Justia Tax Law Opinion Summaries

FICA tax includes social security tax and hospital insurance tax, 26 U.S.C. 3101(a)–(b). Balestra was a United Airlines pilot from 1979 until his 2004 retirement. He was eligible for life-long retirement benefits through a nonqualified deferred compensation plan that was a nonaccount balance plan, starting the day of his retirement. United withheld $4,199.22 in hospital insurance tax from Balestra in 2004 based on statutory tax rate applied to the present value of the deferred compensation that Balestra was to receive under the plan. United’s obligation to pay the benefits was eventually discharged in bankruptcy. United ceased paying Balestra’s benefits in 2010. Balestra actually received only $63,032.09 in benefits, although he paid hospital tax based on $289,601.18 in benefits, and sought a refund of $3,285.26—the amount of tax paid on compensation he will never receive. The IRS and Claims Court rejected the claim. The Federal Circuit affirmed. The term “amount deferred” is not defined by statute, but a Treasury regulation defines it in terms of deferred compensation’s “present value,” without consideration of an employer’s financial condition. While the regulation may seem unfair in a specific instance, in balancing the desire for simplicity against the ideal of ultimate comprehensiveness, the agency has a reasonable degree of discretion. View "Balestra v. United States" on Justia Law

The manufacturer sells telecommunications equipment to telephone companies, which pay for the equipment, written instructions on using the equipment, a copy of the computer software that makes the equipment work, and the right to copy that software onto the equipment’s hard drive and use the software to operate the equipment. An almost identical transaction was previously found to satisfy the requirements of California’s technology transfer agreement statutes (Rev. & Tax. Code 6011(c)(10) & 6012(c)(10)), so that the manufacturer was responsible for paying sales taxes only on tangible portions of the transaction (equipment and instructions), but not the intangible portions (software and rights to copy and use it). The State Board of Equalization nonetheless assessed a sales tax. The manufacturer paid the taxes and sought a refund. The court of appeal held that the Board’s assessment of the sales tax was erroneous. The manufacturer’s decision to give the telephone companies copies of the software on magnetic tapes and compact discs (rather than over the Internet) does not turn the software or the rights to use it into “tangible personal property” subject to the sales tax. View "Lucent Techs., Inc. v. State Bd. of Equalization" on Justia Law

WCI was owned by WB Acquisition, which was owned by WBPartners, which in turn was owned by Daren Barone’s and Gregory Watkins’s holding corporations. WCI and WB Partners formed a joint venture called the NTC Joint Venture. The joint venture’s structure had significant federal income tax consequences. While the NTC project was ongoing, WCI sold its assets to Kuranda. WB Partners, WB Acquisition, and Barone's holding corporation (collectively, Taxpayers) challenged certain tax deficiencies identified by the Commissioner. In three consolidated decisions, the Tax Court found that the NTC Joint Venture was not a valid partnership for tax purposes, and therefore that all of the joint venture’s profits were taxable income to WCI. The Tax Court determined that all of the proceeds from the noncompetition agreement were income to WCI as well. Because WCI had substantially understated its income, the Tax Court upheld the Commissioner’s assessment of accuracy-related penalties. The court concluded that income from the NTC Project attributed to WB Partners was in fact income to WCL; proceeds from the noncompetition agreement were income to WCI rather than WB Partners; and the Tax Court properly assessed accuracy-related penalties. Accordingly, the court affirmed the judgment. View "DJB Holding Corp. v. Commissioner" on Justia Law

This case was before the Supreme Court on appeal from a circuit court judgment validating a proposed bond issue. The Court affirmed the circuit court’s decision to validate the bonds but remanded with instructions for the circuit court to require Leon County Energy Improvement District to amend the financing agreement to remove all references to judicial foreclosure. The financing agreement was virtually identical to the financing agreement in Thomas v. Clean Energy Coastal Corridor, also decided today. The Court wrote further in order to recede from its decision in Meyers v. City of St. Cloud, in which the Court concluded that citizens and taxpayers who failed to appear in the bond validation proceedings in circuit court nonetheless had the right to appeal from the trial court’s decision. The Court held that the conclusion reached by Meyers cannot be sustained and that citizens and taxpayers are not entitled to appeal without having formally participated in the trial proceedings. View "Reynolds v. Leon County Energy Improvement Dist." on Justia Law

