Justia Tax Law Opinion Summaries

When parties discharge waste that could affect the quality of California’s water they must pay a permit fee set by the State Water Resources Control Board, Wat. Code, 13260. In 2011, two of the five Board seats were vacant; two of the remaining three members approved an increase of fees for the 2011-2012 fiscal year. CBI argued that section 183 required the fees to be approved by a majority of the five-person Board and that the increase was an illegal tax because the fee imposed on the dischargers in the storm water program (one of eight areas in the permit program) exceeded the cost of regulating this particular program. The court of appeal upheld the fee; section 181, not section 183, applied to adoption of the fee schedule and the vote by a majority of the Board’s quorum complied with section 181. Section 13260 requires that the total fees collected from all waste dischargers must equal the costs of regulating the entire waste discharge permit program. View "Cal. Bldg. Indus. Ass'n v. State Water Res. Control Bd." on Justia Law

Taxpayer timely filed a 2010 personal property tax return properly listing certain taxable property. The property, however, was not placed on the tax rolls. In 2013, the Colfax County Board of Equalization placed the personal property back on the tax rolls. Taxpayer appealed. The Tax Equalization and Review Commission ultimately decided that the Board’s action was void on the grounds that the Board did not have authority to place the items of personal property on the tax rolls, thereby reversing and vacating the Board’s decision. The Supreme Court affirmed, holding that the Board’s action in placing Taxpayer’s personal property on the tax rolls for 2010 was void because it lacked statutory authority to do so under Neb. Rev. Stat. 77-1507(1). View "Cargill Meat Solutions Corp. v. Colfax County Bd. of Equalization" on Justia Law

In 2007 Rogers, a U.S. citizen, lived in Hong Kong and worked as a flight attendant for United Airlines. She flew and worked in and over foreign countries and also in and over the United States and over international waters. She and her husband filed a tax return reporting all of her flight attendant earnings as “foreign earned income.” The IRS determined a tax deficiency of $3,428.30 on the portion of Rogers’s earnings attributable to her work outside foreign countries, as well as a 20% penalty. Rogers argued that 26 U.S.C. 911(a)(1), (b)(1)(A) authorized exclusion of Rogers’s flight attendant earnings as “foreign earned income,” because it was received “from sources within a foreign country or countries,” Rogers’s Hong Kong-based job. and that they should not be charged the negligence penalty. The Tax Court disagreed, finding that they could only exclude the portion of Rogers’s earnings that were related to her time spent working in or over foreign countries. The D.C. Circuit affirmed. View "Rogers v. Comm'r, Internal Revenue Serv." on Justia Law

Retired officers of D.C.’s Metropolitan Police Department were subsequently re-hired by the D.C. Protective Services Division, which protects government buildings and D.C.-owned property. They received pension benefits from their service with the Police Department and salaries for their jobs with Protective Services, but Section 5- 723(e) of the D.C. Code requires reduction of plaintiffs’ salaries by the amount of their pensions to prevent so-called double-dipping. Pursuant to that provision, D.C. reduced plaintiffs’ salaries by the amount of their pensions. Following a remand for consideration under the Fair Labor Standards Act, plaintiffs raised a claim under the Public Salary Tax Act of 1939, 4 U.S.C. 111(a)), which was rejected. The D.C. Circuit affirmed. The Public Salary Tax Act allows states and D.C. to impose “taxation” on compensation paid to employees of the federal government, only if the taxation does not discriminate against federal employees. The D.C. salary reduction provision at issue is not “taxation.” It does not raise revenue, but operates on the opposite side of D.C.’s financial ledger. It reduces D.C.’s total expenditures on salaries. View "Cannon v. Dist. of Columbia" on Justia Law

