Justia Tax Law Opinion Summaries

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

This case concerns an IRS regulation that imposes a “penalty” on U.S. banks that fail to report interest paid to certain foreign account-holders. Two Bankers Associations challenged the legality of the regulation. At issue was whether a challenge to a tax-related statutory or regulatory requirement that is enforced by a “penalty” – as opposed to a challenge to a statute or regulation that imposes a tax – is covered by the Anti-Injunction Act, 26 U.S.C. 7421. The court concluded that the Tax Code defines some penalties as taxes for purposes of the Anti-Injunction Act. In those cases, such as the one here, the Anti-Injunction Act ordinarily applies because the suit, if successful, would invalidate the regulation and thereby directly prevent collection of the tax. The penalty at issue here is located in Chapter 68, Subchapter B of the Tax Code. The Tax Code provides that penalties in Chapter 68, Subchapter B are treated as taxes under the Anti-Injunction Act. Accordingly, the Anti-Injunction Act bars this suit as premature. The court vacated the district court's judgment and remanded with directions to dismiss the case. View "Florida Bankers Ass'n v. US Dep't of the Treasury" on Justia Law

The IRS Appeals Office denied appellant a Collection Due Process hearing based on its unexplained determination that all the reasons he gave for requesting a hearing were frivolous. Further, the Appeals office contends that its frivolousness determination is not subject to judicial review. However, the tax court held that it has jurisdiction to conduct a review limited to whether the IRS correctly treated appellant’s arguments as frivolous. The court affirmed the tax court’s conclusion regarding jurisdiction; the court also affirmed the tax court’s assessment that the IRS’s boilerplate letter rejecting appellant’s arguments as frivolous was inadequate; and, after remand, the Appeals Office held a Collection Due Process hearing, and the tax court correctly decided that the Office did not abuse its discretion in concluding that the IRS could proceed with collection actions. Accordingly, the court affirmed the tax court’s decision in its entirety. View "Ryskamp v. Commissioner" on Justia Law

In 1996, a Belgian subsidiary of Albemarle issued 20-year debentures to Albemarle. Interest payments were made on the debentures from 1997-2001. The Belgian subsidiary did not pay Belgian withholding taxes on the interest payments, believing the payments to be tax-exempt. In 2001, Belgian tax authorities issued a notice of adjustment to Albemarle for the tax years 1996-1998, stating that the interest payments made between 1997 and 2001 were subject to Belgian withholding tax at the statutory rate of 25%. Albemarle submitted a protest. In 2002, Albemarle agreed to pay withholding tax at the rate of 15% on all interest paid from 1997 through 2001 and satisfied the total amount of the taxes due. In 2009, Albemarle filed an amended consolidated U.S. income tax return for the 2002 tax year, in which it claimed refunds of $1,416,740 in foreign tax credits attributable to the withholding taxes it had paid under the agreement with the Belgian tax authorities. The IRS allowed Albemarle’s refund claims for the years 1999, 2000, and 2001, but disallowed claims for 1997 and 1998 as not filed within the 10-year limitations period provided in 26 U.S.C. 6511(d)(3)(A). The Claims Court agreed with the government. The Federal Circuit affirmed. View "Albemarle Corp. v. United States" on Justia Law

Great Oaks, a water retailer, challenged a groundwater extraction fee imposed on water it draws from wells on its property. The power to impose such a fee is statutorily vested in the Santa Clara Valley Water Management District. The trial court awarded a refund of charges paid by Great Oaks, finding that the charge violated the provisions of both the District Act and Article XIII D of the California Constitution, which imposes procedural and substantive constraints on fees and charges imposed by local public entities. The court of appeal reversed, holding that the fee is a property-related charge for purposes of Article 13D, subject to some constraints, but is also a charge for water service, exempt from the requirement of voter ratification. A pre-suit claim submitted by Great Oaks did not preserve any monetary remedy against the District for violations of Article 13D and, because the matter was treated as a simple action for damages when it should have been treated as a petition for a writ of mandate, the trial court failed to apply a properly deferential standard of review to the question whether the District’s setting of the fee, or its use of the resulting proceeds, complied with the District Act. View "Great Oaks Water Co. v. Santa Clara Valley Water Dist." on Justia Law

Appellees were Online Travel Companies (OTCs) that provide online travel information and secure reservations for travelers for car rental and lodging services in Montana. The Montana Department of Revenue filed suit against the OTCs arguing that the OTCs were required to collect and remit taxes on OTC fees under both the Lodging Facility Use Tax and Sales Tax. The district court granted summary judgment in favor of the OTCs. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly found that the Lodging Facility Use Tax does not apply to OTC fees; but (2) erred in ruling that the Sales Tax does not apply to OTC fees. View "Mont. Dep’t of Revenue v. Priceline.com, Inc." on Justia Law

After the Dakota County Assessor estimated the market value of Westview Mall, owned by KCP Hastings, LLC, KCP challenged the estimated assessments. After a trial, the tax court adopted market valuations of the property that exceeded the County’s estimated assessments. The Supreme Court affirmed in part, vacated in part, and remanded, holding that the tax court (1) did not clearly err by using the mall’s gross building area rather than its gross leasable area in its calculations of market value; (2) clearly erred when it rejected KCP’s discounted-cash-flow analysis, which KCP’s appraiser used to arrive at his income-approach valuation; and (3) abused its discretion by determining the value of the subject property relying solely on the sales-comparison approach. View "KCP Hastings, LLC v. County of Dakota" on Justia Law