Justia Tax Law Opinion Summaries

Five Delta Alpha, LLC (FDA) purchased an aircraft and immediately leased it to JetSelect, LLC. After paying Missouri use tax under protest, FDA filed a use tax refund claim with the Director of Revenue, asserting that the purchase of the aircraft was eligible for exemption pursuant to Mo. Rev. Stat. 144.030.2(20) because the aircraft was leased to JetSelect as a common carrier providing air carrier service to the general public. The Director denied the claim. On appeal, the Administrative Hearing Commission (AHC) concluded that JetSelect was a common carrier but determined that FDA was not entitled to the refund because its lease was not a “sale” for purposes of the resale exemption. The Supreme Court reversed, holding that FDA showed clear and unequivocal proof that it qualified for the exemption because the lease to JetSelect constituted a sale for sales tax purposes. View "Five Delta Alpha, LLC v. Dir. of Revenue" on Justia Law

Custom Built, a personal training company, paid Powerhouse Gym of Joplin (Powerhouse), a fitness facility, rental fees covering the lease of office space and the opportunity to market and sell personal training services to Powerhouse members. The Department of Revenue (DOR) issued an assessment against Powerhouse for unpaid sales tax on the rental fees. Powerhouse challenged the assessment, and the Administrative Hearing Commission (AHC) determined that Powerhouse did not owe sales tax on the rental fees collected from Custom Built. DOR appealed, contending that the rental fees were subject to sales tax as a fee paid to a place of recreation under Mo. Rev. Stat. 144.020.1(2). The Supreme Court affirmed the AHC’s decision, holding that Powerhouse was not liable for sales tax on the monthly rental fees because Powerhouse did not render a taxable service to Custom Built. View "Tatson, LLC v. Dir. of Revenue" on Justia Law

When the dude ranch owned by a closely held Wisconsin corporation was sold, the shareholders planned to liquidate, but the asset sale had produced a sizable capital ($1.8 million) gain and the corporation faced significant federal and state tax liability. Midcoast proposed an intricate tax-avoidance transaction that involved Midcoast purchasing shares for offset against bad debts and losses purchased from credit card companies, purportedly financing the purchases with a loan. The shareholders implemented the plan. The taxes were never paid. The IRS sought to hold the former shareholders responsible for the tax debt as transferees of the defunct corporation under 28 U.S.C. 6901 and Wisconsin law of fraudulent transfer and corporate dissolution. The tax court ruled in favor of the IRS. The Seventh Circuit affirmed, agreeing with the tax court that the substance of the transaction was a liquidation. Midcoast did not actually pay the shareholders for their stock; instead, each shareholder received a pro rata distribution of cash on hand— the proceeds of the asset sale—making them “transferees” as that term is broadly defined in section 6901(h). View "Dugan v. Comm'r of Internal Revenue" on Justia Law

Petitioners, the owners of a single-family residence located in Nassau County, filed a small claims assessment review (SCAR) petition under Real Property Tax Law (RPTL) 730. The County requested disqualification of the petition for lack of jurisdiction on the grounds that the property was not owner-occupied by Petitioners during the tax year in question. The SCAR hearing officer agreed and disqualified the petition. At issue on appeal was whether the property should come within the statute’s coverage where, during the relevant tax year, the property was occupied rent-free by Petitioners’ close relative. The Appellate Division affirmed. The Court of Appeals affirmed, holding that when a property is occupied during the relevant tax period by an owner’s relative but not by the owner, the property is not “owner-occupied” within the meaning of RPTL 730(1)(b)(i). View "Manouel v. Bd. of Assessors" on Justia Law

The parties did not dispute the facts of the various transactions in this case, only the legal conclusions to be drawn from them. At the center, this case concerned the County of Orange’s property tax reassessment of a retail shopping center located in the City of Westminster. The Assessment Appeals Board and the trial court both concluded reassessment was proper because there was a change of ownership of the subject property when it was purchased by the long-term lessee and a third party investor. After review, the Court of Appeal concluded there was no change of ownership for property tax purposes and reversed the trial court’s judgment. View "Dyanlyn Two v. County of Orange" on Justia Law

