Justia Tax Law Opinion Summaries

This case involves a dispute over a tax sale of a property in Jackson County, Mississippi. The property was owned by Deborah Hallford, who failed to pay property taxes in 2014, leading to the property being sold at a tax sale in 2015. Pierre Thoden, a resident of New York, purchased the property at the sale. Hallford failed to redeem the property within the redemption period, and Thoden later received title after he paid the delinquent taxes for 2015-18. After learning of the tax sale, Hallford filed a complaint to set aside the tax sale, claiming that due to a lack of proper notice, the sale was void. The chancery court found in Hallford’s favor and voided the tax sale based on insufficient notice.Thoden appealed the chancery court's decision, arguing that he was entitled to a statutory lien and reimbursement for appliances, costs, and expenses on the property. The Supreme Court of Mississippi affirmed the chancery court’s finding that the tax sale was void but held that Thoden was entitled to a hearing to present proof of his damages. The case was remanded for a hearing to determine the amount Thoden was owed as damages.On remand, the chancery court found that Thoden was unjustly enriched by the rent he collected from tenants and that he could not keep money he collected on property where he was in the nature of a trespasser. The court also found that Thoden was entitled to the amount he paid in taxes, plus interest. However, the court denied Thoden’s claim to reimbursement for his repairs on, improvements to, and maintenance of the property. Thoden appealed these findings.The Supreme Court of Mississippi affirmed in part and reversed and rendered in part. The court held that Thoden was entitled to a refund of his purchase price and interest on that price, and that he was not entitled to reimbursement of the cost of repairs, improvements, and maintenance. The court also held that Hallford was entitled to a $4,500 set-off. However, the court reversed the chancery court's determination that Thoden was not entitled to the taxes he paid on the property for 2015-18, and awarded Thoden $2,231.06. View "Thoden v. Hallford" on Justia Law

The case revolves around a dispute between Pinellas County and Pasco County in Florida. Pinellas County owns approximately 12,400 acres of real estate in neighboring Pasco County. Although Pinellas County once paid ad valorem taxes to Pasco County for the property, it now asserts that sovereign immunity relieves it of that obligation. Pinellas County filed a lawsuit against the Pasco County Property Appraiser, seeking a judgment declaring the property immune from ad valorem taxes and an injunction prohibiting future assessment and collection of such taxes.The trial court ruled in favor of Pinellas County, holding that as a political subdivision of the state, Pinellas County is entitled to sovereign immunity, which includes immunity from the ad valorem taxation of its properties, regardless of whether those properties are located within the boundaries of Pinellas County or in another county within the state of Florida. The Pasco County Property Appraiser appealed this decision.The Second District Court of Appeal reversed the trial court's ruling. The district court noted that each county has statutory and constitutional authority to assess ad valorem taxes on “all property in the county.” The district court also rejected Pinellas County’s primary contention that its immunity from taxation extends beyond its own borders, noting that Pinellas County had not identified any supporting authority.The Supreme Court of Florida disagreed with Pinellas County's argument that its property in Pasco County was not taxable based on principles of sovereign immunity. The court held that although a county’s real property is immune from that county’s own efforts to assess ad valorem taxes, Pinellas County has not identified any authority recognizing an immunity from taxation of the county’s property located beyond its territorial boundaries. Therefore, the court concluded that sovereign immunity does not shield a county from the obligation of paying ad valorem taxes for property owned by that county but located outside its territorial boundaries. The court approved the decision of the Second District Court of Appeal. View "Pinellas County, Florida v. Joiner" on Justia Law

The New London Hospital Association, Inc. (NLH), a nonprofit corporation, appealed a decision by the Superior Court dismissing its appeals from denials by the Town of Newport of NLH’s applications for charitable property tax exemptions for tax years 2015, 2017, and 2018. NLH owns a property in Newport where it operates the Newport Health Center (NHC), an outpatient treatment center. NLH applied for a charitable tax exemption for the NHC property, which was denied by the Town. NLH appealed these denials to the superior court. The court ruled that NLH established three of the four factors necessary for the exemption, but not the fourth.The Supreme Court of New Hampshire affirmed the trial court’s rulings that NLH satisfied the second and third factors for charitable exemption. However, it reversed the trial court's ruling that NLH failed to prove that it satisfied the fourth factor, which required NLH to show that “any of [NLH’s] income or profits are used for any purpose other than the purpose for which [NLH] was established.” The court concluded that the practice of referring patients to Dartmouth-Hitchcock Health (DHH) for “appropriate medical care” that NLH cannot provide, does not confer on DHH a “pecuniary . . . benefit” prohibited under the fourth factor. The court also found that NLH was not required to show that the independent contractors to whom it made payments shared NLH’s charitable mission. The case was remanded for further proceedings. View "New London Hospital Association v. Town of Newport" on Justia Law