Clean Energy Coastal Corridor, whose purpose is to finance through the issuance of bonds certain qualifying improvements to real property as authorized by the Property Assessed Clean Energy (PACE) Act, adopted a bond resolution authorizing the issuance of revenue bonds in an amount not to exceed $500,000,000 for the purpose of financing qualifying improvements. Clean Energy filed a complaint to validate those bonds. The only argument relevant to this appeal regarding Clean Energy’s authority to issue the bonds was that the bonds could not be validated because the financing agreement to be signed by Clean Energy and property owners participating in the PACE Program purported to authorize a remedy for the collection of unpaid assessments that was not authorized by Florida law. After a show-cause hearing, the circuit court validated the proposed bond issue. The Supreme Court affirmed the circuit court’s final judgment validating the bonds but remanded for the circuit court to require Clean Energy to amend the financing agreement, as the financing agreement’s references to judicial foreclosure were inconsistent with its requirement that the collection of non-ad valorem assessments must be accomplished pursuant to Fla. Stat. 197’s uniform method. View "Thomas v. Clean Energy Coastal Corridor" on Justia Law

In 2013, defendant-respondent, City of Ontario, with the consent of defendant-respondent, City of Rancho Cucamonga, established the Greater Ontario Tourism Marketing District (the GOTMD). The GOTMD was comprised of all lodging businesses operating in the two cities, and its mandate was to market and promote the businesses as "tourist, meeting and event destinations" with assessments imposed on the businesses based on their room rates and rental volumes. Plaintiff-appellant, The Inland Oversight Committee (IOC), sued the cities to invalidate the assessments on the ground they were a "tax" that was not approved by a majority or supermajority of the cities' voters as article XIII C of the California Constitution required. IOC claimed the assessments were either a general tax requiring majority voter approval or a special tax requiring supermajority voter approval. The trial court sustained demurrers, without leave to amend, on the ground that neither IOC nor any of its members had standing to challenge the validity of the assessments. IOC appealed. The cities filed a motion to dismiss the appeal along with their respondent's brief, claiming that the Court of Appeal lacked jurisdiction to consider the merits of IOC's appeal because IOC's notice of appeal was filed more than 30 days after the judgment was entered. The Court of Appeal agreed that IOC's notice of appeal was untimely filed, and it accordingly lacked jurisdiction to consider the merits of the appeal. View "Inland Oversight Com. v. City of Ontario" on Justia Law

This matter concerned a parcel of commercial/industrial property located in Springettsbury Township, which was owned by appellee Harley-Davidson Motor Company. Approximately 110 acres of the parcel contained buildings and other improvements, and the remaining 119 acres were considered “excess” land. Previously, the United States Navy, from 1941 until 1964, and, later, a private firm, American Machinery and Foundry Company (“AMF”), with whom Harley-Davidson merged in 1969, used the parcel to operate a weapons manufacturing plant and, in the course of their business, buried numerous contaminants (as well as unexploded military ordnance) in the subsurface strata. This use caused significant environmental damage to the property. In 1993, Harley-Davidson repurposed a portion of the site to operate a motorcycle manufacturing plant. In 2003, the Assessment Office of York County notified Harley-Davidson that it intended to increase the parcel’s property tax assessment. Harley-Davidson filed an appeal with the York County Board of Assessment Appeals, which affirmed. Harley-Davidson then filed a de novo appeal with the trial court. Appellant Central York School District (“School District”) intervened, and the parties proceeded to a three-day bench trial to determine the parcel’s assessments for tax years 2004 through 2010, pursuant to the Second Class A and Third Class County Assessment Law. This appeal by allowance before the Pennsylvania Supreme Court involved the proper determination of the fair market value of Harley-Davidson's property for purposes of property tax assessment, including consideration of environmental contamination, remediation, and stigma, as well as the potential for future subdivision of the property. After review, the Supreme Court found: (1) hypothetical ways in which a property could be used by potential buyers are properly considered by an expert in evaluating what a willing buyer would pay for a property; (2) the potential effect of agreements concerning possible environmental remediation liability and ongoing environmental restrictions and maintenance is a relevant factor that must be taken into account when determining the fair market value of property, and (3) environmental stigma may be relevant to determining fair market value of real estate for tax purposes in appropriate circumstances. The Supreme concluded: (1) the Commonwealth Court erred in concluding that the School District’s expert valued the subject property as already subdivided, and, thus, its determination in this regard was reversed; (2) the Commonwealth Court properly concluded that these agreements were not accounted for by the trial court; thus, the Commonwealth Court’s remand was affirmed; and (3) the trial court properly relied upon the School District’s expert’s opinion regarding a 5% environmental stigma devaluation for the property; thus, reversed the Commonwealth Court’s rejection of the trial court’s reliance upon such stigma in its valuation of the property. View "Harley-Davidson v. Central York Sch District et al" on Justia Law