Plaintiffs-appellants Donald Kipnis, Lawrence Kibler, Barry Mukamal and Kenneth Welt,appealedthe district court’s Federal Rule of Civil Procedure 12(b)(6) dismissal of their complaint against defendants-appellees Bayerische Hypo-Und Vereinsbank, AG and HVB U.S. Finance, Inc. (collectively, “HVB”) as barred by the applicable statutes of limitations. This appeal arose out of the parties’ participation in an income tax shelter scheme known as a Custom Adjustable Rate Debt Structure (“CARDS”) transaction. In short, Plaintiffs alleged that HVB and its co-conspirators defrauded Plaintiffs by promoting and selling CARDS for their own financial gain. Plaintiffs “paid a heavy price in damages” as a result of HVB’s wrongdoing, including “substantial fees (and interest payments)” they paid HVB and other CARDS Dealers to participate in the CARDS strategy and “hundreds of thousands of dollars in ‘clean-up’ costs” they incurred after HVB failed to advise them to amend their tax returns. Consequently, Plaintiffs sought to recover the “damages that reasonably flow” from HVB’s misconduct. These damages included fees they paid to HVB and other CARDS Dealers, attorney’s fees and accountant’s fees incurred in litigating against the IRS, back taxes and interest paid by Plaintiffs, punitive damages, treble damages, and attorney’s fees and costs incurred in the instant action. The district court rejected Plaintiffs’ argument that their claims did not accrue until November 1, 2012, because they did not sustain any damages until the tax court issued its final decision. By December 5, 2001 (plaintiffs’ mandatory repayment date) Plaintiffs had sustained part of the damages they sought to recover, including the fees they paid to HVB.The district court found Plaintiffs’ reliance on the Florida Supreme Court’s decision in "Peat, Marwick, Mitchell & Co. v. Lane," (565 So. 2d 1323 (Fla. 1990)), to be misplaced, and dismissed Plaintiffs’ complaint as time-barred. The parties agreed that Florida law controlled the sole issue in this appeal: when did Plaintiffs’ claims against HVB accrue for purposes of the statutes of limitations. It was not clear under Florida law when Plaintiffs first suffered injury, and thus when their claims against HVB accrued for purposes of the applicable statutes of limitations. Because the relevant facts were undisputed, and this appeal depended wholly on interpretations of Florida law regarding the statute of limitations, the Eleventh Circuit certified a question of Florida law to the Florida Supreme Court. View "Kipnis v. Bayerische Hypo-UND Vereinsbank, AG" on Justia Law

This appeal arose out of a decision by the Town of Middlebury Development Review Board (DRB) to approve appellee Jolley Associates, LLC's application for a Planned Unit Development (PUD) to add a car wash to an existing gas station and convenience store within the Town limits. Appellant MDY Taxes, Inc. operated an H&R Block tax franchise in property rented in a shopping center adjacent to the Jolley lot. Appellant Village Car Wash, Inc. operated a car wash located approximately one-quarter of a mile from the Jolley lot. Appellants did not participate in the DRB proceeding, but sought to challenge the approval of the PUD through an appeal to the Environmental Division of the Superior Court. The environmental court dismissed the appeal for lack of jurisdiction. The court concluded that appellants did not have standing, to appeal the DRB decision because they had not participated in the proceedings before the DRB as required by statute, and because they did not meet any of the exceptions to that statutory requirement. On appeal, appellants argued that a procedural defect prevented them from appearing before the DRB, and that it would be manifestly unjust if they are not afforded party status to appeal. Finding no reversible error, the Supreme Court affirmed. View "In re Appeal of MDY Taxes, Inc., & Village Car Wash, Inc." on Justia Law

