Justia Tax Law Opinion Summaries

The Supreme Judicial Court affirmed the judgment entered in the Business and Consumer Docket awarding the State and ConnectME Authority $406,852 in unpaid fees pursuant to Me. Rev. Stat. 35-A, 9216, plus interests and costs. On appeal, all parties argued that the lower court erred by concluding that the section 9216 assessment was a valid business excise tax. The Supreme Judicial Court held (1) the Legislature properly characterized the section 9216 assessment as a fee and not a tax; and (2) while the lower court erred by concluding that the assessment was a valid business excise tax, the error was harmless. View "State v. Biddeford Internet Corp." on Justia Law

The Eleventh Circuit affirmed the decisions of the tax court upholding the Commissioner's transferee liability assessment against petitioners. Terry and Sandra Shockley sold their company, SCC, and reported their gains from this sale on timely federal income tax returns for calendar year 2001. The Commissioner assessed additional tax liabilities against SCC and thus asserted transferee liability under I.R.C. 6901 against each of eight of the largest selling shareholders of SCC. The court held that the tax court appropriately used substance over form and its related judicial doctrines to determine the true nature of the transaction at issue. The court agreed with the Commissioner, the tax court, and the Seventh Circuit that substance-over-form analysis was appropriate in context of the Wisconsin Uniform Fraudulent Transfer Act. Under the circumstances, the Commissioner was permitted to assess transferee liability for unpaid taxes against petitioners by applying the procedural device supplied by I.R.C. 6901. View "Shockley v. Commissioner of Internal Revenue" on Justia Law

The Supreme Court affirmed the district court’s dismissal of a complaint brought by the Town of Pine Bluffs alleging that Laramie County illegally taxed a day care center that the Town owned and operated. The Town sought an injunction under Wyo. Stat. Ann. 39-13-109(c)(i), alleging that the property was used for a governmental purpose and was therefore exempt under Wyo. Stat. Ann. 39-11-105(a)(v). The district court granted the County’s motion to dismiss, concluding that the Town should have exhausted administrative remedies before resorting to an injunction. The Supreme Court affirmed, holding that section 39-13-109(c)(i) did not provide the Town a remedy for an error in assessing the day care center and that it needed to resort to the administrative process instead. View "Town of Pine Bluffs v. Eisele" on Justia Law

Petitioner Ann Hardegger filed a complaint in the district court seeking contribution from respondents Daniel and Cheryl Clark, for their proportionate share of a payment she made to the Internal Revenue Service (“IRS”) in full satisfaction of the parties’ joint and several tax liabilities. In October 2010, the Clarks filed a joint voluntary Chapter 7 bankruptcy petition and gave notice to their creditors, including the Hardeggers. The Hardeggers did not file a proof of claim in the bankruptcy proceeding, and the bankruptcy court granted the Clarks a discharge. In Hardegger’s case, the district court found the Clarks responsible for one-half of the IRS indebtedness and entered summary judgment in Hardegger’s favor. A division of the court of appeals reversed, however, concluding that Hardegger’s contribution claim constituted a pre-petition debt that had been discharged in the Clarks’ bankruptcy case. Applying the “conduct test,” under which a claim arises for bankruptcy purposes at the time the debtor committed the conduct on which the claim is based, the Colorado Supreme Court concluded that Hardegger’s claim for contribution arose when the parties’ jointly owned company incurred federal tax withholding liability between 2007 and 2009, rendering Hardegger and Clark potentially responsible for that debt. Because this conduct occurred before the Clarks filed their bankruptcy petition in 2010, Hardegger’s claim constituted a pre-petition debt that was subject to discharge. View "Hardegger v. Clark" on Justia Law