In 2001, N.D. Laws 53-06.2-10.1 was amended to authorize “account wagering,” a form of parimutuel wagering in which an individual deposits money in an account and, through a licensed simulcast service provider authorized to operate a simulcast parimutuel wagering system, uses the balance to pay for parimutuel wagers. The legislature did not make corresponding changes to section 53-06.2-11 or otherwise alter the statutory takeout formulas to authorize a tax on account wagering until 2007. Racing Services (RSI), formerly a state-licensed horse racing simulcast service provider, filed bankruptcy. PW Enterprises, its largest non-governmental creditor filed suit on behalf of all creditors to recover money the state collected from RSI as taxes on parimutuel account wagering. The district court held that the money must be returned to the bankruptcy estate because North Dakota law did not authorize the state to collect taxes on account wagering before 2007. The Eighth Circuit affirmed. Though some members of the legislature may have understood account wagering would be taxed similarly to existing forms of parimutuel wagering, that belief does not make the statute as written ambiguous or require a court to strain to infer a legislative intent that is entirely absent from the statutory language. View "PW Enters., Inc. v. North Dakota" on Justia Law

Berera worked at Mesa, a health care organization, as a nurse practitioner, 2011-2013. After Berera’s employment ended, she allegedly discovered that the wages on her W-2 did not reflect the wages that Mesa owed her. Berera sued in state court, asserting a class of current and former employees whom Mesa “forced to pay [Mesa’s] share of payroll taxes and other taxes and withholdings,” that this “forced payment resulted in the employees receiving less money than they earned,” and that Mesa paid employees “less than the wages and overtime compensation to which the employees were entitled.” The complaint contained no additional substantive allegations, but recited an unpaid wages claim under section 337.385 of the Kentucky Revised Statutes and claims of conversion and negligence under Kentucky law. The district court dismissed, reasoning that the Federal Insurance Contribution Act (FICA), 26 U.S.C. 3101–3128, which imposes a 7.65% tax on wages to fund Social Security and Medicare, requires parties seeking a refund to file a claim with the IRS before bringing a federal tax refund suit. The Sixth Circuit affirmed, agreeing that the purported state-law claims are truly FICA claims. View "Berera v. Mesa Med. Grp., PLLC" on Justia Law

The four debtors involved in these bankruptcy appeals all failed to timely file their Massachusetts income tax returns and failed to pay their taxes. Each debtor eventually filed his late tax returns but still failed to pay the taxes that were due. Each debtor eventually filed for Chapter 7 bankruptcy and sought a ruling that their obligation to pay the unpaid taxes was dischargeable. The Massachusetts Department of Revenue argued that unpaid taxes for which no return was timely filed by the Commonwealth’s statutory deadline fit within an exception to discharge under 11 U.S.C. 532(a)(1)(B)(i). The bankruptcy courts split three to one in favor of the debtors. In the two cases appealed to the Bankruptcy Appellate Panel (BAP), the BAP sided with the debtors. In the two cases appealed to the district court, the court granted summary judgment to the Department. The First Circuit affirmed the district court’s judgment in favor of the Department and reversed the BAP’s grant of judgment for the debtors, holding that a Massachusetts state income tax return filed after the date by which Massachusetts requires such returns to be filed does not constitute a “return” under 11 U.S.C. 523(a) such that unpaid taxes due under the return can be discharged in bankruptcy. View "Fahey v. Mass. Dep’t of Revenue" on Justia Law

Plaintiffs in this case were two companies subject to the five percent excise tax on video programming delivered by direct broadcast satellite. Plaintiffs brought a complaint for declaratory and injunctive relief alleging that the tax violates the Commerce Clause of the federal Constitution because it disfavors satellite companies as compared with those companies that provide video programming via cable. A superior court judge granted summary judgment in favor of Defendant, the Department of Revenue. The Supreme Judicial Court affirmed, holding that the cable and satellite companies are not similarly situated, and therefore, Plaintiffs failed to carry their burden of establishing that the excise tax statute was motivated by a discriminatory purpose. View "DIRECTV, LLC v. Dep’t of Revenue" on Justia Law

Edwin B. Lumpkin, Jr. appealed several Circuit Court orders dismissing three cases he had initiated challenging property-tax assessments made by the Jefferson County Board of Equalization and Adjustments. Lumpkin owned and operated Metro Mini Storage, a chain of self-storage facilities with locations throughout the Birmingham metropolitan area. In 2012, Lumpkin received notice from Jefferson County regarding the assessed value of three of his properties located in that county. Believing the assessed values of these properties to be too high, Lumpkin elected to protest their valuation, and the Board heard his arguments. Acting pro se, Lumpkin filed three appeals in the Jefferson Circuit Court (one for each of the three locations), arguing that the Board's decisions did not reflect the true market value of the properties and that a reduction in assessed value was warranted based on the evidence he had presented. Because Lumpkin's appeals are governed by section 40-3-25 and because he failed to comply with all the requirements of section 40-3-25 for perfecting his appeals, the Supreme Court concluded the trial court properly dismissed the cases. View "Lumpkin, Jr. v. Alabama" on Justia Law