Justia Tax Law Opinion Summaries

San Diego Gas & Electric Company (SDG&E) owns an interstate electric transmission line running from Arizona to California. The Arizona Department of Revenue (ADOR) is responsible for valuing SDG&E's property in Arizona for tax purposes. In 2020, SDG&E reported a net "original plant in service" valuation of $48,817,396 and a net "related accumulated provision for depreciation" amount of $51,446,397, resulting in a negative valuation of $2,629,001. ADOR disagreed with this calculation and determined a different accumulated depreciation amount, resulting in a positive valuation.The Arizona Tax Court granted summary judgment in favor of SDG&E, finding that their valuation correctly followed the statutory requirements. ADOR appealed, and the Arizona Court of Appeals reversed the Tax Court's decision, holding that the statute did not permit a negative valuation for a plant in service and that accumulated depreciation could not reduce the full cash value to a negative number. The Court of Appeals remanded the case for further proceedings.The Arizona Supreme Court reviewed the case and held that the calculation prescribed by the statute for determining a reduced plant in service cost does not preclude a negative valuation. The Court found that the statutory language did not limit the reduction of the original plant in service cost by accumulated depreciation to a non-negative number. Additionally, the Court clarified that a negative valuation for one component, when summed with other component valuations, reduces the overall full cash value but does not "offset" the valuation of other components. The Supreme Court vacated the relevant portions of the Court of Appeals' opinion and affirmed the Tax Court's grant of summary judgment in favor of SDG&E. View "San Diego Gas & Electric Co. v. Arizona Department of Revenue" on Justia Law

An individual, referred to as "Client," became the target of a criminal investigation into alleged tax evasion. The grand jury issued a subpoena to Client, who invoked his Fifth Amendment privilege against self-incrimination and refused to produce documents. Subsequently, the grand jury subpoenaed the law firm that had represented Client in tax matters, requesting documents related to that representation and instructing the firm to provide a privilege log if any documents were withheld. The law firm declined to produce certain documents or provide a privilege log, citing attorney-client privilege, the work-product doctrine, and Client’s Fifth Amendment rights.The United States District Court for the Central District of California ordered the law firm to provide the Government with a privilege log, rejecting the firm's assertion of Client’s Fifth Amendment rights. The district court temporarily stayed enforcement of its order, and Client filed an interlocutory appeal.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that an attorney cannot be compelled to provide the Government with a privilege log of documents protected under Fisher v. United States, 425 U.S. 391 (1976). The court explained that providing a privilege log would reveal the existence, authenticity, and Client’s custody of the documents, thus undermining Client’s Fifth Amendment act-of-production privilege. The court determined that to assess whether the documents are indeed protected under Fisher, the district court should conduct an in camera review.The Ninth Circuit reversed the district court’s order and remanded the case for further proceedings, instructing the district court to conduct an in camera review to determine the applicability of the Fisher privilege. View "In re Grand Jury Subpoena, Dated July 21, 2023" on Justia Law

The plaintiffs, property owners in Danbury, Connecticut, challenged the tax assessments on their properties, each valued at over one million dollars, by appealing to the Superior Court. They were required by statute to file appraisals of their properties within 120 days of filing their appeals. The plaintiffs requested extensions to this deadline, which the court granted. However, they failed to file the appraisals with the court by the extended deadlines, although they did provide the appraisals to the defendant's counsel.The trial court initially dismissed five of the six tax appeals for failure to meet the filing deadline, concluding it lacked subject matter jurisdiction. The court later granted the plaintiffs' motions to open the judgments of dismissal and for reargument, citing similar cases where the court had not dismissed appeals under similar circumstances. The court denied the defendant's corrected motion to dismiss the sixth appeal, finding no prejudice to the defendant from the late filing.The defendant appealed to the Connecticut Supreme Court, arguing that the trial court lacked subject matter jurisdiction due to the plaintiffs' failure to timely file the appraisals. The plaintiffs contended that the appeal was moot because they had filed new tax appeals under a recent statutory amendment allowing for such actions if previous appeals were dismissed under certain conditions.The Connecticut Supreme Court held that the appeal was not moot, as the underlying appeals were not "dismissed" for purposes of the new statutory provision, given that the judgments of dismissal had been opened. The court further held that the appraisal filing requirement in § 12-117a (a) (2) is not subject matter jurisdictional. The requirement is mandatory but arises after the commencement of a tax appeal, and the time period for filing the appraisal can be extended by the court for good cause. The judgments of the Superior Court were affirmed. View "7 Germantown Road, LLC v. Danbury" on Justia Law

