Justia Tax Law Opinion Summaries

After the Polskys attempted to claim the child tax credit for the 2010 and 2011 tax years, the IRS issued a notice disallowing the credit because their daughter was older than 17. They submitted amended returns, specifically requesting that the IRS review whether their permanently disabled daughter qualified for the tax credit. According to the Polskys, the IRS refused to rule on the amended returns because they were substantially the same as the original returns. The Tax Court dismissed their petition because the IRS had not issued a notice of deficiency. In 2014, the Polskys, pro se, filed in the district court, alleging that the IRS erroneously disallowed the credit and violated their due process rights by preventing them from challenging the disallowance in Tax Court. The district court dismissed, holding that the credit is unavailable when the child has attained age 17 and that the Polskys failed to state a due process claim. The Third Circuit affirmed, rejecting an argument that that the tax credit’s definition of “qualifying child,” 26 U.S.C. 24, which has an age cap, incorporates section 152(c), which has no age cap for a person who is permanently disabled and that the second definition of “qualifying child” overrides the age cap in the tax credit. View "Polsky v. United States" on Justia Law

In 2006, the IRS audited the Sandovals’ 2003-2005 tax returns. The Sandovals signed forms waiving their right to a notice of deficiency for the years 2003 and 2004, and consenting to extend the limitations period for the 2003 fiscal year through December 31, 2008. The Sandovals hired representation. On reconsideration, the IRS assessed deficiencies for 2003 and 2004 at $60,274 and $87,566. IRS agents continued to confer with the Sandovals’ representative to prepare amended returns. The Sandovals filed amended returns in 2008 for amounts they considered “substantially correct,” and requested abatements. They submitted checks and a letter from their representative stating that the checks should be applied to the Sandovals’ liability for 2003 and 2004, and that “any overpayment” should be contributed to other years’ outstanding amounts due. The IRS granted substantial abatements, such that the checks satisfied the Sandovals’ tax deficiencies from 2003 and 2004. In 2010, the Sandovals filed new amended returns for 2003 and 2004 seeking a full refund of funds remitted plus amounts applied as overpayments from other years, approximately $101,000. The IRS denied the claims. The Federal Circuit affirmed summary judgment for the IRS, rejecting arguments that the Sandovals withdrew consent to assessment without notice of deficiency and never received subsequent notice; the 2008 funds were applied after the three-year limitations period for assessment; or the 2008 funds were given as refundable deposits, not as tax payments. View "Sandoval-Lua v. United States" on Justia Law

After Appellants went bankrupt, Appellees foreclosed on their home. Appellants each received an IRS Form 1099-A in the mail at the end of the tax year stating that the foreclosure might have tax consequences. The mortgage debt, however, was discharged during Appellants’ Chapter 7 bankruptcy proceedings. Appellants sued Appellees, claiming that the Forms were a coercive attempt to collect on the mortgage debt, which Appellees had no right to collect. The bankruptcy court found the Forms gave Appellants “no objective basis” to believe Appellees were trying to collect the discharged mortgage debt. The district court affirmed. The First Circuit affirmed, holding that the evidence in the record showed that the Forms were not objectively coercive. View "Bates v. CitiMortgage, Inc." on Justia Law

Betty Lunn, the owner of a single-family residence, challenged the Lorain County auditor’s valuation of the property for tax year 2012. Lunn appealed, arguing that her 2011 purchase of the home was a recent arm’s-length sale that established a lower true value. The Board of Revision (BOR) retained the auditor’s valuation, concluding that the auditor had provided insufficient evidence of the sale. The Board of Tax Appeals (BTA) reversed and valued the property according to the sale price. The Supreme Court reversed, holding (1) the BTA acted reasonably and lawfully when it found that Lunn satisfied her initial burden to show a recent arm’s-length sale under former Ohio Rev. Code 4713.03; but (2) Lunn’s purchase was a “forced sale” under section 5713.04, and therefore, Lunn failed to overcome the presumption that the sale of the property post-foreclosure was not indicative of the property’s true value. View "Lunn v. Lorain County Board of Revision" on Justia Law

Cynthia Musto owned property that the Lorain County auditor valued at $547,260 for the tax year 2012. Musto filed a complaint requesting a reduction in value to $405,000. The Board of Revision (BOR) retained the county auditor’s valuation of Musto’s property. The Board of Tax Appeals (BTA) affirmed. The Supreme Court affirmed the BTA’s decision, holding (1) the BTA did not err by denying Musto’s motion to continue the BTA hearing; (2) the BTA reasonably and lawfully retained the auditor’s valuation because Musto did not present clear evidence negating it; and (3) the BTA did not err by denying Musto’s motion to disqualify counsel for the auditor and the BOR. View "Musto v. Lorain County Board of Revision" on Justia Law

