Justia Tax Law Opinion Summaries

The issue in this case centered on the interpretation of the "right to travel" provision Article III of the Yakama Nation Treaty of 1855, in the context of importing fuel into Washington State. The Washington State Department of Licensing (Department) challenged Cougar Den Inc.'s importation of fuel without holding an importer's license and without paying state fuel taxes under former chapter 82.36 RCW, repealed by LAWS OF 2013, ch. 225, section 501, and former chapter 82.38 RCW (2007). An administrative law judge ruled in favor of Cougar Den, holding that the right to travel on highways should be interpreted to preempt the tax. The Department's director, Pat Kohler, reversed. On appeal, the Yakima County Superior Court reversed the director's order and ruled in favor of Cougar Den. Finding no reversible error in that judgment, the Washington Supreme Court affirmed. View "Cougar Den, Inc. v. Dep't of Licensing" on Justia Law

David Emerson owned two adjoining parcels of real property in Erie County. The Erie County auditor’s aggregate valuation of the two parcels for tax year 2011 was $328,270. Emerson challenged the valuations, arguing that his 2009 purchase of the parcels established lower true values because it was a recent arm’s-length transaction. The Erie County Board of Revision (BOR) retained the auditor’s valuation. On appeal, the Board of Tax Appeals (BTA) reversed the BOR’s decision and valued the property at $180,000 according to the sale price. The Supreme Court affirmed, holding (1) Emerson demonstrated a recent arm’s-length sale; and (2) the county cannot rebut the sale price with an appraisal. View "Emerson v. Erie County Board of Revision" on Justia Law

After the IRS assessed tax deficiencies and penalties, the taxpayers filed a pro se petition for review. Acting on advice from Niehus, a lawyer who was not authorized to practice in Illinois, the couple stipulated that only half of the tax relief they sought was appropriate. Upon discovering that Niehus was not a member of the Illinois bar, they asked the court to set aside the stipulation. The Tax Court refused and entered judgment against the couple. On remand, with the couple represented by a CPA, Drobny, who was authorized to practice before the Tax Court, the court held that the couple had not been prejudiced by Niehus’s ineligibility to practice and that the advice he had given them had been valid. The Seventh Circuit affirmed, agreeing that Niehus provided “competent, valuable, diligent, and effective” assistance, and noting that there is no right to counsel in a Tax Court proceeding. View "Shamrock v. Commissioner of Internal Revenue" on Justia Law

Non-Russian investors could not invest directly in Russian sovereign debt but could invest in derivative credit-linked notes (CLNs), sold by banks. When Russia defaulted on its sovereign debt in 1998, CLNs lost nearly all of their value. The Russian Central Bank imposed currency exchange limitations that prevented the ruble from being freely traded. Tiger's hedge funds had purchased CLNs for more than $230 million. After the collapse, Tiger needed cash to pay off investors but was unable to sell its CLNs. Zimmerman believed that she could make money by obtaining devalued Russian debt in anticipation of a recovery of the ruble. Bracebridge, in which Zimmerman was a partner, established RRF, a hedge fund. FFIP, another fund managed by Bracebridge contributed RRF's first assets. Tiger transferred CLNs to RRF in exchange for an RRF ownership interest. Tiger sold its RRF partnership shares to FFIP for a discount, although the value of the shares had increased. RRF filed its 2000 tax return, allocating a loss to FFIP. FFIP’s 2001 losses flowed through to Zimmerman. In 2005, the IRS audited the parties, disallowed the loss RRF claimed for the sale of the Tiger CLNs, and imposed a 40% penalty. RRF and Bracebridge sought readjustment of partnership items under the Tax Equity and Fiscal Responsibility Act, I.R.C. 6221–6233. The Claims Court held that the limitations period for assessing taxes against RRF’s indirect partners had expired as to some, but not all, indirect partners and upheld the disallowance of the losses and imposition of penalties. The Federal Circuit affirmed, holding that the losses claimed on Zimmerman’s 2001 tax return are “attributable to” the loss claimed in RRF’s 2000 tax return, the limitations period for which was suspended by the 2005 Final Partnership Administrative Adjustment. Tiger’s contributions to RRF were not valid partnership contributions. View "Russian Recovery Fund Limited v. United States" on Justia Law

Plaintiffs each bought skin puncture lancets and glucose test strips from retail pharmacy stores owned and/or operated by defendants. When plaintiffs purchased these items, the retail pharmacies charged them "sales tax" and subsequently remitted the money they collected as sales tax to the Board of Equalization. Plaintiffs filed suit alleging that the lancets and test strips have been exempt from sales tax since March 10, 2000, the date on which the Board made effective California Code of Regulations, title 18, section 1591.1, subdivision (b)(5). The Supreme Court held in Loeffler v. Target Corp., that the customer was not the taxpayer and thus could not herself seek a refund from the Board. At issue was whether the customer may obtain a court order compelling the retail pharmacy to file an administrative refund claim with the Board. The state's Supreme Court held in Javor v. Board of Equalization that the Legislature's authority in this regard was not exclusive and that courts retain a residual power to fill remedial gaps by fashioning tax refund remedies in "unique circumstances." The court concluded that a court may create a new tax refund remedy—and, accordingly, that the requisite "unique circumstances" exist— only if (1) the person seeking the new tax refund remedy has no statutory tax refund remedy available to it, (2) the tax refund remedy sought is not inconsistent with existing tax refund remedies, and (3) the Board has already determined that the person seeking the new tax refund remedy is entitled to a refund, such that the refusal to create that remedy will unjustly enrich either the taxpayer/retailer or the Board. In this case, because the Revenue and Taxation Code does not provide for this remedy and because plaintiffs have not established any of the three prerequisites to the exercise of the judicial residual power to fashion new remedies, the court concluded that the trial court correctly sustained demurrers to all of the claims in the complaint without leave to amend. Accordingly, the court affirmed the judgment. View "McClain v. Sav-On Drugs" on Justia Law

