Justia Tax Law Opinion Summaries

In 2012, the City of Country Club Hills City Council adopted an ordinance that provided to homeowners a 25 percent rebate of 2010 city property taxes paid in 2011, subject to the completion of an application by the homeowner and approval by the City Clerk. This was the city’s twelfth consecutive year of offering a rebate program. The application stated that the “FILING OF THIS APPLICATION DOES NOT GUARANTEE APPROVAL BY THE CITY OF COUNTRY CLUB HILLS.” The city prepared the rebate checks but never distributed them. In 2012, the Cook County treasurer overpaid the city by more than $6 million. The county successfully sued to collect the overpayment. Bell filed a purported class action under 42 U.S.C. 1983, arguing that refusal to issue the rebates amounted to an unconstitutional taking and asserting state law claims for conversion and unjust enrichment. The City Council then repealed the 2012 ordinance. The Seventh Circuit affirmed dismissal, agreeing that Bell had no constitutionally protected property interest in the expectation of a rebate, and that she had adequate state court remedies for her claims under state law. View "Bell v. City of Country Club Hills" on Justia Law

Defendant appealed the district court's grant of summary judgment in favor of the United States for unpaid federal income taxes, late penalties, and interest accrued, arguing that the district court erred because her affidavit created a genuine factual dispute about whether she had paid the taxes and penalties owed. Reviewing de novo, the court concluded that the district court did not err by entering summary judgment in favor of the United States where the United States submitted copies of defendant's federal tax returns, transcripts of her accounts for tax years 1996 and 1999 through 2002, and an affidavit from an IRS officer that established defendant had outstanding tax assessments. In this case, the evidence created a presumption that the assessments were proper and shifted the burden to defendant to rebut the presumption with evidence that the assessments were erroneous. The court concluded that defendant's affidavit failed to create a genuine factual dispute about the validity of the assessments, and defendant's general and self-serving assertions that she paid the taxes owed and related late penalties for tax years 1996 and 1999 through 2002 failed to rebut the presumption established by the assessments. The court vacated the part of the judgment addressing the amount of defendant's assessments and remanded for the district court to credit her payment and to recalculate her assessment for tax year 1996. The court affirmed the entry of summary judgment regarding defendant's liability. View "United States v. Stein" on Justia Law

This appeal centered on who was entitled to real property tax increment revenue after the statutory dissolution of the San Jose Redevelopment Agency. The trial court held that tax increment revenue from a real property tax imposed to raise funds for the pension obligations of Santa Clara County was properly distributed to the Redevelopment Property Tax Trust Fund to pay the debts of the former redevelopment agency. Santa Clara County, with its Director of Finance Vinod Sharma, argued on appeal that this holding was erroneous. The trial court also held that statutes dissolving the former redevelopment agency required that certain tax increment revenue be passed through from the Redevelopment Property Tax Trust Fund to Santa Clara County instead of being used to meet the enforceable obligations of the former redevelopment agency. The City of San Jose, as the successor of the redevelopment agency, argued on appeal that this holding was erroneous. Finding no reversible error, the Court of Appeals affirmed the trial court. View "City of San Jose v. Sharma" on Justia Law

New York Frozen Foods, Inc. filed its Bedford Heights income-tax returns on a separate-entity basis for tax years 2005 through 2007. In 2010, Frozen Foods and its affiliates filed consolidated amended returns for the same tax years and claimed a refund of taxes it had previously paid based on its separate returns. Regional Income Tax Agency, acting in its capacity as the city’s tax administrator, denied the refund. The Bedford Heights Income tax Board of Review affirmed the denial of refunds. The Board of Tax Appeals (BTA) affirmed, agreeing that the amended returns were improper. Frozen Foods appealed. Bedford Heights cross-appealed, arguing that the BTA erred by failing to deny the refund on an alternative ground. The Supreme Court affirmed the decision to deny Frozen Foods’ claim for a refund on the alternate ground that the city ordinance barred a change from a separate return to a consolidated return when filing an amended return because the change constituted a “change in method of accounting” prohibited by the ordinance. View "New York Frozen Foods, Inc. v. Bedford Heights Income Tax Board of Review" on Justia Law

Plaintiffs, three former baristas, filed a class action against Starbucks, challenging the legality of Starbucks’ practice of withholding state and federal taxes from baristas’ paychecks based on the cash tips they receive. As a general practice, the baristas do not report to Starbucks how much they receive in tips. Instead, for tax withholding purposes, the company simply imputes 50 cents per hour in estimated tip income to each barista and withholds state and federal taxes from the baristas’ paychecks based on that amount. The district court granted Starbucks' motion to dismiss. The court concluded that, under the Tax Injunction Act, 28 U.S.C. 1341, and the Anti-Injunction Act, 26 U.S.C. 7421(a), the district court lacks subject matter jurisdiction over plaintiffs’ claims for declaratory and injunctive relief. The court also concluded that the federal-state comity doctrine bars the district court from awarding statutory damages on the state-tax component of plaintiffs’ claims, from which the federal-tax component cannot be severed. Because all of the claims are jurisdictionally barred or foreclosed by the comity doctrine, the court concluded that the entire action must be remanded to state court. Accordingly, the court reversed and remanded. View "Fredrickson v. Starbucks Corp." on Justia Law

