Justia Tax Law Opinion Summaries

Defendant was convicted of conspiracy to defraud the United States, in violation of 18 U.S.C. 371, and four counts of filing false individual income tax returns, in violation of 26 U.S.C. 7206(1). The court concluded that there was sufficient evidence for a reasonable jury to find that defendant was guilty of conspiracy to defraud the United States where she and her husband owned two medical schools in the Caribbean, made millions of dollars from operating and selling them, and then, instead of reporting and paying taxes on any of that money, the couple followed "a common design" to hide it in multiple offshore accounts. Further, there was sufficient evidence for a reasonable jury to convict defendant of the four counts of filing false individual income tax returns where she failed to disclose her financial interest in foreign bank accounts. Finally, the district court did not err in denying defendant's motion for a new trial, the district court properly admitted the husband's out-of-court statements, e-mails, and other correspondence under Federal Rule of Evidence 801(d)(2)(E), and the district court did not clearly err by including in the loss amount the tax she owed on the interest, dividends, and capital gains in those accounts. However, the district court should have made a foundational finding as to whether the two entities defendant owned are properly treated as partnerships for the purpose of federal tax purposes. Accordingly, the court affirmed the convictions, vacated the sentence, and remanded for further proceedings. View "United States v. Hough" on Justia Law

In 2009, Clarke submitted 2006-2008 tax returns for a trust, each claiming $900,000 in income and $900,000 in fiduciary fees; they did not identify the income’s source. Each reported $300,000 of tax paid to the IRS and requested $300,000 in refunds. Clarke identified the trust’s fiduciary as “Timothy F. Geither” (an apparent misspelling of the name of then-Treasury Secretary, Geithner), which raised a red flag. The IRS notified Clarke that the returns would not be processed. Clarke resubmitted, but did not name “Geither.” The IRS mailed Clarke three $300,000 checks. Clarke opened a bank account, deposited the checks, and, within months, spent all of the funds. In 2013 Clarke was indicted on seven counts of presenting false claims. The manager of the check cashing company where Clarke tried to cash his first check, testified that Clarke told him that he had the check because of “a trust fund because his dad had passed.” Clarke argued that the government had not proven that he knew the claim was false. The court did not include a good faith jury instruction requested by Clarke. Though barred from trial, a psychiatric report explained that Clarke believed that the U.S. is a business front designed to regulate commerce and has established bank accounts for its citizens. The Seventh Circuit affirmed Clarke’s conviction. View "United States v. Clarke" on Justia Law

In 1998, Eggersten's law office, an S corporation, established an employee stock ownership plan (ESOP), a retirement plan that primarily owns securities of the sponsoring employer. Eggertsen transferred his ownership to the ESOP. S corporations pass their income through to shareholders who pay any tax due on that income. 26 U.S.C. 1366, and, in the mid-1990s, it was possible for ESOPs, then exempt from taxes at the plan level, to own shares in S corporations, 26 U.S.C. 501(a), 512(e)(3), 1361(b)(1)(B), 1361(c)(6)(B). ESOP participants, such as Eggertsen, were not taxed on income attributable to stock held in the ESOP until that stock was distributed, typically at retirement. The law office, therefore, did not pay tax on its income; the ESOP would not owe tax at the plan level. Eggertsen, who ultimately owned the shares, would not owe tax on the income until retirement. In 2001, Congress amended the provisions, giving affected taxpayers a grace period to come into compliance. The law firm did not comply within the grace period. The IRS waited until 2011 to try to collect the excise tax (over $200,000) that resulted from delayed compliance. The Sixth Circuit upheld the imposition of the tax and held that the limitations period remained open. View "Law Office of John H Eggertsen, P.C. v. Comm'r of Internal Revenue" on Justia Law

The City of Birmingham sued "Bonedaddy's of Lee Branch" for failing to pay its business-license taxes, occupational taxes, interest, penalties and fees for multiple years since the business' formation in 2007. The City alleged that the defendants had failed and refused to submit business records and tax returns for the periods that were the subject of the complaint; that the defendants were currently engaged in business in the City of Birmingham in violation of the City's business-license code; and that notice of the final tax assessments had been mailed but that no payments had been forthcoming. The City asked the trial court to enter a preliminary injunction directing the defendants to refrain from further conducting business within the City and causing the sheriff to padlock the defendants' place of business in the City. The trial court ultimately granted the City's request, and Bonedaddy's was prohibited from further business until its back-taxes were paid. Cowan and Bonedaddy's argued on appeal that the trial court did not have subject-matter jurisdiction to enter a final judgment against defendant John Cowan in this case because, they say, the City did not comply with certain provisions of the Alabama Taxpayers' Bill of Rights and Uniform Revenue Procedures Act. Upon review, the Supreme Court found that the City had issued a final sales-tax assessment against Bonedaddy's. The notice of final assessment, however, did not name Cowan individually as the taxpayer nor was the notice mailed to Cowan. Additionally, the City did not present any evidence at trial to indicate that it had ever issued a final sales-tax assessment against Cowan per se. Based on the evidence presented at trial, it did not appear that the City complied with the requirements of the TBOR with regard to Cowan. The Court reversed the trial court with respect to Cowan's responsibility to pay Bonedaddy's outstanding sale taxes, but affirmed with regard to the tax assessments against Bonedaddy's itself. View "Bonedaddy's of Lee Branch, LLC v. City of Birmingham" on Justia Law

