Justia Tax Law Opinion Summaries

José Mireles was involved in a drug distribution conspiracy that transported large quantities of cocaine and heroin from Los Angeles to Chicago. Mireles's role included retrieving drug shipments, delivering them to customers, and laundering the proceeds back to Los Angeles. The Drug Enforcement Agency eventually dismantled the network, arresting Mireles and other conspirators. Mireles escaped custody while being transported to court but was re-arrested 18 months later. He was convicted and sentenced to 342 months in prison.The United States District Court for the Northern District of Illinois handled the initial trial. Mireles challenged the admission of certain evidence and the calculation of his sentence. The district court admitted evidence of Mireles's failure to file tax returns, his escape from custody, and a conversation about procuring a firearm. The court also calculated the drug quantity attributable to Mireles and applied sentencing enhancements for obstruction of justice and reckless endangerment.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed Mireles's conviction, finding no abuse of discretion in the admission of the challenged evidence. However, the court ordered a limited remand for resentencing. The appellate court could not discern the factual basis for one of the sentencing enhancements related to obstruction of justice. The court upheld the enhancement for reckless endangerment but required further proceedings to clarify the obstruction enhancement. The court vacated Mireles's sentence and remanded the case for further proceedings consistent with its opinion. View "United States v. Mireles" on Justia Law

The case involves a dispute over fees related to contracts between independent solar generators (the plaintiffs) and National Grid USA Services Co., Inc. and its affiliate Niagara Mohawk Power Corporation (the defendants). The plaintiffs are required to pay costs for interconnecting their solar energy projects to the defendants' electric distribution grid, which includes a "tax gross-up adder" to offset the defendants' federal income tax liability. The plaintiffs sought a declaratory judgment that these interconnection payments are not taxable income and also sought to recover the allegedly unlawful tax-related fees through state-law claims for damages.The United States District Court for the Northern District of New York dismissed the case, finding that it lacked subject-matter jurisdiction. The court concluded that the plaintiffs' request for a declaratory judgment was barred by the Declaratory Judgment Act because the federal tax issue would only arise as a defense to a state-law breach of contract claim. The court also found that the plaintiffs' state-law claims did not raise a substantial federal question, as the federal tax issue was not significant to the federal system as a whole.The United States Court of Appeals for the Second Circuit affirmed the district court's judgment. The appellate court agreed that the plaintiffs' request for declaratory relief did not meet the threshold requirement for federal subject-matter jurisdiction, as the federal tax issue would only arise as a defense in a hypothetical state-law breach of contract claim. The court also found that the federal issue in the plaintiffs' state-law claims was not substantial, as it was fact-bound and situation-specific, and did not have broader significance for the federal government. Therefore, the district court's dismissal for lack of subject-matter jurisdiction was upheld. View "Sunvestment Energy Group NY 64 LLC v. National Grid USA Services Co., Inc." on Justia Law

The case involves a divorce between Guy Morrison, III (Husband) and Tami Hinson-Morrison (Wife), who married in 2007. Before the marriage, they signed a premarital agreement stating that each party would retain their individual property, any property acquired from the proceeds or appreciation of their premarital property, and any property acquired by gift or inheritance. During the marriage, Husband formed three oil and gas companies and made various financial contributions to Wife's businesses and properties. Wife filed for divorce in 2022, leading to disputes over the interpretation and application of the premarital agreement and the equitable distribution of assets and debts.The District Court of Campbell County found the premarital agreement clear and unambiguous, except for its silence on commingling of funds. The court ruled that Husband's financial contributions to Wife's properties were spousal gifts and did not warrant compensation. The court divided the remaining marital assets and debts equitably, awarding Husband his businesses and other assets, while Wife retained her businesses and the marital home. The court also ordered the parties to file joint tax returns for 2021 and 2022 and bear their respective tax obligations proportionally.The Supreme Court of Wyoming affirmed the district court's decision. It held that the premarital agreement was clear and enforceable, and the district court correctly interpreted it without adding a commingling provision. The court also found no abuse of discretion in the equitable distribution of assets and debts, noting that the division left both parties in a comfortable financial position. The court declined to award Wife attorney fees, as the fee-shifting provision in the premarital agreement did not apply to the divorce proceedings. View "Morrison v. Hinson-Morrison" on Justia Law

