Justia Tax Law Opinion Summaries

The Supreme Court affirmed the judgment of the circuit court granting summary judgment for certain Internet sellers (Sellers) and enjoining the State from enforcing 2016 legislation extending the obligation to collect and remit sales tax to sellers with no physical presence in the state. Pursuant to the legislation, the State brought this declaratory judgment action seeking a declaration that Sellers, who had no physical presence in the state, must comply with the requirements of the 2016 legislation. The circuit court enjoined the State from enforcing the obligation to collect and remit sales tax against Sellers, observing its obligation to adhere to Supreme Court precedent prohibiting the imposition of an obligation to collect and remit sales tax on sellers with no physical presence in the State. The Supreme Court affirmed, holding that the circuit court correctly applied the law when it granted Sellers’ motion for summary judgment. View "State v. Wayfair Inc." on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) that valued the land underlying the North Bank Condominiums in Franklin County for tax year 2013. The BTA adopted the value found in an appraisal report submitted by the Columbus City Schools Board of Education (BOE). The unit owners appealed, arguing that the BTA should have adopted the land value in their appraisal report rather than the higher value in the BOE’s appraisal report. The Supreme Court affirmed, holding that the BTA did not abuse its discretion in finding the BOE’s appraisal to be more probative and in thus adopting the land value found in the BOE’s appraisal. View "NWD 300 Spring, LLC v. Franklin County Board of Revision" on Justia Law

The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) that increased the tax value of property owned by State Farm Mutual Automobile Insurance Company. On appeal, State Farm challenged the BTA’s reliance on a November 2013 sale price in ordering an increase from the $14,000,000 value adopted by the BTA for tax year 2011 to $25,092,330 for tax year 2012. The Supreme Court reversed, holding that the 2013 sale price was not indicative of value because it was not at arm’s length for purposes of determining property value. The court then ordered that the Board of Revision’s value of $14,000,000 be reinstated for tax year 2012. View "Columbus City Schools Board of Education v. Franklin County Board of Revision" on Justia Law

If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

At issue in this appeal was a judgment dismissing an action seeking to recover money unlawfully collected by the City of Pocatello from users of the City’s water and sewer systems. In 2005, the city government decided that the City should be able to operate its water and sewer systems at a profit like private utilities. By law, the City was required to charge and collect sufficient fees so that its water and sewer systems “shall be and always remain self-supporting.” Those fees had to be sufficient to pay when due all bonds and interest as required by Idaho Code section 50-1032(a) and “to provide for all expenses of operation and maintenance of such works . . . , including reserves therefor,” as required by Idaho Code section 50-1032(b). The City wanted to obtain a profit in excess of the amounts necessary for the water and sewer systems to remain self-supporting. This profit was paid into the general fund. The City instituted a program called "PILOT," which stood for payment in lieu of taxes, under which city-owned water and sewer departments paid "property taxes" to the City as if they were private entities, and the departments then passed this cost on to their customers. The “property taxes” were then paid into the City’s general fund. Plaintiffs sought a refund of the PILOT sums that they had paid. In granting summary judgment, the district court held that the imposition of the PILOT was not a compensable taking. The district court appeared to rely upon two grounds for that decision: (1) "Some courts have made that determination on the grounds that money is not 'property' within the meaning of the Takings Clause," and (2) "Other courts ‘have concluded that governmental-imposed obligations to pay money are not the sort of governmental actions subject to a takings analysis.?” The Idaho Supreme Court determined both of these rationales were incorrect, reversed and remanded for further proceedings. View "Hill-Vu Mobile Home Pk v. City of Pocatello" on Justia Law

At issue in this appeal was a judgment dismissing an action seeking to recover money unlawfully collected by the City of Pocatello from users of the City’s water and sewer systems. In 2005, the city government decided that the City should be able to operate its water and sewer systems at a profit like private utilities. By law, the City was required to charge and collect sufficient fees so that its water and sewer systems “shall be and always remain self-supporting.” Those fees had to be sufficient to pay when due all bonds and interest as required by Idaho Code section 50-1032(a) and “to provide for all expenses of operation and maintenance of such works . . . , including reserves therefor,” as required by Idaho Code section 50-1032(b). The City wanted to obtain a profit in excess of the amounts necessary for the water and sewer systems to remain self-supporting. This profit was paid into the general fund. The City instituted a program called "PILOT," which stood for payment in lieu of taxes, under which city-owned water and sewer departments paid "property taxes" to the City as if they were private entities, and the departments then passed this cost on to their customers. The “property taxes” were then paid into the City’s general fund. Plaintiffs sought a refund of the PILOT sums that they had paid. In granting summary judgment, the district court held that the imposition of the PILOT was not a compensable taking. The district court appeared to rely upon two grounds for that decision: (1) "Some courts have made that determination on the grounds that money is not 'property' within the meaning of the Takings Clause," and (2) "Other courts ‘have concluded that governmental-imposed obligations to pay money are not the sort of governmental actions subject to a takings analysis.?” The Idaho Supreme Court determined both of these rationales were incorrect, reversed and remanded for further proceedings. View "Hill-Vu Mobile Home Pk v. City of Pocatello" on Justia Law