Petitioner Kadle Properties Revocable Realty Trust (Trust), challenged the dismissal of the Trust’s appeal to the New Hampshire Board of Tax and Land Appeals (BTLA), filed after respondent, the City of Keene (City), denied the Trust’s application for an educational use tax exemption. The Trust owned property in Keene that included an office building. A separate, for-profit corporation, Config Systems, Incorporated (Config Systems), rented a portion of the Trust’s office building, where it offered computer classes. The Trust did not own or operate Config Systems, but Daniel Kadle, in addition to serving as trustee for the Trust, was a beneficiary of the Trust and the sole shareholder of Config Systems. The Trust sought the exemption based upon Config Systems’s use of part of the property as a school. The Trust appealed the City’s denial of its request to the BTLA. During the BTLA hearing on the Trust’s appeal, the City moved to dismiss the appeal. The BTLA granted the City’s motion, reasoning that the property owner, the Trust, was not a school, and that Config Systems, the entity operating the school which the Trust claims qualified the property for an exemption, did not own the property. Finding no reversible error in that decision, the Supreme Court affirmed. View "Appeal of Kadle Properties Revocable Realty Trust" on Justia Law

In July 2015, the Delaware Joint Vocational School District Board of Education passed a resolution to submit a renewal levy to voters at the general election. On November 20, 2015, the Delaware County Board of Elections purported to certify the election result. The county auditor then delivered the abstract of tax rates to the tax commissioner to apply the reduction factors and calculate the tax rate for the school district. When the county auditor discovered that the Board of Elections had not certified the results of the levy using Form 5-U, however, the tax commissioner excluded the levy on the list of tax rates certified for collection to the county auditors in counties with territory in the school district, and the levy was not included on the property tax bills sent to property owners for the first half of tax year 2016. The school board brought this action in mandamus to compel the tax commissioner to apply the reduction factors and calculate the tax rates for the levy. The Supreme Court denied relief, holding that because no proper certification of the multicounty election was presented to the tax commissioner demonstrating that the tax was authorized to be levied, the commissioner did not have a clear legal duty to apply reduction factors and calculate tax rates for this levy. View "State ex rel. Delaware Joint Vocational School District Board of Education v. Testa" on Justia Law

After petitioner unsuccessfully challenged his liability in a preassessment hearing before the Office of Appeals of the IRS, he sought to raise the same issue before the same administrative unit in his collection due process (CDP) hearing. The Office of Appeals concluded that Section 6330 of the Internal Revenue Code, I.R.C. 6330, prohibited him from disputing his liability a second time, and the Tax Court agreed. The court explained that petitioner was afforded a meaningful opportunity to challenge the imposition and amount of the reporting penalty: he had the ability to request a preassessment hearing before the Office of Appeals. The court determined that this was sufficient under Section 6330(c)(2)(B). The court also held that Section 6330(c)(4) barred petitioner from challenging his liability in the CDP context. Therefore, the court concluded that the Commissioner was entitled to judgment as a matter of law, and the court affirmed the Tax Court's judgment. View "Iames v. Commissioner of IRS" on Justia Law

This was the third appeal of this case arising from the efforts of appellee Southern LNG, Inc. (“Southern”) to compel State Revenue Commissioner Lynnette Riley (“the Commissioner”) to recognize Southern as a “public utility” under OCGA 48-5-511 and to accept Southern’s ad valorem property tax returns. On remand, the trial court granted summary judgment to the Commissioner on a mandamus claim, holding that Southern had an adequate alternative remedy. In a prior appeal, the Supreme Court laid out for the parties in considerable detail the potential legal and procedural issues bearing on the question of whether the Commissioner could become a party or be bound by a judgment rendered in the tax appeals. On remand, Southern and the Commissioner filed renewed cross-motions for summary judgment. The trial court granted summary judgment in favor of Southern, holding that it had no “equally convenient, complete and beneficial” remedy other than mandamus, and denied the Commissioner’s motion for summary judgment, and directed the Commissioner “to accept [Southern’s] ad valorem property tax returns pursuant to OCGA 48-5-511(a) instanter.” The Commissioner appealed, and the Supreme Court this time reversed, finding Southern did not show the Commissioner, in refusing to accept Southern’s ad valorem tax returns, violated a “clear legal duty,” that she failed to act, or that her actions were arbitrary, capricious and unreasonable, amounting to a gross abuse of discretion, so as to entitle Southern to a writ of mandamus. View "Riley v. Southern LNG, Inc." on Justia Law

A court-appointed receiver (the Receiver), acting on behalf of a class of defrauded persons (the underlying plaintiffs), attempted to collect judgments previously rendered against several corporations and their proprietors. When the Receiver was able to recoup only a portion of the amount, it filed a tax-refund claim. The IRS denied the tax-refund claim. Thereafter, the Receiver responded by bringing this suit pursuant to 28 U.S.C. 1346(a). At issue in this case was the statute’s requirement that a taxpayer who seeks to reduce her tax liability under certain circumstances have an “unrestricted right” to income when she first reported it. The district court fashioned a judicially-created exception to the statute’s “unrestricted right” requirement, proceeded to deny the government’s motion to dismiss, and granted a modicum of relief. The First Circuit reversed, holding that the district court erred in refusing to follow section 1341(a)’s unambiguous textual mandate by carving out a special exemption from the “unrestricted right” requirement for parties in either the Receiver’s or the underlying plaintiffs’ position. Remanded for entry of judgment dismissing the tax-refund suit. View "Robb Evans & Associates, LLC v. United States" on Justia Law