Plaintiffs and appellants Luz Solar Partners Ltd., III; Luz Solar Partners Ltd., IV; Luz Solar Partners Ltd., V; Luz Solar Partners Ltd., VI; Luz Solar Partners Ltd., VII; Luz Solar Partners Ltd., VIII and Harper Lake Company VIII; and Luz Solar Partners Ltd., IX and HLC IX (collectively “Luz Partners”) challenged the assessment of real property improved with solar energy generating systems (SEGS units) for tax years 2011-2012 and 2012-2013. They contended that defendants-respondents San Bernardino County (County) and the Assessment Appeals Board of San Bernardino County (Appeals Board) erroneously relied on the State of California Board of Equalization’s (Board) incorrect interpretation of the applicable statutes governing the method of assessing the value of the property. Finding that the Board correctly interpreted the applicable law in setting forth the method of assessing the value of the solar properties, the Court of Appeal affirmed. View "Luz Solar Partners Ltd. v. San Bernardino County" on Justia Law

Plaintiff, for 22 years, contested in administrative proceedings a California Franchise Tax Board ruling that he owed close to $7.4 million in taxes, penalties, and interest. The Ninth Circuit affirmed the district court's dismissal of plaintiff's action under 42 U.S.C. 1983, which arose from his administrative proceedings. The panel held that the Tax Injunction Act, 28 U.S.C. 1341, barred plaintiff's suit because plaintiff could either pay now and litigate later, or the pay-then-protest remedy provided plaintiff a speedy remedy, even if the protest-then-pay remedy had not. The court also held that, if plaintiff pays and then protests, the California state courts would likely allow plaintiff to add constitutional claims to a state court action challenging the tax. View "Hyatt v. Yee" on Justia Law

The Supreme Court vacated the decision of the Board of Tax Appeals (BTA) that denied a tax exemption for real property leased to a community school. The tax commissioner determined that for tax years 2008 through 2010, because the property owner had collected “substantial market-rate rent,” the property was leased “with a view to profit” for purposes of former Ohio Rev. Code 5709.07(A)(1), and therefore, no exemption was available. The BTA affirmed on the basis that the school’s rental payments exceeded the lessor’s expenses under the lease. The Supreme Court vacated the BTA’s decision and remanded the case, holding (1) the key inquiry in determining whether property is lease with a view to profit focuses on the intention of the lessor; and (2) the BTA unreasonably ignored evidence of the lessor’s intent in this case. View "Breeze, Inc. v. Testa" on Justia Law

The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) affirming the tax commissioner’s denial of 2350 Morse LLC’s application for tax exemption of real property leased to a community school, holding that the BTA unreasonably ignored evidence of 2350 Morse’s intent in leasing the property. Morse sought an exemption for the property for tax year 2010 under both Ohio Rev. Code 5709.07 and 5709.121. The commissioner decided that 2350 Morse was not entitled to an exemption because the property had been leased “with a view to profit” for purposes of former section 5709.07(A)(1). The BTA affirmed. The Supreme Court reversed, holding that no reasonable reading of the record could support a finding that 2350 Morse leased the property with a view to profit. View "2350 Morse, LLC v. Testa" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) determining that a corporate executive’s supplemental executive retirement plan (SERP) was not subject to the city of Cleveland’s income tax. Upon retirement, the executive became entitled to receive benefits from the SERP, which was to be paid from an annuity over the court of his and his spouse’s lives. Cleveland sought to tax the present value of those future payments at the time of the retirement. The Supreme Court held that because a Cleveland ordinance exempts “pensions” from the city income tax and because the SERP constitutes a pension, the city income tax does not apply. View "MacDonald v. Cleveland Income Tax Board of Review" on Justia Law

The money that a homosexual man paid to father children through in vitro fertilization—and in particular, to identify, retain, compensate, and care for the women who served as an egg donor and a gestational surrogate—was not spent "for the purpose of affecting" his body's reproductive "function" within the meaning of I.R.C. 213. In this case, the Eleventh Circuit held that it was constrained by I.R.C. 213's plain language where taxpayer's own function within the human reproductive process was to produce and provide healthy sperm, and because taxpayer was and remained capable of performing that function without the aid of IVF-related treatments, those treatments did not affect any function of his body and did not qualify as deductible "medical care" within the meaning of Section 213(a). The court also held that the IRS's disallowance of taxpayer's claimed deduction neither violated any fundamental right nor discriminated on the basis of any suspect (or quasi-suspect) characteristic. View "Morrissey v. United States" on Justia Law