The City of Rutland appealed a superior court decision that two buildings owned by the Rutland County Parent Child Center (RCPCC) were exempt from property taxation. The City argued neither property met the requirements of the public use tax exemption in 32 V.S.A. 3802(4). RCPCC is one of fifteen parent-child centers in Vermont. Under the statutory definition, a parent-child center is a “community-based organization established for the purpose of providing prevention and early intervention services." The superior court determined on summary judgment that RCPCC’s properties did not qualify for the public school tax exemption but, after a bench trial, decided that RCPCC’s use of the properties in question met the three-prong public use exemption test from American Museum of Fly Fishing, Inc. v. Town of Manchester, 110, 557 A.2d 900 (1989), and that, accordingly, both properties were exempt from property tax assessment. The Vermont Supreme Court found that RCPCC's use of the buildings met all elements of the American Museum of Fly Fishing's test, and affirmed the superior court's judgment. View "Rutland County Parent Child Center, Inc. v. City of Rutland" on Justia Law

Kohl’s Department Stores, Inc. entered into a license agreement with Kohl’s Illinois, Inc., an affiliate of Kohl’s that operates retail stores in select states, but not Virginia, for the use of intellectual property managed and licensed by Kohl’s Illinois. Kohl’s paid royalties to Kohl’s Illinois, and when calculating its federal taxable income, Kohl’s deducted these royalty payments from its income as an ordinary and necessary business expense. Kohl’s Illinois, however, did not pay state income taxes on a substantial portion of the royalties. Kohl’s claimed that the royalty payments fell within the “subject-to-tax” exception to the add back statute. The Virginia Department of Taxation auditor required that the untaxed portion be added back to Kohl’s taxable income and issued a notices of assessment to Kohl’s for certain taxable years. The circuit court affirmed, concluding that only the portion of the royalties that was actually taxed by another state fell within the subject-to-tax exception. The Supreme Court reversed, holding that the circuit court erred by failing to hold that Kohl’s Illinois need not be the entity that pays the tax for the subject-to-tax exception to apply. Remanded for a determination of what portion of the royalty payments was actually taxed by another state and therefore excepted from the add back statute. View "Kohl's Department Stores, Inc. v. Virginia Department of Taxation" on Justia Law

This appeal presents a narrow question of law relating to state income tax liability. Zippora Stahl was an Idaho resident who died in 2010. At the time of her death, Stahl owned real property located in Chino, California that had substantially appreciated in value. The Estate made a "1022 Election" following the sale of the Chino property in its 2012 federal income tax return. The Estate also filed an Idaho income tax return for 2012. When it did so, the Estate initially used the same modified carryover basis for the Chino property as it had for its federal income tax return. The Estate computed its state tax liability as $1,029,107, which the Estate paid. The Idaho State Tax Commission processed the Estate’s 2012 Idaho income tax return and determined that the Estate had incorrectly computed a credit for taxes paid to other states. Kathleen Krucker, personal representative of the Estate, appealed the district court’s grant of summary judgment in favor of the Commission and the district court’s denial of the Estate’s motion for reconsideration. The district court held that the Estate could not use a different figure as the starting point for calculating its Idaho taxable income for 2012 than it reported to the Internal Revenue Service for that year. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Krucker v. Idaho State Tax Commission" on Justia Law

The Supreme Court affirmed the North Carolina Business Court’s substantive decision interpreting N.C. Gen. Stat. 105-130.5(b)(1) so as to preclude The Fidelity Bank from deducting “market discount income” relating to discounted United States obligations for North Carolina corporate income taxation purposes. The Supreme Court, however, reversed the Business Court’s decision to dismiss the second of two judicial review petitions that Fidelity Bank filed in these cases and remanding that matter to the North Carolina Department of Revenue with instructions to vacate that portion of the Department’s second amended final agency decision relating to the deductibility issue for lack of subject matter jurisdiction, holding that the Business Court’s decision to dismiss the portions of the second judicial review petition challenging the Department’s decision concerning the deductibility issue in the second amended final agency decision was erroneous. View "Fidelity Bank v. N.C. Department of Revenue" on Justia Law