The City of San Diego adopted an ordinance imposing a tax on visitors for occupancy in hotels located within the City. The tax, known as the transient occupancy tax, is calculated as a percentage of the “rent charged by the operator” of the hotel. The City of San Diego issued transient occupancy tax assessments against online travel companies (OTCs) on the basis that the OTCs were liable as the “operator” of every hotel. The OTCs appealed. A hearing officer found that the OTCs owed tax on the amount retained by the OTCs above the amount remitted to the hotels as the agreed wholesale cost of the room rental. The superior court vacated the decision, concluding that OTCs are not operators of the hotels and that the markup the OTCs charge for their services is not part of the rent subject to the tax. The court of appeal affirmed. The Supreme Court affirmed, holding (1) under the ordinance, the operator of a hotel is liable for tax on the wholesale cost plus any additional amount for room rental the operator requires the OTC to charge the visitor under the “rate party” provisions of hotel-OTC contracts; but (2) OTCs are not operators within the meaning of the ordinance. View "In re Transient Occupancy Tax Cases" on Justia Law

Plaintiff, The Bishop of the Protestant Episcopal Diocese in New Hampshire, A Corporation Sole, d/b/a St. George’s Episcopal Church (Church), appealed a superior court order denying its summary judgment motion and granting that of the defendant, Town of Durham (Town), based upon a finding that 24 spaces in the Church’s parking lot that are leased to University of New Hampshire (UNH) students were taxable. Until 2013, the Church received a religious tax exemption under RSA 72:23, III for its entire parking lot. In early 2013, the Town learned that the Church leased spaces to UNH students. At that time, the Town believed students leased 30 of the 37 parking spaces. Accordingly, after determining that the leased parking spaces were no longer exempt from taxation, the Town issued the Church a tax bill. After review of the Church’s arguments on appeal, the New Hampshire Supreme Court concluded that the Church did not meet its burden of demonstrating that the leased spaces were exempt. The Court affirmed the superior court order. View "Bishop of the Protestant Episcopal Diocese in New Hampshire v. Town of Durham" on Justia Law

At issue in this case was a tax exclusion, La. R.S. 47:301(14)(g)(i)(bb), which provided exclusions from state and local sales tax of charges for repairs on certain property that was delivered to customers out of state. At the local tax level, the 2013 version of this tax exclusion was mandatory for tax authorities in East Feliciana Parish and optional for all other parishes, municipalities and school boards. The question presented for the Louisiana Supreme Court's review was, when the legislature enacted a tax exclusion, whether La. Const. art. VI, section 29(D)(1) required the legislature to treat tax authorities in all parishes the same or to make tax authorities in all parishes act the same. The Supreme Court held that the uniformity provision of the constitution, based on its plain and unambiguous meaning, required that a legislative tax exclusion treat tax authorities in all parishes the same. The Court found La. R.S. 47:301(14)(g)(i)(bb), as amended in 2013, to be unconstitutional because tax authorities in all parishes are not required to apply the tax exclusion in the same form, manner, or degree. "However, the portion of this statutory provision-mandating tax authorities in East Feliciana Parish apply the exclusion-is severable from the rest." Therefore, the Court severed this portion, leaving the balance of the statutory provision unchanged. Accordingly, the Court affirmed the district court ruling and remanded this matter to the district court for further proceedings. View "Arrow Aviation Co., LLC. v. St. Martin Parish Sch. Bd." on Justia Law

These consolidated tax refund actions stem from faulty AMCOR investments. Taxpayers were partners in AMCOR partnerships that the IRS investigated as shams. After taxpayers settled with the IRS and paid the amounts assessed, they sought refunds claiming that the IRS’s assessments were untimely and that the IRS failed to issue notices of deficiency. The court concluded, however, that its decision in Irvine v. United States forecloses taxpayers' arguments. Like in Irvine, the district courts in this case lack subject matter jurisdiction to hear these refund claims. Additionally, the variance doctrine forecloses taxpayers’ argument that the IRS failed to issue notices of deficiency because taxpayers did not make such an argument in their claims for refund before the IRS. Accordingly, the court affirmed the district courts' grant of summary judgment in favor of the IRS. View "Rodgers v. United States" on Justia Law

Avnet Inc. was a New York corporation, headquartered in Arizona, and a major distributor of electronic components and computer technology worldwide. Avnet sold products through its headquarters in Arizona and through its many regional sales offices, including one in Redmond, Washington. Following an audit, the Washington State Department of Revenue (Department) determined that from 2003 to 2005, Avnet underreported its business and operations (B&O) tax liabilities by failing to include its national and drop-shipped sales in its tax filings. At issue in this appeal was whether national and drop-shipped sales were subject to Washington's B&O tax under the dormant commerce clause and the Department former "Rule 193." The Washington Supreme Court concluded that neither the dormant commerce clause nor Rule 193 barred the imposition of a B&O tax to Avnet's national and drop-shipped sales delivered in Washington. View "Avnet, Inc. v. Dep't of Revenue" on Justia Law