Anzaldi, DeSalvo, and Latin concocted an $8 million fraudulent tax scheme based on a sovereign citizen-type theory that the U.S. government holds hidden bank accounts for its citizens that can be accessed through various legal maneuvers. By filing false tax returns, the three requested more than $8 million for themselves and others in tax refunds. The IRS accepted five of their returns, paying out more than $1 million in refunds before catching onto the scheme. A jury convicted all three of conspiracy to file false claims, 18 U.S.C. 286 and filing false claims upon an agency of the United States, 18 U.S.C. 287. Anzaldi and Latin appealed their convictions. The Seventh Circuit affirmed, rejecting Anzaldi’s claim that the court should have ordered a competency examination pursuant to 18 U.S.C. 4241(a) before allowing her to represent herself pro se; upholding admission of evidence of how Anzaldi structured her fees to be under $10,000; and rejecting a claim that the court erred by not instructing the jury that willfulness was required to convict, and instead instructing that the defendants had to have acted “knowingly.” View "United States v. Latin" on Justia Law

In 2012, the Fremont County Assessor assessed the commercial land and improvements of Mountain Vista Retirement Residence at $1,327,908 and its personal property at $8,246. The Fremont County Board of Equalization, the State Board of Equalization, and the district court upheld the valuation. Mountain Vista appealed, arguing that it should be exempt from property tax because it is a charitable or benevolent association that uses its property for primarily non-commercial purposes. The Supreme Court affirmed, holding that Mountain Vista is neither a charitable or benevolent association and that its property is primarily used for commercial purposes. View "Mountain Vista Ret. Residence v. Fremont County Assessor" on Justia Law

Pro se appellant Ray DeVilbiss owned property within a road service area, but did not make use of the roads built and maintained with the road service taxes levied on that property. He argued Alaska law required that his property therefore be excluded from the service area, and that the tax was invalid absent a special benefit to his property. The superior court rejected these claims, and granted the borough that oversaw the service area summary judgment. Appellant appealed to the Supreme Court, but the Supreme Court affirmed. Alaska law neither required boroughs and municipalities to exclude properties that do not make use of roads financed by road service taxes nor tied the validity of a tax to each taxpayer’s receipt of a special benefit. View "DeVilbiss v. Matanuska-Susitna Borough" on Justia Law

In 2012, as the result of a change in the way the Custer County assessor classified irrigated grassland for purposes of valuation, the assessor increased the assessed value of the property owned by Appellant from $734,968 to $1,834,924. Appellant filed petitions with the Tax Equalization and Review Commission (TERC) pursuant to Neb. Rev. Stat. 77-1507.01 challenging the valuation increase. After two separate hearings on Appellant’s petitions, TERC affirmed the assessor’s valuations for 2012. The Supreme Court reversed, holding that TERC’s consideration of Appellant’s petitions using the appellate standard of review described in Nev. Rev. Stat. 77-5016(9) constituted plain error. Remanded. View "Cain v. Custer County Bd. of Equalization" on Justia Law

At the center of this an appeal was the superior court's de novo valuation of the Trans-Alaska Pipeline System (TAPS) for tax assessment years 2007, 2008, and 2009. In February 2014 the Alaska Supreme Court issued a decision affirming the superior court's de novo valuation of TAPS for the 2006 assessment year.1 The parties introduced considerably more evidence during trial for the 2007, 2008, and 2009 years, but the operative facts remained substantially the same and the superior court applied similar standards and methods for valuation. Many of the issues raised on appeal were similar or identical to issues raised in the 2006 appeal and thus are partially or wholly resolved by the Court's prior opinion. Because the superior court did not clearly err or abuse its discretion with regard to any of its findings or its methodology, and because it committed no legal error in its conclusions, the Supreme Court affirmed. View "Alaska Dept. of Revenue v. BP Pipelines (Alaska) Inc." on Justia Law

The 1976 Railroad Revitalization and Regulatory Reform Act prohibits states from imposing taxes that “discriminat[e] against a rail carrier,” 49 U.S.C. 11501(b)(4)A, including: Assessing rail transportation property at a value with a higher ratio to the true market value of the property than the ratio applied to other commercial and industrial property; levying or collecting an ad valorem property tax on rail transportation property at a tax rate that exceeds the rate applicable to commercial and industrial property in the same jurisdiction; or imposing “another tax that discriminates against a rail carrier providing transportation.” Railroads sued, claiming that Tennessee sales and use tax assessments were discriminatory. The district court agreed, holding that imposition of those taxes on railroad purchases and use of diesel fuel was discriminatory. In response, in 2014, Tennessee enacted a Transportation Fuel Equity Act that repeals the sales and use tax on railroad diesel fuel, but subjects railroads to the same per-gallon tax imposed on motor carriers under the Highway User Fuel Tax. Previously railroads, like other carriers using diesel fuel for off-highway purposes, were exempt from a “diesel tax.” The Railroads contend the Act is discriminatory because it now subjects only railroads to taxation of diesel fuel used off-highway. The Sixth Circuit affirmed denial of the Railroads’ motion for a preliminary injunction on its targeted or singling-out approach and the functional approach, but remanded for consideration of the Railroads’ argument under the competitive approach. View "CSX Transp., Inc. v. Tenn. Dep't of Revenue" on Justia Law