The case involves James B. Church & Associates, P.C. (the Church Firm), which served as legal counsel for Dennis Shogren, the personal representative of the estate of Loren R. Kirk, in a probate action. The estate beneficiaries, including Barbara Sagehorn and the Carter Beneficiaries, alleged that the Church Firm negligently failed to file a protective claim for a refund with the IRS or advise Shogren to do so. This failure purportedly resulted in the estate missing out on a potential $5,000,000 tax refund.The Superior Court of San Bernardino denied the Church Firm's special motion to strike the causes of action under the anti-SLAPP statute. The court found that the firm did not demonstrate that the causes of action arose from its constitutionally protected free speech or petitioning activities. The Church Firm appealed this decision.The Court of Appeal, Fourth Appellate District, Division One, State of California, reviewed the case. The court conducted an independent review and agreed with the lower court's ruling. It determined that the alleged acts forming the basis of the petitioners' causes of action—specifically, the Church Firm's failure to file a protective claim for a refund and failure to advise Shogren to file such a claim—were not protected activities under the anti-SLAPP statute. The court emphasized that the anti-SLAPP statute protects statements or writings made before or in connection with an issue under consideration by a judicial body, not failures to act or speak.Therefore, the Court of Appeal affirmed the order denying the anti-SLAPP motion, concluding that the Church Firm did not meet its burden of proving that the causes of action arose from protected conduct. View "Callister v. James B. Church & Associates" on Justia Law

The case involves a dispute between partners in a limited partnership formed to develop and operate an affordable housing project in Boston. The financing and structure of the project were driven by the Low Income Housing Tax Credit (LIHTC) program, which incentivizes private investment in affordable housing through tax credits. The partnership agreement included a right of first refusal (ROR) for the nonprofit general partner to purchase the property at a below-market price after the compliance period.In the Superior Court, the judge ruled on cross motions for summary judgment, concluding that the investor limited partner, AMTAX, did not have a consent right over a sale to the nonprofit general partner under the ROR agreement. However, the judge also ruled that the purchase price under the ROR agreement must include the limited partners' exit tax liability. The judge dismissed the remaining claims and counterclaims due to lack of evidentiary support or as a consequence of these rulings.The Supreme Judicial Court of Massachusetts reviewed the case. The court affirmed the lower court's decision, holding that AMTAX's consent was not required for the preliminary steps leading to a sale under the ROR agreement. The court also held that the limited partners' exit taxes were "attributable to" the sale of the property and must be included in the purchase price. The court found that the notice of consent rights recorded by AMTAX was accurate and did not constitute slander of title or tortious interference. Consequently, the plaintiffs' claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference, slander of title, and violation of G. L. c. 93A were dismissed. The judgment was affirmed. View "Tenants' Development Corporation v. Amtax Holdings 227, LLC" on Justia Law

The case involves Russell County and its officials (collectively, the County parties) appealing a summary judgment from the Russell Circuit Court in favor of the City of Phenix City and the Town of Hurtsboro (collectively, the municipalities). The dispute centers on whether the Alabama Terminal Excise Tax Act (ATETA), effective October 1, 2012, repealed a local law (Act No. 859, Ala. Acts 1969) that required Russell County to distribute 10% of its share of state gasoline excise tax proceeds to the municipalities.The Russell Circuit Court ruled in favor of the municipalities, declaring that the ATETA did not repeal the local law, despite the ATETA repealing Act No. 224, which the local law referenced. The court found that the ATETA's provisions, which stated that local legislation governing the distribution of gasoline excise tax proceeds remained in force, supported this conclusion.The Supreme Court of Alabama reviewed the case de novo. The County parties argued that the local law was void because it specifically referenced Act No. 224, which the ATETA repealed, and that the ATETA was not a continuation of Act No. 224. They also contended that the ATETA implicitly repealed the local law. The Supreme Court found that the local law's reference to the "state gasoline excise tax" was a general reference, incorporating subsequent amendments, including the ATETA. The court also determined that the ATETA was a continuation of Act No. 224, as it did not substantially alter the distribution scheme. Additionally, the court held that the ATETA did not repeal the local law by implication, as it contemplated local variation in the distribution of tax proceeds.The Supreme Court of Alabama affirmed the circuit court's judgment, holding that the ATETA did not repeal the local law and that the local law remained in force, requiring Russell County to distribute 10% of its share of gasoline excise tax proceeds to the municipalities. View "Russell County, Alabama v. City of Phenix City, Alabama" on Justia Law

Payroll Management, Inc. filed for chapter 11 bankruptcy and received $1,070,330.23 from British Petroleum, Inc. for economic losses due to the Deepwater Horizon Oil Spill. Sunz Insurance Company claimed a first-priority security interest in these funds, asserting that its security interest attached and perfected before any other creditor. The Internal Revenue Service (IRS) contended that its federal tax lien had first priority as it attached and perfected first. Both parties filed cross motions for summary judgment.The bankruptcy court granted summary judgment in favor of the IRS, determining that Payroll’s BP claim was a commercial tort claim when the IRS filed its tax lien notice. The court found that the IRS’s tax lien attached and perfected first, while Sunz’s security interest did not attach to commercial tort claims. The district court affirmed this decision.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the lower courts' decisions. The court held that Payroll’s BP claim remained a commercial tort claim in March 2017 when the IRS filed its tax lien notice. The settlement agreement did not automatically convert the tort claim into a contract, as it did not create an automatic obligation for BP to pay Payroll a certain amount. Therefore, the IRS’s tax lien, which attached and perfected first, took priority over Sunz’s security interest. The court concluded that the IRS was entitled to the $1,070,330.23 payment. View "Sunz Insurance Company v. Treasury Department" on Justia Law

