Justia Tax Law Opinion Summaries

Davis and his wife purchased a Philadelphia rental property in 1997 1997. A longtime member of the U.S. Army Reserve, Davis was called to active duty in 2004. A few months later, the Davises transferred the property to Global LLC, owned and managed by Davis, to “insulate themselves from liability” because “his wife was unable to manage the property.” In 2009, Davis and Global asked the Philadelphia Department of Revenue to reduce Global’s property tax debt, citing the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. 3901, which limits interest imposed on a servicemember’s delinquent property taxes during active duty to a rate of six percent and forbids additional penalties. The Department denied this request, stating that the SCRA does not apply to a business owned by a servicemember and that Davis should file an abatement petition with the Philadelphia Tax Review Board. The Review Board denied that petition. Two years later the city initiated foreclosure proceedings; the state court entered judgment in the city’s favor. Davis and Global filed suit under 42 U.S.C. 1983. The Third Circuit affirmed dismissal. SCRA extends only to servicemembers; a corporation is not a “servicemember” under the statute. View "Davis v. City of Philadelphia" on Justia Law

The IRS conducted a criminal investigation into businesses owned by Rogers and his associates and subsequently seized millions of dollars. Forfeiture actions settled by an agreement executed in August, 2012. Rogers released his right to bring future claims “related to and/or in connection with or arising out of” the forfeiture actions. In November 2012, Rogers requested records under the Freedom of Information Act (FOIA) 5 U.S.C. 552. The IRS denied the request. In 2013, Rogers filed suit. In November 2014, the IRS moved for summary judgment, arguing that the release affirmatively waived Rogers’ right to bring his FOIA action. Rogers argued that the IRS forfeited its right to rely on the release by not pleading it as an affirmative defense; the IRS should be estopped from asserting the affirmative defense; and the release did not apply because the FOIA claim was not related to the forfeiture actions. The court granted the IRS summary judgment, finding the release’s language broad enough to encompass Rogers’ FOIA action. The Sixth Circuit affirmed While the IRS could have been more diligent in raising its defense, the court did not abuse its discretion by permitting the IRS to raise it in a summary judgment motion. View "Rogers v. Internal Revenue Serv." on Justia Law

The IRS disallowed all deductions and losses reported by RJT on its 2001 partnership return. It also determined that a 40-percent accuracy-related penalty for gross misstatement of partnership basis would be applied to any underpayment of tax by RJT partners resulting from the adjustments made to the RJT partnership return. RJT and Thompson challenged these adjustments in a partnership-level proceeding before the Tax Court, but the adjustments, including imposition of the penalty, were affirmed by the Tax Court and by this court on appeal. Then the Thompsons filed a petition in the Tax Court to challenge both the tax deficiency and the penalty. The IRS contends that the Thompsons are prohibited from challenging the Tax Court’s jurisdiction over the penalty issue under the law-of-the-case doctrine. The court affirmed the judgment, concluding that the Tax Court did not err by dismissing the penalty issue for lack of jurisdiction. View "Thompson v. Commissioner" on Justia Law

Krispy Kreme sought a refund for sales tax it had remitted on retail sales of donuts and non-hot beverages between April 2003 and December 2005, arguing that not more than eighty percent of its food products were sold for immediate consumption on or off the premises of the establishment, and therefore, the lower tax rate authorized by Mo. Rev. Stat. 144.014 applied to its food sales. The Administrative Hearing Commission (AHC) ruled that Krispy Kreme was not entitled to a refund, determining that the lower tax rate did not apply to Krispy Kreme’s food sales. The Supreme Court affirmed, holding that Krispy Kreme failed to prove that sales of food prepared for immediate consumption did not constitute more than eighty percent of its total gross receipts and failed to show it was entitled to a lower tax rate under section 144.014. View "Krispy Kreme Doughnut Corp. v. Dir. of Revenue" on Justia Law

Nelson Industrial Steam Company (“NISCO”) was in the business of generating electric power in Lake Charles. In order to comply with state and federal environmental regulations, NISCO introduces limestone into its power generation process; the limestone acts as a “scrubbing agent.” The limestone chemically reacts with sulfur to make ash, which NISCO then sells to LA Ash, for a profit of roughly $6.8 million annually. LA Ash sells the ash to its customers for varying commercial purposes, including roads, construction projects, environmental remediation, etc. NISCO appealed when taxes were collected on its purchase of limestone over four tax periods. NISCO claimed its purchase of limestone was subject to the “further processing exclusion” of La. R.S. 47:301(10)(c)(i)(aa), which narrowed the scope of taxable sales. The Louisiana Supreme Court granted NISCO’s writ application to determine the taxability of the limestone. The trial court ruled in the Tax Collectors' favor. After its review, the Supreme Court found that NISCO’s by-product of ash was the appropriate end product to analyze for purposes of determining the “further processing exclusion’s” applicability to the purchase of limestone. Moreover, under a proper “purpose” test, the third prong of the three-part inquiry enunciated in "International Paper v. Bridges," (972 So.2d 1121(2008)) was satisfied, "as evidenced by NISCO’s choice of manufacturing process and technology, its contractual language utilized in its purchasing of the limestone, and its subsequent marketing and sale of the ash." Therefore the Court reversed the trial court and ruled in favor of NISCO. View "Bridges v. Nelson Industrial Steam Co." on Justia Law

