Justia Tax Law Opinion Summaries

The City of Cincinnati owned several golf courses that were operated under a management contract by a private, for-profit contractor. Paul Macke, a private golf-course operator who owned taxable real property, challenged the ongoing exemption of the golf courses as public property used exclusively for a public purpose in complaints filed in 2009 and 2010. In each case, the tax commissioner granted the complaint and denied exemption. The City appealed. The Board of Tax Appeals (BTA) consolidated the cases and reversed the tax commissioner’s denial of exemptions. The tax commissioner appealed. The Supreme Court affirmed, holding that the BTA acted reasonably and lawfully by determining that the City did not forfeit its exemption under Ohio Rev. code 5709.08(A) when it hired a private management company to manage its golf courses. View "City of Cincinnati v. Testa" on Justia Law

In 2002, BB&T, a North Carolina financial holding company, entered into a transaction with Barclays, which is headquartered in the United Kingdom. The Structured Trust Advantaged Repackaged Securities transaction (STARS) was in effect for five years. The original version of STARS was marketed to enhance investment yield for cash-rich U.S. corporations by taking advantage of differences between the U.S. and the U.K tax systems by having a U.K. trustee and paying U.K. taxes. The U.S. participant would realize an economic benefit by claiming foreign tax credits for U.K. taxes paid by the trust. Combining the STARS structure with a loan component attracted banks and was marketed as a “low cost financing” program. When the IRS reviewed BB&T’s tax treatment of STARS, it disapproved benefits that BB&T had claimed based on the transaction: foreign tax credits ($498,161,951.00); interest deductions ($74,551,947.40); and certain transaction cost deductions ($2,630,125.05). It imposed taxes on certain payments from Barclays ($84,033,228.20) and imposed $112,766,901.80 in penalties. The Claims Court denied BB&T’s claim for a refund. The Federal Circuit affirmed in part and remanded, upholding imposition accuracy-related penalties on BB&T. The amount of the penalties requires reassessment, as BB&T is entitled to deductions for interest it paid on the STARS Loan. View "Salem Fin., Inc. v. United States" on Justia Law

After Defendant, the owner of real property in the Town of Canton, abandoned the subject property, the Town filed a petition seeking the appointment of a receiver of rents. The trial court, finding that Defendant owed the Town taxes, granted the petition and authorized the receiver to collect all rents or use and occupancy payments. The court subsequently modified its order to allow the receiver to evict the tenant and to bring an action against the tenant for all rents due. The tenant moved to remove the receiver, asserting that the receiver had exceeded its authority under Conn. Gen. Stat. 12-163a by serving it with a notice to quit and by bring an action to collect back taxes and prior rents. The court denied the motion for removal. The Appellate Court (1) reversed insofar as the trial court granted the receiver’s motion to modify the receivership orders, but (2) affirmed insofar as it denied the tenant’s motion to remove the receiver. The Supreme Court (1) reversed as to the reversal of the trial court’s judgment granting the receiver’s motion for modification, holding that section 12-163a does authorize a receiver to use legal process to collect rent due prior to the date of the receiver’s appointment; and (2) otherwise affirmed. View "Canton v. Cadle Props. of Conn., Inc." on Justia Law

Jay Sewards, a former employee of the Sheriff's Department, was entitled to receive a disability pension equal to one-half his previous salary. Because Sewards completed 34 years of service, he received an additional amount to bring his pension up to what he would have received as a service pension. At issue was whether the additional amount is taxable under the Internal Revenue Code. The Tax Court rejected Sewards' argument that the entire amount of the retirement allowance may be excluded from taxation because it is a worker's compensation program pursuant to 26 U.S.C. 104(a)(1). The court affirmed the Tax Court's conclusion that the portion of Sewards’s retirement allowance exceeding what he would have received solely based on disability is subject to taxation. In this case, Sewards had completed 34 years of service and received additional amounts so that his service-connected disability pension was the same as what he would have received as a service pension. Those additional amounts were paid not based on his injuries, but based on his years of service, and thus were not excludable. View "Sewards v. CIR" on Justia Law

In 2013, the City of Cape Coral issued a special assessment to provide fire protection services. The City passed an ordinance levying a special assessment against all real property in the City, both developed and undeveloped. The City then filed a complaint to validate the debt. Eight property owners appeared in opposition to the special assessment. After a show cause hearing, the trial court entered its final judgment of validation. The Supreme Court affirmed the order of validation, holding that the City properly exercised its authority to issue a special assessment to fund fire protection services and that the assessment did not violate existing law. View "Morris v. City of Cape Coral" on Justia Law

