Justia Tax Law Opinion Summaries

The Supreme Court of the State of Colorado reviewed a case involving a dispute over the methodology for implementing Tax Increment Financing (TIF) under Colorado's Urban Renewal Law (URL). The respondents, collectively known as AURA, argued that the methodology applied by the Colorado State Property Tax Administrator and the Arapahoe County Assessor was in violation of the URL because it differentiated between direct and indirect benefits when adjusting the base and increment values of blighted property in urban renewal areas. They contended that this methodology deprived urban renewal authorities of property tax revenues they should receive due to enhanced market perceptions of properties located in a TIF plan. The court of appeals agreed with AURA and reversed the district court's summary judgment favoring the Assessor. However, the Supreme Court held that the Administrator's methodology does not violate the URL. The URL does not prescribe a specific methodology but gives the Administrator broad authority to determine how to calculate and proportionately adjust the base and increment values. The court concluded that the Administrator's differentiation between direct and indirect benefits does not conflict with the URL, and therefore, reversed the portion of the division’s judgment concerning the Administrator’s methodology and affirmed that the district court correctly entered summary judgment. View "Kaiser v. Aurora Urban Renewal Authority" on Justia Law

The Supreme Court of the State of Washington found that the initiation fees charged by Royal Oaks Country Club, a nonprofit corporation, are fully deductible from the business and occupation (B&O) tax under RCW 82.04.4282. The statute permits taxpayers to deduct "bona fide" initiation fees, among other things, from their B&O tax. The court held that these initiation fees were "bona fide" as they were paid solely for the privilege of membership, and did not automatically entitle a member to use any service or facility of the club. The court differentiated between dues and initiation fees, noting that the statute treats these two terms separately. The court rejected the Washington Department of Revenue's argument that a portion of the initiation fee was for access to facilities and thus not subject to the exemption, stating that there is a difference between access and use. The court affirmed the Court of Appeals' decision that Royal Oaks' initiation fees qualify as bona fide initiation fees and are therefore wholly deductible. View "Royal Oaks Country Club v. Dep't of Revenue" on Justia Law

In South Dakota, McLane Western, Inc. and McLane Minnesota, Inc., South Dakota-licensed wholesalers of tobacco products, purchased Other Tobacco Products (OTP) from U.S. Smokeless Tobacco Brands, Inc. (UST Sales), who in turn purchased the products from U.S. Smokeless Tobacco Manufacturing Company, LLC (UST Manufacturing), a federally licensed tobacco manufacturer. McLane brought the OTP into South Dakota and paid the state's 35% tobacco tax. They calculated the tobacco tax they owed using the amount they paid to UST Sales for the OTP, a price higher than what UST Sales paid UST Manufacturing for the same OTP. McLane later submitted numerous refund requests to the South Dakota Department of Revenue, arguing that they overpaid their tax obligations as their tax should have been based on the price UST Sales paid UST Manufacturing.The Supreme Court of the State of South Dakota agreed that McLane overpaid its tobacco tax as it was based on the higher price it paid to UST Sales instead of the price at which UST Manufacturing sold tobacco products to UST Sales. However, the court also concluded that McLane was not entitled to a refund for the overpaid amounts. The court reasoned that although McLane overpaid its advance tax obligation, it fully recovered the advance tax it paid from the dealers to whom it subsequently sold the OTP. The dealers then recovered that tax from the consumers who purchased the OTP. Thus, McLane was made whole by its resale of the OTP and is not entitled to any refund. The court affirmed the Department’s denial of McLane’s request for a refund. View "Mclane Western, Inc. v. South Dakota Department Of Revenue" on Justia Law