Relying on the reputations of Defendants, Plaintiffs, the owners of one of South Florida’s largest general contractors, initiated a custom adjustable rate debt structure (CARDS) transaction. The IRS later issued notices of deficiency disallowing tax deductions based on the CARDS transaction on Plaintiffs’ federal tax returns on the ground that the CARDS transaction lacked economic substance. The tax court upheld the notice of deficiency. Thereafter, Plaintiffs filed a diversity action against Defendants in a federal district court alleging several tax law claims. The district court dismissed the complaint, concluding that the statute of limitations on Plaintiffs’ claims had run. Plaintiffs appealed. The United States Court of Appeals for the Eleventh Circuit certified a question of state law to the Supreme Court regarding whether Plaintiffs’ claims accrued at the time the IRS issued the notice of deficiency or when Plaintiffs’ underlying dispute with the IRS was concluded or final. The Supreme Court held that Taxpayers’ claims accrued at the time their action in the tax court became final, and that action became final ninety days after the tax court’s judgment, at the expiration of the time period for an appeal of that judgment. View "Kipnis v. Bayerische Hypo-Und Vereinsbank" on Justia Law

Two telephone companies (collectively, Taxpayers) paid personal property taxes assessed by the board of assessors of Boston for fiscal year 2012 on certain personal property each company owned. Taxpayers subsequently filed abatement applications, which were denied. The Appellate Tax Board upheld the property tax assessments. Taxpayers appealed, arguing that the tax assessments, which were based on a split tax rate structure authorized by Mass. Gen. Laws ch. 40, 56, constituted a disproportionate tax that violated the Massachusetts Constitution. The Supreme Judicial Court affirmed, holding that the split rate structure authorized by section 56 and related statutes is not unconstitutionally disproportionate. View "Verizon New England, Inc. v. Board of Assessors of Boston" on Justia Law

Albany Commons Ltd., the owner of a 240-unit apartment complex, filed a complaint for tax year 2005 seeking a reduction from the auditor’s valuation of $13,600,000 to $9,720,000. At a hearing before the Franklin County Board of Revision (BOR), Albany Commons presented an appraisal by James Horner, a certified appraiser, that proposed a property valuation of $9,338,000. The BOR adopted Horner’s valuation. The Columbus City Schools Board of Education (BOE) appealed. The Board of Tax Appeals (BTA) adopted Horner’s appraisal valuation without adjustment and without discussion of other issues raised by the BOE. BOE again appealed, arguing that the absence of market data from the appraisal report and other flaws in the appraisal rendered the appraisal defective and unreliable. The Supreme Court affirmed, holding that the BOE did not establish an abuse of discretion in the BTA’s decision to credit Horner’s testimony and report. View "Columbus City Schools Board of Education v. Franklin County Board of Revision" on Justia Law

In 2003, the Mississippi State Tax Commission (now the Department of Revenue) assessed additional income tax, penalties, and interest in an amount greater than $11.75 million against AT&T based on its income from dividends from non-Mississippi subsidiaries. After exhausting its administrative remedies, AT&T appealed to the Chancery Court of the First Judicial District of Hinds County, arguing that a portion of Section 27-7-15(4)(i) discriminated against interstate commerce in violation of the negative, or dormant, aspect of the Commerce Clause of the United States Constitution. AT&T argued that the scheme allowed an income tax exemption for dividends received from AT&T’s Mississippi subsidiaries while denying an exemption to similarly situated non-Mississippi subsidiaries. Ultimately, the chancellor agreed and declared a portion of Section 27-7-15(4)(i) as unconstitutional. Having determined that the geographical limitation in Section 27-7-15(4)(i) offended the negative aspect of the Commerce Clause of the United States Constitution, the Mississippi Supreme Court held that portion of it to be unconstitutional and invalid. The phrase “under the provisions of this article” was struck from Section 27-7-15(4)(i) and the severance was be applied to AT&T for the tax years at issue in this case. The judgment of the Chancery Court was affirmed. View "Miss. Dept. of Revenue v. AT&T Corporation" on Justia Law

The tax commissioner, in a final determination journalized on June 8, 2010, reduced to $927,513 the almost $17 million amortizable amount that International Paper Company had reported. The tax commissioner’s letter to International Paper memorializing this determination was not mailed until July 12, 2010. The Board of Tax Appeals (BTA) reinstated International Paper’s amortizable amount, concluding that the tax commission violated Ohio Rev. Code 5751.53(D) by failing to notify International Paper of its assessment by the June 30 deadline. The tax commissioner appealed. The Supreme Court reversed, holding (1) Ohio Rev. Code 5751.53(D) requires that a reduction in the amortizable amount be embodied in a timely issued final determination to effect a reduction of the amortizable amount; (2) Ohio Rev. Code 5751.53(D) requires the tax commissioner to enter his determination on the journal by June 30, but the determination need not be mailed to the taxpayer by that date to be effective; (3) thus, the BTA erred by finding the tax commissioner’s final determination void; and (4) International Paper did not jurisdictionally forfeit any right to a remand for consideration of its substantive claim by failing to file a protective cross-appeal. Remanded for consideration of International Paper’s substantive challenge to the tax commissioner’s decision. View "International Paper Co. v. Testa" on Justia Law