The Director of Revenue assessed use tax on the service charges Bartlett International Inc. and Bartlett Grain Co., LP (collectively, Bartlett) paid to install a grain conveyor at one of its grain elevators in Missouri. The Administrative Hearing Commission determined that the Director improperly assessed tax on the disputed charges. The Supreme Court reversed, holding (1) the service charges were subject to use tax because they were part of the sale of tangible personal property under Mo. Rev. Stat. 144.605(8); and (2) Bartlett failed to show that the disputed charges were subject to a statutory exemption or exclusion. Remanded. View "Bartlett Int’l, Inc. v. Dir. of Revenue" on Justia Law

The assessment of real property in the State for property tax purposes is calculated by reference to the value on the “date of finality,” which is defined as “January 1, immediately before the 1st taxable year to which the assessment based on the new value is applicable.” Petitioner appealed her 2011 tax assessment of a condominium she owned and occupied. The Tax Court concluded that the Tax Property Article did not prohibit the court from taking into account sales of comparable properties that occur after the date of finality in determining the value of a property on the date of finality and, thus, relied on sales of comparable properties that occurred several months after the date of finality. The Circuit Court ruled that the Tax Court erred in considering evidence of post-date of finality sales of comparable properties. The Court of Special Appeals reversed. The Court of Appeals affirmed, holding (1) the Tax Court may consider the sale of comparable properties occurring within a reasonable time after the date of finality to assess the value of the property; and (2) substantial evidence in the record supported the Tax Court’s assessment of Petitioner’s property, relying on the post-date of finality sales. View "Lane v. Supervisor of Assessments of Montgomery County" on Justia Law

Plaintiffs are individuals who obtained property tax loans from defendant property tax lenders in exchange for the transfer of their tax liens pursuant to Sections 32.06 and 32.065 of the Texas Tax Code. In these four consolidated appeals, at issue is whether the Truth in Lending Act's (TILA), 15 U.S.C. 1602(f), (g), (i), disclosure and consumer protection requirements apply to transfers of property tax liens carried out under Section 32.06 of the Texas Tax Code. The court concluded that the transfer of a tax lien does not constitute an extension of “credit” that is subject to TILA. Accordingly, the court denied the district court's dismissal of No. 14-51326, and reversed the district court's denial of defendants' motion to dismiss in No. 15-50199, 15-50340, and 15-50437. View "Billings v. Propel Fin. Servs." on Justia Law

In 2009, Spire Institute (Spire), a nonprofit corporation, entered into an agreement to lease land from Roni Lee, LLC, a for-profit company. By 2012, Spire had constructed Olympic-grade athletic facilities and related improvements on about a quarter of the property. In 2010, Spire sought a real-estate-tax exemption for the entire property under the charitable-use exemption. The tax commissioner denied exemption, finding that Roni Lee used the property for land development and commercial leasing and that Spire was not “engaged in charitable activity in any substantial way.” The commissioner also denied exemption of he undeveloped property under the prospective-use doctrine. The Board of Tax Appeals (BTA) affirmed the denial of exemption. The Supreme Court affirmed the BTA’s decision, holding that Spire failed to establish that any portion of the subject property qualified for a charitable-use exemption. View "Geneva Area Recreational, Educ. & Athletic Trust v. Testa" on Justia Law

The issue this case presented for the Supreme Court's review centered on whether 39-29-105(1)(a) permitted a deduction for the “cost of capital” associated with natural gas transportation and processing facilities. In general terms, the cost of capital was defined as the amount of money that an investor could have earned on a different investment of similar risk. In this case, the cost of capital was the amount of money that BP America Production Company’s (“BP”) predecessors could have earned had they invested in other ventures rather than in building transportation and processing facilities. BP claimed it could deduct the cost of capital because it was a cost associated with transportation and processing activity. Respondent Colorado Department of Revenue argued that the cost of capital was not a deductible cost because it was not an actual cost. The court of appeals held that the cost of capital as not a deductible cost under the statute. BP appealed, and the Colorado Supreme Court reversed, holding that the plain language of section 39-29-102(3)(a) authorized a deduction for any transportation, manufacturing, and processing costs and that the cost of capital was a deductible cost that resulted from investment in transportation and processing facilities. The appellate court was reversed and the case remanded back to the district court for further proceedings. View "BP Am. v. Colo. Dept. of Revenue" on Justia Law