regarding the issues in the first complaint. Plaintiff then filed a claim in the Faulkner County Court for a refund of its 2012 ad valorem taxes under Ark. Code Ann. 26-35-901 based on an erroneous assessment of its personal property and on the taxation of its exempt intangible property. The county court dismissed the refund action under Ark. R. Civ. P. 12(b)(8) because the earlier case involved the same parties and arose out of the same occurrence. Plaintiff appealed. The circuit court dismissed the refund action, finding that the refund claims were precluded by res judicata. The Supreme Court reversed, holding that because the valuation appeal was dismissed for lack of subject-matter jurisdiction, there was no valid judgment in that case by a court with proper jurisdiction, and all of the required elements of claim preclusion were not satisfied. View "Desoto Gathering Co. v. Hill" on Justia Law

Spireas earned $40 million in technology license royalties in 2007-2008s. Royalties paid under a license agreement are usually taxed as ordinary income at 35 percent but Spireas claimed capital gains treatment (15 percent) under 26 U.S.C. 1235(a), which applies to money received “in consideration of” “[a] transfer . . . of property consisting of all substantial rights to a patent.” The IRS disagreed and gave Spireas notice of a $5.8 million deficiency for the two tax years. The Tax Court and Third Circuit affirmed. To qualify for automatic capital-gains treatment, income must be paid in exchange for a “transfer of property” that consists of “all substantial rights” to a “patent.” Not every transfer of “rights” qualifies because the statute grants capital gains treatment only to transfers of property. Spireas’s original theory was that he reduced the formulation to practice in 2000, giving him the required property interest, and later assigned his interest. Spireas later abandoned that theory, arguing that he transferred his rights prospectively in 1998. Because that was two years before the invention of the formulation, Spireas’s second position cannot depend on the legal standard of reduction to actual practice to establish that he held a property right at the time of transfer. Spireas’s sole claim on appeal was, therefore, waived. View "Spireas v. Commissioner of Internal Revenue" on Justia Law

The Railroad Revitalization and Regulatory Reform Act prohibits states from imposing a tax that discriminates against a rail carrier. 49 U.S.C. 11501(b)(4). The Eleventh Circuit held that Alabama's tax scheme, which imposes either a sales or use tax on rail carriers when they buy or consume diesel fuel but exempts competing motor and water carriers from those taxes, violates the Act as to water carriers, but not to motor carriers. The court held that the district court correctly concluded that the excise tax was roughly equivalent to the sales and use tax and thus the excise tax justified the motor carrier sales-tax exemption. However, unlike the motor carrier exemption, the State could offer no rough equivalency justification for the water carrier exemption because water carriers pay no state taxes at all when they buy or consume diesel. View "CSX Transportation, Inc. v. Alabama Department of Revenue" on Justia Law

The Railroad Revitalization and Regulatory Reform Act prohibits states from imposing a tax that discriminates against a rail carrier. 49 U.S.C. 11501(b)(4). The Eleventh Circuit held that Alabama's tax scheme, which imposes either a sales or use tax on rail carriers when they buy or consume diesel fuel but exempts competing motor and water carriers from those taxes, violates the Act as to water carriers, but not to motor carriers. The court held that the district court correctly concluded that the excise tax was roughly equivalent to the sales and use tax and thus the excise tax justified the motor carrier sales-tax exemption. However, unlike the motor carrier exemption, the State could offer no rough equivalency justification for the water carrier exemption because water carriers pay no state taxes at all when they buy or consume diesel. View "CSX Transportation, Inc. v. Alabama Department of Revenue" on Justia Law

Pursuant to Mississippi Code Section 27-35-119 (Rev. 2017), Natchez Hospital Company, LLC, (“Hospital”) filed a Complaint and Petition For Reduction of Assessment on Software. This ad valorem assessment was made by the Adams County Board of Supervisors (“Board”). Prior to appealing to the circuit court, the Hospital paid the ad valorem taxes as assessed. The Board filed a motion to dismiss for lack of jurisdiction, arguing that the Hospital had failed to post the necessary appeal bond required by Mississippi Code Section 11-51-77 (Rev. 2012), thus depriving the circuit court of jurisdiction. Following a hearing on the motion, the circuit court determined that the Hospital’s failure to post the bond under Section 11-51-77 deprived the court of jurisdiction to hear the appeal and granted the Board’s motion to dismiss. The Hospital appealed the circuit court’s decision to dismiss the case, asking only whether the bond requirement of Mississippi Code Section 11-51-77 was mandatory to confer jurisdiction on a circuit court to hear an appeal from a decision of a board of supervisors regarding an assessment of taxes. The Mississippi Supreme Court determined the Hospital paid the tax, but that was no excuse for not posting the bond to give the trial court jurisdiction to hear its complaint. Therefore, the Supreme Court affirmed dismissal of the Hospital’s case. View "Natchez Hospital Company, LLC v. Adams County Board of Supervisors" on Justia Law

Ky. Const. section 170 does not exempt a qualifying charitable institution from the use tax imposed by Ky. Rev. Stat. 139.310.The Finance and Administration Cabinet’s Department of Revenue, the Board of Tax Appeals, and the circuit court concluded that the section 170 constitutional exemption speaks only to ad valorem property taxes and does not relieve a “public charity” from the use tax imposed by section 139.310. The court of appeals disagreed, ruling that the use tax imposed under section 139.310 is similar enough to an ad valorem tax to render its enforcement on governmental entities unconstitutional under section 170. The Supreme Court reversed, holding (1) section 170 of the Kentucky Constitution provides for exemptions from property taxes only; and (2) the holding in Commonwealth ex rel. Luckett v. City of Elizabethtown, 435 S.W.2d 78 (Ky. 1968), that the section 170 exemption applies to the use tax is not sustainable. View "Commonwealth, Finance & Administration Cabinet, Department of Revenue v. Interstate Gas Supply Inc." on Justia Law