In this case, Dean and Dave Cook filed a complaint with the Union County Board of Revision in February 2022, seeking an increase in the property valuation of an apartment complex owned by The Residence at Cooks Pointe, L.L.C. The Marysville Exempted Village Schools Board of Education filed a counter-complaint in May 2022, supporting the Cooks' claim that the property was undervalued. The Board of Revision held a hearing in August 2022 and decided not to change the property valuation due to insufficient evidence.The Marysville Exempted Village Schools Board of Education appealed the Board of Revision's decision to the Board of Tax Appeals (BTA) in September 2022. However, the BTA dismissed the appeal in December 2022, citing a recent amendment to R.C. 5717.01, effective July 21, 2022, which restricted the ability of school boards to appeal property valuation decisions unless they owned or leased the property in question. The school board then appealed to the Third District Court of Appeals, which reversed the BTA's decision, ruling that the amendment did not apply to cases pending before the Board of Revision when the amendment took effect.The Supreme Court of Ohio reviewed the case and affirmed the Third District Court of Appeals' decision. The court held that the amended R.C. 5717.01, which limits a political subdivision's ability to appeal a county board of revision's property valuation decision, does not apply to cases that were pending before a board of revision when the amendment took effect. The court emphasized that the language of the amended statute is written in the present tense and ties the right of appeal to the moment a complaint is filed with a board of revision. Therefore, the school board's appeal to the BTA should be considered under the former version of R.C. 5717.01. The case was remanded to the BTA for further proceedings. View "Marysville Exempted Village Schools Bd. of Edn. v. Union Cty. Bd. of Revision" on Justia Law

Eight rural electric cooperatives (RECs) sought judicial review after the Kansas Board of Tax Appeals (BOTA) denied their property valuation challenges for the 2019 and 2020 tax years. The RECs argued that the valuation methodology used by the Kansas Department of Revenue's Property Valuation Division (PVD) violated the requirement for "generally accepted appraisal procedures" under K.S.A. 79-5a04. The RECs elected to go to district court for a trial de novo, which allows for an evidentiary hearing where issues of law and fact are determined anew.The Shawnee County District Court agreed with the RECs, concluding that PVD's valuation methodology violated K.S.A. 79-5a04. The court found that the methodology resulted in non-uniform and unequal valuations of the RECs' properties, thus inflating their property values and taxes. The district court ordered PVD to adjust its methodology to account for the RECs' treatment of margin stabilization adjustments (MSAs) in their net operating income (NOI).On appeal, the Kansas Supreme Court reviewed whether the district court exceeded its scope of judicial review by considering issues not raised before BOTA. The Supreme Court held that a trial de novo under K.S.A. 2023 Supp. 74-2426(c)(4)(B) does not expand a district court's scope of judicial review beyond what is permitted by K.S.A. 77-617. The court determined that the RECs had only raised a constitutional issue regarding uniform and equal taxation before BOTA, not a statutory compliance issue under K.S.A. 79-5a04. Therefore, the district court exceeded its scope of review by deciding on the statutory issue.The Kansas Supreme Court reversed the district court's judgment, holding that the district court improperly expanded its scope of review by addressing the statutory compliance issue that was not litigated before BOTA. View "FreeState Electric Cooperative, Inc. v. Kansas Dept. of Revenue" on Justia Law

Precision Castparts Corp. (Precision Castparts) sought to deduct income included in its 2017 federal tax return under 26 U.S.C. § 965 (Section 965) from its Nebraska taxable income. Section 965, part of the Tax Cuts and Jobs Act (TCJA), required U.S. shareholders to include retained earnings of controlled foreign corporations (CFCs) in their income. Precision Castparts argued that this income should be deductible under Neb. Rev. Stat. § 77-2716(5), which allows deductions for "dividends received or deemed to be received" from foreign corporations.The Tax Commissioner denied Precision Castparts' request to amend its 2017 Nebraska tax return to claim this deduction, stating that Section 965 income is not considered "dividends" under federal tax law. The Commissioner concluded that Section 965 income is a "deemed inclusion" rather than a "deemed dividend."The district court for Lancaster County affirmed the Tax Commissioner’s decision. The court reasoned that Section 965 income does not meet the definition of a dividend under federal tax law because it involves no actual distribution. The court also agreed with the Tax Commissioner that Congress did not explicitly deem Section 965 inclusions as dividends, unlike other provisions in the Internal Revenue Code.The Nebraska Supreme Court reviewed the case and affirmed the district court's decision. The Court held that Section 965 income does not qualify as "dividends . . . deemed to be received" under § 77-2716(5). The Court noted that Section 965 employs pass-through treatment, attributing earnings to shareholders without deeming a distribution. Therefore, the income included under Section 965 is not deductible in Nebraska. The Court concluded that the district court did not err in affirming the Tax Commissioner’s order. View "Precision Castparts Corp. v. Nebraska Dept. of Rev." on Justia Law