In this case, the United States Chamber of Commerce and three other trade associations sued to stop the enforcement of a new state tax in Maryland known as the Digital Advertising Gross Revenues Tax Act. The law requires large technology companies to pay a tax based on gross revenue they earn from digital advertising in the state. The plaintiffs alleged that the Act violates the Internet Tax Freedom Act, the Commerce Clause, the Due Process Clause, and the First Amendment. The United States District Court for the District of Maryland dismissed three of the counts as barred by the Tax Injunction Act, which prevents federal courts from stopping the collection of state taxes when state law provides an adequate remedy. The court dismissed the fourth count on mootness grounds after a state trial court declared the Act unconstitutional in a separate proceeding. On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of the first three counts, but vacated the judgment to the extent it dismissed those counts with prejudice, ordering that the dismissal be entered without prejudice. The appellate court also vacated the dismissal of the fourth count and remanded for further proceedings, as the plaintiffs' First Amendment challenge to the Act's prohibition on passing the tax onto consumers was not moot. View "Chamber of Commerce of the United States v. Lierman" on Justia Law

In the case before the Nebraska Supreme Court, Fountain II, LLC, a commercial real estate development company, disputed the denial of special valuation as agricultural or horticultural land, commonly known as "greenbelt status", for a 19.9-acre property it owned in Douglas County, Nebraska. The Douglas County Board of Equalization had denied the company's application for greenbelt status for the tax year 2018, arguing that the property was not primarily used for agricultural or horticultural purposes. The Tax Equalization and Review Commission (TERC) affirmed the county board's decision.Upon appeal, the Nebraska Supreme Court reversed TERC's decision and remanded the case with instructions to sustain the company's protest. The court found that TERC erred in considering the property's use as of July 15, 2018, instead of as of January 1, 2018, as required by Nebraska law. The court also found that the county board's decision was arbitrary and unreasonable, and TERC's decision was not supported by competent evidence, as the evidence showed that the property was primarily used for agricultural purposes as of January 1, 2018. View "Fountain II, LLC v. Douglas Cty. Bd. of Equal." on Justia Law

In this case, the United States Court of Appeals for the Federal Circuit ruled against Philadelphia Energy Solutions Refining and Marketing, LLC ("Philadelphia Energy"). Philadelphia Energy, a fuel producer, had appealed a decision by the United States Court of Federal Claims denying their claim for tax refunds for excise taxes they had paid on fuel mixtures of butane and gasoline. Philadelphia Energy argued that these fuel mixtures should be considered "alternative fuel mixtures" under 26 U.S.C. § 6426(e), making them eligible for a tax credit. However, the Court of Appeals upheld the lower court's decision, finding that butane, despite being considered a liquefied petroleum gas, is not considered an "alternative fuel" under this statute. This is because butane is also a "taxable fuel," and the statutory language creates a dichotomy between "taxable fuels" and "special motor fuels", with the two being mutually exclusive. Consequently, Philadelphia Energy's mixture of butane and gasoline does not qualify for the alternative fuel mixture credit, and they are not entitled to the claimed tax refunds. View "PHILADELPHIA ENERGY SOLUTIONS REFINING v. US " on Justia Law

In this case, the Greenspan family bought a home in Long Beach, California, for $900,000 in 2014. The land was valued at $540,000 and the improvements (the home itself) at $360,000. Two years later, the Greenspans demolished the original residence, except for the garage, and built a new home on the property. The County of Los Angeles then reappraised the property, reducing the value of the improvements to $40,000 and increasing the value of the land to $860,000. The County then added the appraised value of the new construction to the newly allocated land and improvement values. The Greenspans contested this reappraisal, arguing that the County's reallocation of their base-year land and improvement value was contrary to law. The trial court found in favor of the County, and the Greenspans appealed.The Court of Appeal of the State of California Second Appellate District reversed the trial court's decision. The court found that the County's automatic reallocation of the base-year value for the entire structure removed, leaving only a "credit" for the remaining garage, was contrary to Revenue and Taxation Code sections 51 and 75.10, which require that a property owner receive a reduction in previously assessed base values for portions of any property removed. The court held that the County's automatic reappraisal policy, based on the assumption that a property owner bought the property for the land value alone if substantial renovation occurred within two years, was inconsistent with Proposition 13 and statutory valuation standards. The court remanded the case to the trial court with directions to enter a new judgment vacating the decision of the Board and remanding the matter for further proceedings consistent with its opinion. View "Greenspan v. County of Los Angeles" on Justia Law