Edward Bachner filed fraudulent tax returns for three years, inflating his income and tax withholdings to claim unwarranted refunds. The IRS detected the fraud and imposed civil penalties. Bachner petitioned the United States Tax Court for a redetermination but did not attend the trial, which resulted in the Tax Court sustaining the penalties. Bachner and his wife, Rebecca, who filed joint tax returns, appealed the Tax Court’s judgment.The Tax Court rejected the Bachners' arguments that the IRS’s notice of deficiency was invalid, that the limitations period had expired, and that the IRS had ignored certain procedures. The court also dismissed their claim that they had not underpaid taxes, as well as their assertion of the privilege against self-incrimination. The Tax Court accepted the IRS’s evidence and sustained the fraud penalties against Edward.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court found that Edward had standing to appeal but dismissed Rebecca from the appeal due to her innocent-spouse status. The court held that the Tax Court had jurisdiction to review the IRS’s determinations based on the penalties listed in the notice. The court also upheld the Tax Court’s imposition of fraud penalties, explaining that Edward’s fraudulent overstatement of withholdings constituted an underpayment of taxes under the relevant Treasury Regulations. The Seventh Circuit affirmed the Tax Court’s decision to sustain the penalties against Edward and dismissed Rebecca from the appeal. View "Bachner v CIR" on Justia Law

The case involves a dispute between the Howard Jarvis Taxpayers Association (Howard Jarvis) and the Coachella Valley Water District (Water District). Howard Jarvis challenged the Water District's replenishment charges, alleging they violated Propositions 26 and 218 and unfairly subsidized large agricultural property owners. The lawsuit named the Water District, three board members, the general manager, and three consulting firms as defendants. The complaint included causes of action for writ of mandate, conversion, aiding and abetting, civil conspiracy, violation of the Unfair Competition Law (UCL), and declaratory relief.The Superior Court of Riverside County denied the defendants' anti-SLAPP motion, finding the public interest exemption applied. The court also sustained the defendants' demurrer to the first amended complaint, dismissing some causes of action without leave to amend and others with leave to amend. Howard Jarvis filed a second amended complaint, which the court again dismissed, finding the claims time-barred under the validation statutes. The court awarded Howard Jarvis over $180,000 in attorney's fees, deeming the anti-SLAPP motion frivolous.The California Court of Appeal, Fourth Appellate District, Division Two, reviewed the case. The court held that the public interest exemption to the anti-SLAPP statute did not apply because the lawsuit improperly targeted individual board members and the general manager for actions only the Water District could perform. The court found that most of the causes of action arose from protected activity and that Howard Jarvis failed to demonstrate a probability of success on the merits. Consequently, the anti-SLAPP motion should have been granted in large part, and the fee award was reversed. The court also affirmed the trial court's order sustaining the demurrer, as the remaining claims against the anti-SLAPP defendants were moot or failed as a matter of law. View "Howard Jarvis Taxpayers Assn. v. Powell" on Justia Law

In 2020, Bryce D. Hovannisian and Lindsay E. Hovannisian purchased several tax-defaulted properties at a tax sale from the City of Fresno. Prior to the sale, the City had recorded special assessments for nuisance abatement costs and unpaid penalties against these properties. After the purchase, the County of Fresno issued tax bills to the appellants, which included these special assessments. The appellants sought to pay only the portion of the tax bills excluding the special assessments, arguing that the tax sale should have removed these liens. The County rejected their partial payments, leading the appellants to sue the City and the County to quiet title to the properties.The Superior Court of Fresno County sustained three separate demurrers filed by the City and the County, asserting that Revenue and Taxation Code section 4807 barred the suit as it impeded tax collection. The court granted leave to amend after the first two demurrers but denied it after the third. The court found that the appellants were required to pay the taxes and then seek a refund, rather than challenging the assessments prepayment.The California Court of Appeal, Fifth Appellate District, reviewed the case and affirmed the trial court's ruling. The appellate court held that the special assessments were collected at the same time and in the same manner as county taxes, thus falling under the definition of "taxes" in section 4801. Consequently, section 4807 barred the appellants' prepayment suit. The court also found that the appellants had an adequate remedy at law through a refund action, which precluded them from seeking equitable relief. The judgment of the lower court was affirmed, and the appellants were directed to pay the taxes and seek a refund if necessary. View "Hovannisian v. City of Fresno" on Justia Law