A former employee of Credit Suisse, John Doe, filed a qui tam action under the False Claims Act (FCA) alleging that the bank failed to disclose ongoing criminal conduct to the United States, thereby avoiding additional penalties. This followed Credit Suisse's 2014 guilty plea to conspiracy charges for aiding U.S. taxpayers in filing false tax returns, which included a $1.3 billion fine. Doe claimed that Credit Suisse continued its illegal activities post-plea, thus defrauding the government.The United States District Court for the Eastern District of Virginia granted the government's motion to dismiss the case. The government argued that Doe's allegations did not state a valid claim under the FCA and that continuing the litigation would strain resources and interfere with ongoing obligations under the plea agreement. The district court dismissed the action without holding an in-person hearing, relying instead on written submissions from both parties.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision. The court held that the "hearing" requirement under 31 U.S.C. § 3730(c)(2)(A) of the FCA can be satisfied through written submissions and does not necessitate a formal, in-person hearing. The court found that Doe did not present a colorable claim that his constitutional rights were violated by the dismissal. The court emphasized that the government has broad discretion to dismiss qui tam actions and that the district court properly considered the government's valid reasons for dismissal, including resource conservation and the protection of privileged information. The Fourth Circuit concluded that the district court's dismissal was appropriate and affirmed the judgment. View "United States ex rel. Doe v. Credit Suisse AG" on Justia Law

Michael Brown, a taxpayer, requested a collection due process hearing regarding a notice of tax lien on his property for unpaid taxes. He submitted an offer-in-compromise to settle his tax liability, which was referred to the IRS Collection Division for investigation. The Collection Division returned Brown's offer within seven months, deeming it nonprocessable. Over two years later, the Office of Appeals sustained the notice of tax lien.Brown petitioned the United States Tax Court, arguing that his offer-in-compromise should be deemed accepted by law under 26 U.S.C. § 7122(f) because the Office of Appeals did not issue a final determination within 24 months. The Tax Court rejected this argument, ruling that the Collection Division's return of the offer within the 24-month period constituted a rejection, thus stopping the clock on the 24-month deadline.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the Tax Court's decision. The Ninth Circuit held that the Collection Division's return of Brown's offer-in-compromise within seven months was a valid rejection under § 7122(f), regardless of the ongoing collection due process hearing. The court clarified that the 24-month period for the IRS to act on an offer-in-compromise is terminated by the Collection Division's return of the offer, not by the Office of Appeals' final determination. Therefore, Brown's offer was not deemed accepted by operation of law. View "BROWN V. COMMISSIONER OF INTERNAL REVENUE" on Justia Law

Maggie Anne Boler was convicted of six counts of presenting false claims against the United States by submitting fraudulent tax returns to the IRS and one count of making a false statement on a Paycheck Protection Program (PPP) loan application. Boler submitted six fraudulent tax returns, receiving refunds on four, totaling $116,106. Additionally, she falsely claimed a $20,833 PPP loan. She was sentenced to 30 months in prison.The United States District Court for the District of South Carolina calculated Boler's sentencing range based on the total intended financial harm, including the two denied tax returns, amounting to $180,222. Boler objected, arguing that only the actual loss should be considered, not the intended loss. The district court overruled her objection, holding that the term "loss" in the Sentencing Guidelines could include both actual and intended loss.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court concluded that the term "loss" in the Sentencing Guidelines is genuinely ambiguous and can encompass both actual and intended loss. The court deferred to the Sentencing Guidelines' commentary, which defines "loss" as the greater of actual or intended loss. The court found that the district court correctly included the full intended loss in Boler's sentencing calculation. Therefore, the Fourth Circuit affirmed the district court's judgment, upholding Boler's 30-month sentence. View "United States v. Boler" on Justia Law

Renee Vasko challenged her property tax assessment on two grounds: the revocation of her homestead classification and the assessed value of her property. In 2018, McLeod County sent a homestead application to Vasko’s property address, which was returned as undeliverable. The County learned from the City of Lester Prairie that there had been no measurable water use at the property since 2016. Consequently, the County revoked the homestead classification effective January 2, 2019, and assessed the property at $110,100.Vasko filed a petition in the Minnesota Tax Court, disputing the revocation of the homestead classification and the property’s assessed value. She presented evidence, including mail addressed to the property, utility records, and testimony, to establish occupancy and use of the property. Vasko also compared her property’s valuation to five other properties in the City to argue that her home was overvalued. The Tax Court found that Vasko did not occupy and use the property as a homestead in 2019 and upheld the County’s valuation, concluding that Vasko did not provide sufficient evidence to rebut the presumptive validity of the County’s assessment.The Minnesota Supreme Court reviewed the case and affirmed the Tax Court’s decision. The Court held that the Tax Court correctly placed the burden of proof on Vasko to show that the revocation of the homestead classification was unlawful and that the assessed value was incorrect. The Supreme Court found no clear error in the Tax Court’s findings that Vasko did not occupy and use the property as a homestead and that she failed to provide substantial evidence to challenge the County’s valuation. The decision of the Tax Court was affirmed. View "Vasko vs. County of McLeod" on Justia Law