Justia Tax Law Opinion Summaries

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

At issue in this case was the extent to which a corporate taxpayer must include in its Virginia taxable income royalties paid to an intangible holding company. The Virginia Supreme Court held that the circuit court correctly determined that only the portion of the royalties that was actually taxed by another state falls within the subject-to-tax exception. However, the circuit court erred by failing to hold, in accordance with Kohl's alternative argument, that Kohl's Illinois need not be the entity that pays this tax for the exception to apply. Accordingly, the court reversed the circuit court's judgment and remanded for a determination of what portion of the royalty payments was actually taxed by another state and thus excepted from the add back statute. View "Kohl's Department Stores, Inc. v. Virginia Department of Taxation" on Justia Law

At issue in this case was the extent to which a corporate taxpayer must include in its Virginia taxable income royalties paid to an intangible holding company. The Virginia Supreme Court held that the circuit court correctly determined that only the portion of the royalties that was actually taxed by another state falls within the subject-to-tax exception. However, the circuit court erred by failing to hold, in accordance with Kohl's alternative argument, that Kohl's Illinois need not be the entity that pays this tax for the exception to apply. Accordingly, the court reversed the circuit court's judgment and remanded for a determination of what portion of the royalty payments was actually taxed by another state and thus excepted from the add back statute. View "Kohl's Department Stores, Inc. v. Virginia Department of Taxation" on Justia Law

In this case regarding the determination of the tax court valuing Minnesota Energy Resources Corporation’s (MERC) natural gas pipeline distribution system for the years 2008 through 2012, the Supreme Court affirmed the decision of the tax court on remand, holding that the tax court followed the Court’s instructions on remand and properly applied the Court’s clarified standard to MERC’s claim of external obsolescence. On remand, the tax court found that MERC failed to demonstrate that external obsolescence affected the value of its property. The Supreme Court affirmed, holding (1) the tax court correctly evaluated whether MERC’s evidence of external obsolescence was credible, reliable, and relevant; and (2) the tax court’s decision was justified by the evidence and in conformity with law. View "Minnesota Energy Resources Corp. v. Commissioner of Revenue" on Justia Law

In 2004-2009, the IRS investigated Marinello’s tax activities. In 2012, Marinello was indicted for violating 26 U.S.C. 7212(a) (the Omnibus Clause), which forbids “corruptly or by force or threats of force . . . obstruct[ing] or imped[ing], or endeavor[ing] to obstruct or impede, the due administration” of the Internal Revenue Code. The judge instructed the jury that it must find that Marinello “corruptly” engaged in at least one specified activity, but was not told that it needed to find that Marinello knew he was under investigation and intended corruptly to interfere with that investigation. The Second Circuit affirmed his conviction. The Supreme Court reversed. To convict a defendant under the Omnibus Clause, the government must prove the defendant was aware of a pending tax-related proceeding, such as a particular investigation or audit, or could reasonably foresee that such a proceeding would commence. The verbs “obstruct” and “impede” require an object. The object in 7212(a) is the “due administration of [the Tax Code],” referring to discrete targeted administrative acts rather than every conceivable task involved in the Tax Code’s administration. In context, the Omnibus Clause serves as a “catchall” for the obstructive conduct the subsection sets forth, not for every violation that interferes with routine administrative procedures. A broader reading could result in a lack of fair warning. Just because a taxpayer knows that the IRS will review her tax return annually does not transform every Tax Code violation into an obstruction charge. View "Marinello v. United States" on Justia Law

In 2004-2009, the IRS investigated Marinello’s tax activities. In 2012, Marinello was indicted for violating 26 U.S.C. 7212(a) (the Omnibus Clause), which forbids “corruptly or by force or threats of force . . . obstruct[ing] or imped[ing], or endeavor[ing] to obstruct or impede, the due administration” of the Internal Revenue Code. The judge instructed the jury that it must find that Marinello “corruptly” engaged in at least one specified activity, but was not told that it needed to find that Marinello knew he was under investigation and intended corruptly to interfere with that investigation. The Second Circuit affirmed his conviction. The Supreme Court reversed. To convict a defendant under the Omnibus Clause, the government must prove the defendant was aware of a pending tax-related proceeding, such as a particular investigation or audit, or could reasonably foresee that such a proceeding would commence. The verbs “obstruct” and “impede” require an object. The object in 7212(a) is the “due administration of [the Tax Code],” referring to discrete targeted administrative acts rather than every conceivable task involved in the Tax Code’s administration. In context, the Omnibus Clause serves as a “catchall” for the obstructive conduct the subsection sets forth, not for every violation that interferes with routine administrative procedures. A broader reading could result in a lack of fair warning. Just because a taxpayer knows that the IRS will review her tax return annually does not transform every Tax Code violation into an obstruction charge. View "Marinello v. United States" on Justia Law

The Arizona Department of Revenue (ADOR) is not authorized to value solar panels owned by SolarCity Corporation and Sunrun, Inc. (collectively, Taxpayers) and leased to residential and commercial property owners.For tax year 2015, ADOR notified Taxpayers that their panels had been assigned full cash values and that taxes would be assessed. Taxpayers sought a declaratory judgment that the panels were considered to have no value under Ariz. Rev. Stat. 42-11054(C)(2) and were not subject to valuation. The tax court ruled that the panels were “general property” that must be valued by county assessors pursuant to section 42-13051(A) and that the county assessors cannot assign a zero value because applying section 42-11054(c)(2)’s zero value provision to the panels would violate the Exemptions Clause and the Uniformity Clause of the Arizona Constitution. The Supreme Court affirmed the tax court’s judgment to the extent it concluded that ADOR lacked statutory authority to value Taxpayers’ leased solar panels but reversed the remainder of the judgment and remanded for a determination as to whether section 42-13054 authorizes county assessors to value the solar panels and, if so, whether section 42-11054(C)(2) requires a zero valuation. If section 42-11054(C)(2) applies, the tax could should determine whether that provision violates the Exemptions Clause or Uniformity Clause. View "SolarCity Corp. v. Arizona Department of Revenue" on Justia Law