Vincent Castigliola, a Mississippi resident, bought a yacht in Florida from Mark Fallon, an Ohio resident. Fallon, who is not in the business of buying or selling boats, sold the boat to Castigliola, who also is not in the boat trade. This transaction involved marketing services from Galati Yacht Sales, a yacht broker, which Fallon hired. Castigliola did not pay sales tax on the boat in Florida or use tax in Mississippi. Aggrieved, MDOR audited Castigliola and subsequently assessed use tax and penalties regarding the boat purchase, totaling $7,588. Castigliola challenged the tax, exhausted his administrative remedies without relief, and ultimately appealed to the Chancery Court. Before the chancery court, Castigliola filed a motion for summary judgment, arguing that the sale was a casual sale and therefore not subject to Mississippi use tax. The Court denied his motion, and Castigliola appealed. This case presented two issues: (1) who has the burden to prove use tax is applicable to a transaction; and (2) does the use of a broker make a casual sale taxable? The Supreme Court held that: (1) the Department of Revenue (MDOR) had the burden to prove that a tax applied, and the taxpayer had the burden to prove an exemption from tax applied; and (2) casual sales are excluded from sales and use tax in Mississippi. In this case, because MDOR’s argument for taxation was not supported by its own regulations and relied on an improper and erroneous application of Florida law, the Supreme Court found MDOR’s position was arbitrary and capricious. Furthermore, MDOR admitted the sale was from one individual to another, not in the ordinary course of business. Accordingly, the Court reversed summary judgment and render judgment in favor of Castigliola. View "Castigliola v. Mississippi Dept. of Rev." on Justia Law

Appellant, a retired professional football player, was employed by the Indiana Colts of the National Football League (NFL) during the taxable year of 2008. During the 2008 season, Appellant neither played in nor attended the one game the Colts played in Cleveland. The Colts nevertheless withheld an amount of Cleveland municipal income tax from Appellant’s 2008 compensation and paid it to the city. Appellant sought from Cleveland’s tax administration authority a refund of income tax withheld and remitted to Cleveland for tax year 2008, arguing that the city had no authority to impose its tax on the income of a nonresident who did not work within Cleveland’s city limits during the taxable year. Appellant’s claim for a full refund was denied. The City of Cleveland Board of Review and the Board of Tax Appeals upheld the denial. The Supreme Court reversed, holding that Cleveland lacked authority under its city ordinance and its regulations to impose a tax on Appellant’s income, given that none of the services for which he was compensated were performed in Cleveland during 2008. Remanded with instructions that Appellant be granted a full refund of Cleveland municipal income tax paid for 2008. View "Saturday v. Cleveland Bd. of Review" on Justia Law

Appellant, a former linebacker for the Chicago Bears, filed applications for refunds of income taxes paid to Cleveland for tax years 2004 through 2006. A nonresident of Cleveland, Appellant asserted that Cleveland had adopted an unlawful method of computing the amount of his compensation that was subject to its city income tax. Appellant’s applications were denied. The City of Cleveland Board of Review and the Board of Tax Appeals upheld the denials. The Supreme Court reversed, holding that although Cleveland has the right to tax the compensation earned by a nonresident professional athlete for his work performed in Cleveland, the city’s method of allocating income violates the due-process rights of National Football League players such as Appellant. View "Hillenmeyer v. Cleveland Bd. of Review" on Justia Law

In 2009, the Montana Department of Revenue (Department) began the process of reappraising Montana agricultural properties. In 2010, Petitioners filed a petition for declaratory judgment and writ of mandate seeking a declaration that the Department improperly assessed their agricultural property for tax uses. The district court granted the Department’s motion for summary judgment. The Supreme Court affirmed, holding (1) the district court correctly interpreted the plain language of section 15-7-111 and complied with the rules of statutory construction; and (2) the Department followed the rule-making mandate of section 15-7-111(2), the Department’s application of section 15-7-111 was not unlawful, and the Department is capable of implementing the district court’s interpretations of section 15-7-111. View "Lucas Ranch, Inc. v. Mont. Dep’t of Revenue" on Justia Law

Eagan, Minnesota, assisted in apprehending Procknow, who had absconded while serving supervised release imposed by a Wisconsin state court for forgery. Authorities had received information that Procknow and his girlfriend were staying at an Eagan hotel. The girlfriend was registered at the hotel. Officers spotted Procknow’s car, chased Procknow through the lobby, and arrested him. Through the windows of Procknow’s car, they saw a scanner or copier. Learning of the arrests, the hotel manager stated that the their stay was being terminated and asked the officers to collect a dog, believed to be in their room and ensure that there were no other occupants. Officers knocked, and announced. No one answered, so they used a hotel key and found a dog. Entering to ensure that there were no other occupants, officers saw, in plain view, an electric typewriter, a credit card issued in the name of “Smith,” and financial forms bearing various names and social security numbers. Officer photographed the room, sealed it, and obtained search warrants for the room and car. They seized blank W‐2 forms, partially completed tax forms, lists of business employer identification numbers, and prepaid debit cards (tax refunds) in the names of different people. Further investigation revealed that Procknow had obtained the personal identifying information of at least 40 individuals, which he used to file fraudulent tax returns and claim refunds. Procknow pleaded guilty to theft of government money and aggravated identify theft. The Seventh Circuit affirmed denial of a motion to suppress evidence obtained by the warrantless entry into the hotel room and evidence obtained by grand jury subpoena following the withdrawal of IRS administrative summonses requesting the same information. View "United States v. Procknow" on Justia Law