For tax year 2004, the State of Montana, Department of Revenue (DOR) centrally assessed property owned by Omimex Canada Ltd. and classified it under class nine. Omimex contested the assessment, claiming that it did not operate a “single and continuous property,” and therefore, its properties should be locally assessed and subject to the lower tax rate under class eight. The district judge entered an order in 2007 finding that Omimex’s properties operated as a single and continuous property. The Supreme Court reversed, concluding that Omimex’s property was not subject to classification under class nine, regardless of whether it was centrally assessed. For the tax year 2011, DOR again centrally assessed Omimex’s property and classified it under class nine. Ommimex filed a declaratory action arguing that it did not operate a single and continuous property. The district court granted partial summary judgment for DOR, concluding that the doctrine of issue preclusion barred Omimex from relitigating the issue. The Supreme Court reversed, holding that the court erred when it concluded that the district court’s 2007 finding precluded Omimex from litigating the issue of whether it operated a single and continuous property because Omimex demonstrated the existence of genuine questions of material fact regarding whether the issue in the current litigation was identical to the issue in the 2007 litigation. View "Omimex Canada, Ltd. v. State Dep’t of Revenue" on Justia Law

At issue in this appeal was the constitutionality of the statutory framework under which Iowa taxes the delivery of natural gas at variable tax rates depending on volume and the taxpayer’s geographic location within the state. Plaintiff filed with the Iowa Department of Revenue a claim for a refund of replacement tax Plaintiff paid for certain tax years, asserting that the replacement tax in Iowa Code 437A.5(2) violates the federal Equal Protection Clause, Iowa Const. art. I, 6, and the dormant Commerce Clause because it is based on the natural gas competitive service area in which a taxpayer is located. An administrative law judge denied Plaintiff’s refund claims and rejected the constitutional challenges to the replacement tax. The district court also denied each of Plaintiff’s constitutional challenges. The Supreme Court affirmed, holding (1) a rational basis exists for the variable excise tax imposed on the delivery of natural gas under section 437A.5, and therefore, Plaintiff failed to establish a violation of the Fourteenth Amendment or Iowa Const. art. I, 6; and (2) the natural gas delivery tax framework does not violate the dormant Commerce Clause. View "LSCP, LLLP v. Kay-Decker" on Justia Law

Mark and Tammy Davis owned property that secured a credit line deed of trust held by Huntington National Bank. The Davises failed to pay their 2005 and 2006 real property taxes, resulting in a notice of delinquency being published. The Davises subsequently filed for Chapter 7 bankruptcy. A second notice of delinquency was then published announcing that the tax lien would be sold. A notice of the tax lien sale was mailed to the Davises but was returned undeliverable. The Davises received a discharge in bankruptcy, after which the tax lien was sold. No party redeemed the property, and the tax deed was issued to Rebuild America, Inc. The Davises then filed this action seeking to set aside the tax sale. The circuit court granted relief, finding that the issuance of the two statutory notices of delinquency while the Davises were under the protection of a bankruptcy stay voided the tax deed. The Supreme Court affirmed, holding that the bankruptcy stay rendered the statutory notices void ab initio, and therefore, the tax lien sale did not comply with the required statutory procedure. Accordingly, the tax deed issued in this matter must be set aside. View "Rebuild America v. Davis" on Justia Law

The Court of Federal Claims ruled that MassMutual and ConnMutual were legally authorized to deduct policyholder dividends from their 1995, 1996, and 1997 tax returns in the year before the dividends were actually paid. The government agreed that both companies may deduct the policyholder dividend payments, but argued that the deduction may only be taken in the year when the dividends were actually distributed to the policyholders, because the liability to pay the dividends was contingent on other events, such as a policyholder’s decision to maintain his policy through the policy’s anniversary date. Even if the liability was fixed, the government alleged, these payments still could not have been deducted until the year they were actually paid because the dividends did not qualify as rebates or refunds, which would meet the recurring item exception to the requirement that economic performance or payment occur before a deduction may be taken (26 C.F.R. 1.461-5(b)(5)(ii)). The Federal Circuit affirmed. Because the policyholder dividends were fixed in the year the dividends were announced, they were premium adjustments, and that premium adjustments are rebates, thereby satisfying the recurring item exception. View "Mass. Mut. Life Ins. Co. v. United States" on Justia Law