Justia Tax Law Opinion Summaries

At issue in this case was the homestead exemption’s prohibition on the collection of real property taxes under S.D. Codified Laws 43-31. In January 2014, prior to turning seventy years old, John Reints filed an application for a prohibition on the collection of real property taxes assessed on his home in 2013. Pennington County denied Reints’s request because he had not turned seventy prior to January 1, 2014. The Department upheld the determination, determining that the prohibition does not apply to taxes assessed prior to the year in which the applicant reaches seventy years of age. The circuit court affirmed. The Supreme Court affirmed, albeit on different grounds, holding (1) once a prohibition is granted under chapter 43-31 a county is restrained from collecting any real property taxes on the applicant’s single-family dwelling, regardless of when those taxes were assessed; (2) nevertheless, an applicant cannot establish a base year under the exemption until he actually reaches the age of seventy; (3) because Reints was only sixty-nine years old when he submitted his application, he had not established a base year as required by section 43-31-32; and (4) therefore, Reints’s application was properly denied. View "Reints v. Pennington County" on Justia Law

Guam taxpayers filed a class action suit against Guam and its officers, alleging that Guam violated the tax provisions of the Organic Act of Guam, 48 U.S.C. 1421i, by failing timely to refund overpayments, and, via a claim brought under 42 U.S.C. 1983, the taxpayers also challenged the arbitrary expedited refund program as a violation of equal protection. The district court granted summary judgment to the taxpayers on both claims, entered a permanent injunction both ending the expedited refund program and requiring Guam to pay approved refunds in a timely manner, and awarded substantial attorney’s fees and costs. The court concluded that Guam's section 1983 arguments did not implicate subject matter jurisdiction, but nonetheless, the court exercised its discretion in considering Guam's section 1983 arguments; the official-capacity defendants in this case are “persons” within the meaning of section 1983 for purposes of prospective relief; even if the territorial officials had been obliged by federal law to institute the arbitrary expedited refund process - which they most certainly were not - they were empowered to act only in their capacities as territorial officers; and the district court did not abuse its discretion in requiring that Guam pay refunds within six months once Guam determines that the requests are valid and not subject to investigation or audit. Accordingly, the court affirmed the judgment. View "Paeste v. Government of Guam" on Justia Law

In this appeal, the court considered whether Florida’s Rental Tax and Florida’s Utility Tax, as applied to matters occurring on Seminole Tribe lands, violate the tenets of federal Indian law. The court held that Florida’s Rental Tax is expressly precluded by 25 U.S.C. 465, and, in the alternative, is preempted by the comprehensive federal regulation of Indian land leasing. Therefore, the court affirmed the district court's order as to this issue. The court concluded, however, that the district court erred in placing the legal incidence of the Utility Tax on the Tribe and find that, on this record, the Tribe has not demonstrated that the Utility Tax is generally preempted by federal law. Therefore, the court reversed as to this issue and remanded for further proceedings. View "Seminole Tribe v. Stranburg" on Justia Law

Patrick discovered a Medicaid fraud scheme in which the government paid more than $75 million in phony billings. Patrick and an associate filed a qui tam suit under the False Claims Act against Kyphon, alleging that the company induced hospitals to file claims for Medicare reimbursement “for unnecessary inpatient hospital stays.” The United States intervened and settled the case. For his role in initiating the suit Patrick received a relator’s share of the government’s recovery, totaling $5.9 million. Patrick also received $900,000 from the settlement of related qui tam actions against hospitals that overbillled Medicare. Patrick filed tax returns for 2008 and 2009 reporting his share of the qui tam recoveries as capital gains. The IRS issued deficiency notices, notifying Patrick that the relator’s shares must be reported as ordinary income. The Tax Court upheld that determination. The Seventh Circuit agreed that the relator’s share of a qui tam recovery is not the result of a “gain from the sale or exchange of a capital asset.” Patrick’s relator’s shares are a reward for filing the suit against Kyphon and the hospitals and must be treated as ordinary income. View "Patrick v. Comm'r of Internal Revenue" on Justia Law

Respondent lived in his home for nearly ten years before razing the existing house in order to build a new house on the lot. Respondent benefitted from the application of the homestead tax credit with respect to increases in the value of the prior structure while he lived in it. The new construction increased the value of the property by approximately $500,000. The tax assessor, while retaining Respondent’s existing credit, included the full value of the renovation in the value to be taxed. The Maryland Tax Court affirmed the assessor’s interpretation. The circuit court reversed, and the Court of Special Appeals affirmed. At issue on appeal was whether the “taxable assessment” used to compute the homestead tax credit under Md. Code Tax-Property (TP) 9-105 should include the value of renovations when a homeowner razes and rebuilds a home. The Court of Appeals reversed the judgments of the Court of Special Appeals and circuit court affirmed the decision of the tax court, holding that, when a homeowner razes and rebuilds a home, the homeowner may retain existing homestead tax credit if the homeowner satisfies certain criteria and the tax credit computation for the property with the rebuilt house is to be done in accordance with TP 9-105(c)(5) and TP 9-105(e)(1). View "Dep’t of Assessments & Taxation v. Andrecs" on Justia Law

