Justia Tax Law Opinion Summaries

The district court held that temporary foreign workers in the Commonwealth of the Northern Mariana Islands (CNMI) and their employers are required to pay FICA taxes, which fund Social Security and Medicare. Concorde and more than 4,000 temporary, nonresident former employees of Concorde, appealed the district court's entry of judgment on the pleadings in favor of the United States. The court concluded that, because FICA is a law that imposes an excise tax to support the Social Security system, it applies to the CNMI as it applies to Guam; FICA applies to all workers and their employers in Guam, regardless of their citizenship; and FICA also applies to all workers and their employers in the CNMI, including appellants, regardless of their citizenship. Accordingly, the court affirmed the judgment. View "Fang Lin Ai v. United States" on Justia Law

The Commissioner issued petitioner a notice of deficiency for the 2011 tax year and charged that petitioner had mischaracterized $1.8 million of the $3.1 million he received as a result of the merger between his company and Google, Inc., as long-term capital gain rather than ordinary income. The court agreed with the tax court’s finding that the preponderance of the evidence favors the Commissioner’s deficiency determination, so any error in the court’s allocation of the burden of proof is harmless. In this case, the facts lend credence to the tax court’s conclusion that petitioner did not make a good faith effort to assess his tax liability and could not reasonably rely on his advisers. Accordingly, the court affirmed the judgment. View "Brinkley v. CIR" on Justia Law

Utah’s pay-TV sales tax scheme provides a sales tax credit for an amount equal to fifty percent of the franchise fees paid by pay-TV providers to local municipalities for use of their public rights-of-way. Satellite providers, however, use a different business model that does not trigger franchise fees. The satellite providers brought this lawsuit asserting that Utah’s tax scheme favors local economic interests at the expense of interstate commerce in violation of the Commerce Clause and the Uniform Operation of Laws Clause. The State Tax Commission moved for judgment on the pleadings. The district court granted the motion. The Supreme Court affirmed, holding (1) Utah’s pay-TV tax credit survives dormant commerce scrutiny; and (2) the tax credit survives rational basis scrutiny under the Uniform Operation of Laws Clause. View "DIRECTV v. Utah State Tax Comm’n" on Justia Law

The issue this case presented for the Vermont Supreme Court's review centered on whether Mount Mansfield Company, Inc. (MMC) had unitary operations with AIG Insurance Management Services, Inc. (AIG) such that AIG was required to include MMC as part of the AIG unitary group on its Vermont corporate income tax return. It also raised the question of whether, and under what circumstances, an amended tax return restarted the statute of limitations period for collecting a deficiency. The trial court reversed the decision of the Commissioner of the Department of Taxes that there were unitary operations, and concluded that MMC was a discrete business enterprise distinct from AIG’s insurance and financial business. The Department appealed, arguing that the evidence supported the Commissioner’s decision. Finding no reversible error, the Supreme Court affirmed the trial court. View "AIG Insurance Management Services, Inc. v. Vermont Department of Taxes" on Justia Law

Taxpayers received and then sold stock derived from the demutualization of five mutual life insurance companies from which they had purchased policies. At issue was whether a life insurance policyholder has any basis in a mutual life insurance company’s membership rights. The court held that taxpayers who sold stock obtained through demutualization cannot claim a basis in that stock for tax purposes because they had a zero basis in the mutual rights that were extinguished during the demutualization. The district court skipped a critical step by examining the value of the mutual rights without evidence of whether the taxpayers paid anything to first acquire them. The district court also erred when it estimated basis by using the stock price at the time of demutualization rather than calculating basis at the time the policies were acquired. Consequently, the court concluded that the IRS properly rejected taxpayers' refund claim in this case where they offered nothing to show payment for their stake in the membership rights, as opposed to premium payments for the underlying insurance coverage. Accordingly, the court reversed the district court's denial of the government's motion for summary judgment. View "Dorrance v. United States" on Justia Law

Blume Construction, Inc. appealed a district court judgment affirming a Job Service North Dakota decision, finding Blume did not file a valid appeal and the agency's determination assigning Blume a final penalty tax rate. Blume received a notice of determination from Job Service informing Blume that it would be assigned a penalty tax rate for unemployment insurance. The notice stated the agency conducted an audit and concluded there was a transfer of ownership and payroll between Blume and another company that was knowingly done to obtain a lower tax rate for unemployment insurance. The notice informed Blume it would be assigned the highest tax rate assignable for the next three years. The notice advised Blume the determination would become final unless a written appeal was made to Job Service within fifteen days. Job Service received an electronic appeal request for Blume signed by Craig Fidler. Fidler was identified as a licensed attorney from Colorado. Fidler was not licensed to practice law in North Dakota. In approximately May 2014, Fidler notified the referee he was unable to secure a sponsoring attorney licensed in North Dakota. During that same time period, the referee was informed a North Dakota attorney would be representing Blume. Blume argued the referee erred in finding Blume's attorney engaged in the unauthorized practice of law and the appealed request the attorney filed was void. Finding no reversible error, the Supreme Court affirmed. View "Blume Construction, Inc. v. North Dakota" on Justia Law