The case involves Alico, LLC, a Massachusetts-based company with offices in both Massachusetts and Connecticut. The company's vehicles, used for business, were registered in Massachusetts, and taxes were paid in that state. However, the vehicles were primarily used and garaged in Somers, Connecticut, where the company's sole member and his wife, who also works for the company, reside. In 2018, the tax assessor in Somers, Connecticut, became aware of the presence of these vehicles and retroactively placed them on the town's 2017 and 2018 grand lists, assessing property taxes on them. The plaintiffs, Alico and its sole member, appealed this decision, arguing it was unconstitutional under the dormant commerce clause of the United States constitution. They claimed that because the vehicles were used in interstate commerce and already taxed in Massachusetts, the Connecticut property tax led to impermissible double taxation.The Supreme Court of Connecticut disagreed with the plaintiffs' arguments. The court ruled that the property tax authorized by Connecticut's statute did not violate the dormant commerce clause. The court applied the test set forth in Complete Auto Transit, Inc. v. Brady, which determines the constitutionality of a state tax that is facially neutral but may impose a disproportionate burden on interstate commerce. The court found that the Connecticut tax was applied to an activity with a substantial nexus with the state, was fairly apportioned, did not discriminate against interstate commerce, and was fairly related to the services provided by the state. Therefore, the court affirmed the trial court's denial of the plaintiffs' request for a declaratory judgment declaring the assessments unconstitutional. The court also noted that any double taxation was not the result of a discriminatory tax scheme, but rather the plaintiffs' business decisions. View "Alico, LLC v. Somers" on Justia Law

In this case before the Indiana Supreme Court, Thomas DeCola, the appellant, filed a suit to quiet title after purchasing property owned by Norfolk Southern Corporation, the appellee, at a tax sale. The property had fallen into tax delinquency. DeCola sought judgment on the pleadings, arguing that Norfolk had not received proper notice of the tax sale, the petition for tax deed, or its right of redemption. The trial court converted DeCola's motion into one for summary judgment because it considered evidence outside the pleadings. In its detailed order, the trial court denied DeCola's summary judgment motion, finding the tax deed void due to lack of sufficient notice to Norfolk.DeCola appealed the denial of summary judgment, claiming it was a final order. However, the Indiana Supreme Court held that the trial court's order denying summary judgment was not a final judgment because it did not resolve all claims as to all parties. The Court stated that the order did not meet any of the five definitions of a "final judgment" as laid out in Rule 2(H) of the appellate rules. Therefore, the Court concluded that it did not have jurisdiction to hear the appeal.The Indiana Supreme Court granted transfer, dismissed the appeal for lack of jurisdiction, and remanded the case back to the trial court for further proceedings. View "DeCola v. Norfolk Southern Corporation, Inc." on Justia Law

This case involves a dispute over the tax assessments of 115 vacant lots in the Sunup Ridge subdivision in Converse County, Wyoming, owned by Jan Gray. Gray appealed the Converse County Board of Equalization’s decisions upholding the Converse County Assessor’s tax assessments for the years 2016, 2017, 2018, and 2020. He contended that the County Assessor failed to physically inspect each lot as required by law, and that the tax assessments were not supported by substantial evidence. Additionally, he argued that the County Board did not provide an adequate record on appeal and that he was denied an opportunity for proper discovery.The Supreme Court of Wyoming upheld the County Board's decisions. The court found that the County Assessor had complied with the requirement to physically inspect the properties, and that the tax assessments were supported by substantial evidence. Furthermore, the court determined that the County Board had provided an adequate record for appeal and that Gray had not been denied an opportunity for discovery. Therefore, the court affirmed the County Board's tax assessments for the years in question. View "Jan Charles Gray v. Converse County Assessor" on Justia Law