Appellant in this appeal contested twenty-seven assessments of delinquent sales tax. Appellant’s liability derived from previous assessments against a pet store business of which Appellant was co-owner and an officer. The Board of Tax Appeals (BTA) affirmed the tax commissioner’s determination upholding the assessments against Appellant. Appellant argued on appeal that she may contest the validity of the service of the assessments against the corporation as a defense against her derivative liability. The Supreme Court agreed. Noting that the record in this case documented successful service as to seven of the twenty-seven assessments but did not show completed service of the others, the Supreme Court affirmed the BTA’s decision to uphold the seven assessments as to which completed service was shown. The Court then vacated the BTA’s decision with regard to the other twenty assessments, holding that a successful challenge to the service on the corporation will invalidate the derivative-liability assessment against the responsible individual. Remanded with instructions that the BTA take additional evidence and determine whether service of those twenty assessments was perfected on the corporation. View "Cruz v. Testa" on Justia Law

This court previously determined that the State of Alabama failed to sufficiently justify its decision to impose certain taxes on rail carriers, including CSX Transportation, when motor carriers and water carriers (both railroad competitors) are not subject to the same. Then the Supreme Court reversed and remanded, concluding that the court should reconsider whether the State has offered sufficient justification for exempting railroad competitors from the sales and use taxes the State imposes on railroads when they purchase or consume diesel fuel. The court vacated its prior opinion, vacated the judgment of the district court, and remanded for further proceedings consistent with the Supreme Court's opinion. View "CSX Transportation, Inc. v. AL Dep't of Revenue" on Justia Law

This case originated with the question of whether, for tax year 2006, the present value of William MacDonald’s future annuity payments qualified as taxable wages or as a pension under a Shaker Heights ordinance that exempts pensions from the municipal income tax. The tax administrator and the municipal tax board held that the amount at issue was subject to municipal income tax. The Board of Tax Appeals (BTA) reversed. The court of appeals affirmed. The city of Shaker Heights appealed, arguing that the BTA violated a duty of deference to the determination of the municipal tax board. Specifically, the city argued that when the legislature enacted Ohio Rev. Code 5717.011, authorizing appeal to the BTA in addition to the preexisting right of appeal to the common pleas courts under Ohio Rev. Code 2506, the legislature must have intended that the BTA review decisions of the municipal tax boards using the same standard of review that applies under chapter 2506. The Supreme Court affirmed the judgment of the court of appeals, holding (1) the BTA’s standard of review under section 5717.011 is de novo as to both facts and law; and (2) the BTA in this case properly exercised its own independent judgment in determining the facts and the law. View "MacDonald v. Shaker Heights Bd. of Income Tax Review" on Justia Law

In this appeal, Navistar, Inc. claimed it was due a credit against the new commercial-activity tax (CAT), which was enacted to replace to replace the existing corporate-franchise and personal property taxes for industrial corporations like Navistar. In 2007, Navistar, Inc. undertook a restatement of its 2004 financial restatement, which increased Navistar’s valuation allowance from 62.4 percent to 100 percent. As a consequence, the tax commissioner reduced the amount of Navistar’s potential CAT credit from over $27 million to zero. The Board of Tax Appeals (BTA) affirmed the tax commissioner’s decision. The Supreme Court vacated the BTA’s decision, holding that the tax commissioner’s use of Navistar’s restated valuation allowance as the basis for the final determination was justified only if the restate valuation allowance was a correction of error, which could be the case here only if Navistar’s original valuation allowance was not in compliance with generally accepted accounting principles (GAAP). Remanded for a determination of whether the original valuation allowance was in compliance with GAAP based upon all the evidence in the record. View "Navistar, Inc. v. Testa" on Justia Law

Black repeatedly tried to pay off a more than $5 million tax debt with checks drawn on checking accounts that he knew were closed to prevent the IRS from collecting taxes from him. A jury convicted Black of one count of obstructing and impeding the IRS from collecting taxes and four counts of passing and presenting fictitious financial instruments with intent to defraud. The district court sentenced Black to 71 months in prison. The Seventh Circuit vacated and remanded for resentencing, agreeing that the district court erred in determining his sentencing range under U.S.S.G. 2T1.1, by improperly calculating the tax loss by aggregating the face value of the fraudulent checks and by including penalties and interest in the calculation. The court upheld refusal to consider audit errors and apply available deductions because Black could not establish that he was entitled to any reduction in taxes owed. View "United States v. Black" on Justia Law