Taxpayer brought a mandamus action to compel state officials to collect the gross premium tax from Real Parties. At issue was whether Real Parties are "insurers" under the California Constitution's gross premium tax provision. The trial court sustained Real Parties' demurrers without leave to amend. The court concluded, however, that pursuant to People ex rel. Roddis v. California Mut. Assn., the taxpayer can maintain this action because the complaint alleges facts sufficient to support an inference that indemnifying against future contingent medical expenses represents a significant financial proportion of Real Parties’ businesses. Accordingly, the court reversed the judgment. View "Myers v. St. Bd. of Equalization" on Justia Law

Plaintiff challenged the Appeals Board's denial of his application for a refund of property taxes paid to the County relating to a ground lease and a hangar at the Santa Monica Municipal Airport. The trial court granted summary adjudication with respect to the hangar and subsequently ruled in favor of plaintiff with respect to the ground lease. The County appealed. The court concluded that, with respect to the ground lease, the lease affords plaintiff a private benefit - the exclusive right to store his aircraft and equipment on the leased premises - that is sufficiently independent of the interests retained by Santa Monica to constitute a taxable possessory interest. In regard to the hangar, Revenue and Taxation Code section 107, subdivision (b) defines possessory interests to include “Taxable improvements on tax-exempt land.” Therefore, the court concluded that the trail court improperly granted summary adjudication because the County’s evidence raised a triable issue as to whether the hangar fits this definition. The court reversed and vacated the post-judgment orders. View "Seibold v. County of Los Angeles" on Justia Law

The issue this case presented for the Oklahoma Supreme Court's review centered on a dispute between Defendants-Appellants The Board of County Commissioners of Canadian County and certain citizens and officers of Canadian County, over the legal usage of funds generated from a sales tax enacted by the voters of Canadian County in 1996. In response to concerns raised over the legality of using funds generated by the Tax to pay for juvenile programs and services, in addition to the physical structures, an Attorney General Opinion was requested. The Attorney General issued an opinion concerning the matter in 2014. The Attorney General examined the resolution in question, Resolution No. 96-20, and determined that the language did not authorize use of the Tax for the funding of programs, salaries and expenses related to operation of the juvenile bureau, or even certain aspects of the physical facilities. In the wake of the Opinion, the Board ceased using the Tax for funding the programs, services, and salaries deemed outside the purpose of the Tax, and instead sought other funding sources for those items. Plaintiffs filed suit against the Board in the District Court in late 2014, seeking declaratory relief, a temporary restraining order and temporary injunction pending a declaratory ruling, and a writ of mandamus by way of ancillary relief. In an order filed on January 28, 2015, the trial court granted Citizens' request for a temporary injunction, determining: (1) Citizens were likely to prevail in their request for a declaratory judgment; (2) the Board would not suffer irreparable harm if the temporary injunction was issued; and (3) Citizens would suffer irreparable harm if the temporary injunction was not issued. The Board appealed, arguing that Plaintiffs failed to meet their burden of proof for a temporary injunction. After examining the available evidence, the Supreme Court determined that that the trial court's issuance of a temporary injunction was not an abuse of discretion or against the clear weight of the evidence. Accordingly, the order of the trial court granting a temporary injunction was affirmed. View "Edwards v. Bd. of Cty. Commr's." on Justia Law