Justia Tax Law Opinion Summaries

Four consolidated property tax appeals returned to the Oregon Supreme Court following remand to the Oregon Tax Court. In "Village I," the Supreme Court addressed whether the Tax Court had erred by denying defendant-intervenor Clackamas County Assessor's (assessor) motion for leave to file amended answers on the ground that the answers contained impermissible counterclaims challenging the value of taxpayers' land. The Supreme Court determined that the assessor should have been allowed to challenge the land valuations, and it reversed and remanded the cases to the Tax Court. Before the assessor filed amended answers, taxpayers served notices of voluntary dismissal of their cases pursuant to Tax Court Rule (TCR) 54 A(1). The Tax Court then entered a judgment of dismissal, over the assessor's objection. The court denied the subsequent motions for relief from the judgment by defendant Department of Revenue (department) and the assessor. On appeal, the Supreme Court addressed whether, as defendants argued, the Tax Court erred by giving effect to taxpayers' notices of voluntary dismissal rather than to the decision in "Village I" concerning the assessor's counterclaims pending in the motions for leave to file amended answers. The Court concluded that the Tax Court erred in dismissing the appeals given the decision and remand in Village I. Accordingly, it vacated the Tax Court's order denying defendants relief from the judgment, reversed the general judgment of dismissal, and remanded for further proceedings. View "Village at Main Street Phase II, LLC II v. Dept. of Rev." on Justia Law

The T. Ryan Legg Irrevocable Trust appealed a tax on the trust’s 2006 income. The tax commissioner moved to dismiss, arguing that the Board of Tax Appeals (BTA) lacked jurisdiction to hear the appeal because the trust had not shown that the trustee had authorized the filing of the notice of appeal and the petition for reassessment. The BTA denied the motion to dismiss. The Supreme Court affirmed in part and vacated the BTA’s decision in part, holding (1) the tax commissioner failed to prove that the trust’s counsel lacked authority to file the tax appeals; (2) the trust’s capital gain was subject to Ohio income tax on an apportioned basis, but the trust had a legal basis for seeking a reduced Ohio allocation; and (3) the tax assessment did not violate due process or equal protection rights. Remanded to the tax commission for a determination of the proper Ohio allocation. View "T. Ryan Legg Irrevocable Trust v. Testa" on Justia Law

Ernest and Louann Giddens resided in Missouri but paid Ohio income tax as owners of shares in a corporation that did some of its business in Ohio. In 2008, that corporation was an S corporation, and therefore, its income passed through for tax purposes. The tax commissioner reduced the amount of the “nonresident tax credit” that relates to a distribution from the corporation. The Giddenses had allocated the distribution outside Ohio, arguing that it constituted a dividend that was “nonbusiness income” allocable to Missouri. The tax commissioner determined that the distribution should be treated as “business income” and concluded that a portion of it was taxable by Ohio based on the proportion of the corporation’s business in Ohio. The Board of Tax Appeals affirmed. The Supreme Court reversed, holding that the Giddenses properly treated the income as nonbusiness - rather than business - income. View "Giddens v. Testa" on Justia Law

Regency West Apartments sued the City of Racine to recover refunds from allegedly excessive taxation for tax years 2012 and 2013. The circuit court dismissed Regency West’s claims. The court of appeals affirmed. At issue before the Supreme Court was whether the City’s appraisals of Regency West’s property complied with Wisconsin law. The Supreme Court reversed, holding (1) the valuation methodologies the City used for the assessments at issue did not comply with Wisconsin law; (2) the lower courts erred in concluding that Regency West failed to overcome the presumption of correctness for the 2012 and 2013 tax assessments; and (3) Regency West proved that the City’s tax assessments for the tax years at issue were excessive. Remanded to the circuit court to calculate the amount of Regency West’s refund. View "Regency West Apartments LLC v. City of Racine" on Justia Law

Plaintiffs, two Arlington County taxpayers, challenged the County’s inclusion of transferrable development rights (TDRs) in their real estate assessment, arguing that the County had no authority assess and tax TDRs on their properties for tax years 2012 through 2015. The circuit court ruled in favor of the County. The Supreme Court reversed, holding (1) the County may not tax TDRs under Va. Code 15.2-2316.2 unless it enacts an ordinance that conforms to the detailed requirements of that statute; and (2) the County lacks the authority to tax TDRs under section 15.2-750 and its ordinance until it has approved and accepted a site plan. View "Johnson v. Arlington County" on Justia Law