Michael Howard appealed the grant of summary judgment entered against him in the action he commenced on behalf of himself and all other similarly situated taxpayers in Cullman County against Cullman County and its Revenue Commissioner Barry Willingham, in his official capacity. Howard sought a refund of property taxes he and other taxpayers paid in 2013. Howard sought a judgment declaring that, pursuant to former section 40-7-42, the Commission's levy of property taxes for October 1, 2012, through September 30, 2013, was invalid because it was done in May 2013 rather than at the Commission's first regular meeting in February 2013. He also sought the return of property taxes collected in 2013. The Supreme Court found that the trial court correctly concluded that the Commission's failure to follow the timing provision of former 40-7-42 did not invalidate its subsequent levy in 2013 of property taxes upon Howard and other property owners in Cullman County. Therefore, the Court affirmed summary judgment on all of Howard's claims in favor of Cullman County and the revenue commissioner. View "Howard v. Cullman County" on Justia Law

Appellee challenged the auditor’s valuation of a parcel of residential real estate for tax year 2012. The Columbus City Schools Board of Education (school board) sought retention of the auditor’s valuation. The Franklin County Board of Revision dismissed the complaint. Appellee appealed to the Board of Tax Appeals (BTA) from the dismissal order. On the notice of appeal, Appellee marked “yes” in response to a question asking whether the case should be referred to the small-claims docket. Accordingly, the case was placed on the small-claims docket. The school board filed a motion to return the case to the regular docket. The BTA denied the motion. The Supreme Court exercised its jurisdiction to review the interim order and affirmed the BTA’s denial of the school board’s motion, holding that the BTA did not err in denying the school board’s motion to have the case returned to the BTA’s regular docket. Remanded. View "Megaland GP, LLC v. Franklin County Bd. of Revision" on Justia Law

NOM appealed the district court’s denial of its motion under 26 U.S.C. 7431(c)(3) to collect attorneys’ fees from the IRS. NOM had filed suit against the IRS seeking damages for unlawful inspection and disclosure of confidential tax information by IRS agents. NOM sought statutory damages, actual damages, punitive damages, and costs and attorneys’ fees. the district court concluded that NOM was not a “prevailing party” under section 7430(c)(4)(A) because (1) it did not “substantially prevail[] [in litigation against the IRS] with respect to the amount in controversy, or . . . the most significant . . . issues presented,” and, alternatively, (2) the government’s position in the litigation was “substantially justified” under 7430(c)(4)(B). The court could not say that the government acted unreasonably prior to the summary judgment stage of the litigation by waiting to see what NOM’s evidence was and then challenging its sufficiency. In this case, the government adopted a reasonable strategy in conceding statutory damages, but challenging the existence and amount of both actual and punitive damages. The court agreed with the district court that the government’s litigation position was “substantially justified,” which, by itself, is sufficient to find that NOM was not a “prevailing party” under the statute. Accordingly, the court affirmed the judgment. View "National Org. for Marriage v. IRS" on Justia Law

In November 2009, County of Alameda voters approved Measures I and J levying special parcel taxes by the Albany Unified School District. Plaintiff-appellant Golden Gate Hill Development Company, Inc. was the owner of a parcel of real property in the City of Albany subject to the tax. In February 2014, appellant filed suit against the County and District seeking a refund of taxes paid under the Measures. Golden Gage Hill alleged the tax rates in the Measures were improper because different rates are imposed on residential and nonresidential properties, as well as nonresidential properties of different sizes. The complaint referenced a recent decision in this district, “Borikas v. Alameda Unified School Dist.” (214 Cal.App.4th 135 (2013)), which declared invalid a different parcel tax with similar rate classifications. Respondents moved to dismiss, contending the complaint failed to state a claim because, under Code of Civil Procedure section 860, et seq. (“the validation statutes”), appellant was required to present its claims in a “reverse validation action” within 60 days of passage of the Measures. The trial court sustained the demurrer without leave to amend. Because appellant has not shown there was a basis for its refund claim independent of the alleged invalidity of the Measures, the Court of Appeal affirmed. View "Golden Gate Hill Development Co. v. County of Alameda" on Justia Law