At issue in this case was whether a certain governmental charge imposed on Indian tribes was a tax. After the legislature amended a statute to expand the types of tribal property that were eligible for a property tax: exemption, the Muckleshoot Indian Tribe applied for and received an exemption on its Salish Lodge property pursuant to the amendment. As required by statute, the tribe negotiated and paid an amount to the county in lieu of taxes. The issue before the Washington Supreme Court centered on the constitutionality of this payment in lieu of tax (PILT). The Court found that the PILT was not a tax at all but, rather, a charge that tribes pay to compensate municipalities for public services provided to the exempt property. View "City of Snoqualmie v. King County Exec. Constantine" on Justia Law

The Board of Equalization of Ada County (Ada County) appealed a district court’s ruling granting Evangelical Lutheran Good Samaritan Society (Society) a charitable property tax exemption. After review, the Supreme Court concluded that Society was not a charitable organization under the factors announced in "Appeal of Sunny Ridge Manor, Inc.," (675 P.2d 813 (1984)). Accordingly, the Court reversed and remanded the case for further proceedings. View "Evangelical Lutheran Good Samaritan Society v. Bd of Equalization of Ada County" on Justia Law

Plaintiff, the owner of a parcel of land in the Town of Colchester, challenged the Town’s assessment of the property for the tax year 2011. The Colchester Board of Assessment Appeals upheld the Town’s original valuation. Plaintiff appealed, arguing that the Town had used an improper method for valuing the property. The trial court upheld the Town’s original assessment, determining that Plaintiff had not established that it was aggrieved by the Town’s valuation because it found that Plaintiff’s expert was not credible. Plaintiff appealed, arguing that the trial court applied the incorrect legal standard of valuation to the subject property. The Supreme Court affirmed, holding that the trial court’s determination that Plaintiff failed to establish aggrievement was not clearly erroneous, and the trial court properly rejected Plaintiff’s appeal. View "Nutmeg Housing Development Corp. v. Colchester" on Justia Law

Oil producers (the Producers) challenged an administrative decision (the Decision) in which the Alaska Department of Revenue (DOR) decided to treat separate oil and gas fields operated by common working interest owners as a single entity when calculating the Producers’ oil production tax obligations. Relying on a statute that gave DOR the discretion to “aggregate two or more leases or properties (or portions of them), for purposes of determining [their effective tax rate], when economically interdependent oil or gas production operations are not confined to a single lease or property,” DOR concluded that operations on a number of smaller oil fields were economically interdependent with larger operations on the adjacent Prudhoe Bay oil field. The Producers argued that in interpreting the phrase “economically interdependent” in the Decision, DOR effectively promulgated a regulation without following the procedures established in the Alaska Administrative Procedure Act (APA) and, as a result, DOR’s Decision was invalid. After its review, the Supreme Court concluded that DOR’s Decision was not a regulation because it was a commonsense interpretation of the statute and, therefore, DOR was not required to comply with APA rulemaking requirements. The Court therefore affirmed the superior court’s decision upholding DOR’s decision. View "Chevron U.S.A., Inc. v. Dept. of Revenue" on Justia Law

Pursuant to the Internal Revenue Code, taxpayers receive credits against owed U.S. income tax for money paid to a foreign country for “taxable international business transactions of economic substance.” Some banks have engaged in transactions that generate a foreign tax credit in order to take advantage of the U.S. deductions. In this case, the IRS began disallowing the claim for foreign tax credits sought by Sovereign Bancorp, Inc., later acquired by Santander Holdings USA, Inc. (together, Sovereign), a U.S. taxpayer, and, in 2008, began imposing accuracy-related penalties. Sovereign brought suit to obtain a refund from the IRS, the amount of which was approximately $234 million in taxes, penalties, and interest. The transaction at issue complied on its face with then-existing U.S. statutory and regulatory requirements. The government opposed the refund, arguing that the transaction failed the common law economic substance test. The district court awarded summary judgment to Sovereign, concluding that the transactions had economic substance. The First Circuit reversed, holding that the government was entitled to summary judgment in its favor as to the economic substance of the transaction at issue. View "Santander Holdings USA, Inc. v. United States" on Justia Law