The case revolves around a clerical error by the Internal Revenue Service (IRS) that resulted in a taxpayer, Jeffrey Page, receiving a tax refund check significantly larger than he was entitled to. Page returned only a portion of the excess refund, prompting the United States government to sue under 26 U.S.C. § 7405 to recover the outstanding balance. Page did not respond to the lawsuit, leading the government to move for default judgment. However, the district court denied the motion and dismissed the complaint as untimely, arguing that the two-year limitations period began when Page received the refund check.The United States Court of Appeals for the Ninth Circuit disagreed with the district court's interpretation of when the two-year limitations period began. The appellate court held that the limitations period to sue to recover an erroneous refund starts on the date the erroneous refund check clears the Federal Reserve and payment to the taxpayer is authorized by the Treasury. As Page's refund check cleared less than two years before the government sued, the appellate court held that the complaint was timely and that the district court erred by dismissing it. The appellate court also noted that the district court had improperly shifted the burden to the government to prove at the pleading stage that its claim against Page was timely. The case was reversed and remanded for further proceedings. View "United States v. Page" on Justia Law

Orthofix, Inc. and KCI USA, Inc., both Delaware corporations with principal places of business outside South Carolina, sold durable medical equipment (DME) in South Carolina and remitted the 6% sales tax without protest. However, they later requested refunds for the sales tax paid during certain periods, arguing that they should qualify for a sales tax exemption for DME paid for by Medicaid or Medicare funds. This exemption, however, was only available to sellers whose principal place of business was in South Carolina. The South Carolina Department of Revenue (DOR) denied the refund claims, stating that the companies did not meet the statutory requirements for the exemption.The companies appealed the decisions within the DOR, arguing that the exemption's limitation to in-state businesses violated the dormant Commerce Clause of the U.S. Constitution. The DOR issued determinations finding that the companies were not entitled to a refund of sales tax paid for DME. The companies then filed actions in the circuit court challenging the constitutionality of the exemption under the dormant Commerce Clause. The circuit court granted summary judgment to each company, finding the exemption's discrimination against interstate commerce unconstitutional and severing the "principal place of business in South Carolina" requirement from the remainder of the exemption.The South Carolina Supreme Court affirmed the circuit court's decision as modified. The court agreed that the exemption unconstitutionally discriminated against interstate commerce in violation of the dormant Commerce Clause and that the ordered refunds were appropriate. However, the court found that the companies had not satisfied their burden of proof to show the legislature would have passed the remainder of the exemption absent the unconstitutional language. Therefore, the court declined to sever only the offending language and instead declared the entire exemption void going forward. The court invited the legislature to reenact the exemption, excluding the unconstitutional limitation on a seller's principal place of business. View "Orthofix v. South Carolina Department of Revenue" on Justia Law

The case involves United Therapeutics Corporation (UTC), a biotechnology company, and the Commissioner of Internal Revenue. The dispute centers on the interpretation of a tax provision that coordinates two tax credits: the research credit and the orphan drug credit. The Commissioner claimed that UTC disregarded one of the provision’s two commands, improperly reducing its tax liability by over a million dollars. UTC argued that the relevant half of the coordination provision lost effect in 1989 and has been moribund since.The United States Tax Court disagreed with UTC's argument. The court interpreted the statute’s terms by reference to their ordinary meaning, giving effect to the full coordination provision. The court rejected UTC's argument that changes to the tax law since its enactment rendered part of the coordination provision ineffective. The court also disagreed with UTC's interpretation of two regulations it relied on for support.The United States Court of Appeals for the Fourth Circuit affirmed the tax court's decision. The appellate court agreed with the tax court's interpretation of the coordination provision according to its ordinary meaning. The court also found that the tax court correctly rejected UTC's arguments based on the interpretation of predecessor statutes and regulations. The court concluded that the tax court correctly resolved the case in favor of the Commissioner. View "United Therapeutics Corporation v. Commissioner of Internal Revenue" on Justia Law

The case involves the Iowaska Church of Healing (the "Church"), an organization whose religious practices involve the consumption of Ayahuasca, a tea containing the hallucinogenic drug dimethyltryptamine (DMT), which is regulated under the Controlled Substances Act (CSA). The Church had applied for tax-exempt status under 26 U.S.C. § 501(c)(3) but was denied by the Internal Revenue Service (IRS) on the grounds that the Church's religious use of Ayahuasca was illegal. The Church challenged this decision in the District Court, arguing that the IRS's determination was based on an incorrect assumption of illegality and that the denial of tax-exempt status violated the Religious Freedom Restoration Act of 1993 (RFRA).The District Court denied the Church's motion and granted the Government's motion for summary judgment. The court held that the Church lacked standing to assert its RFRA claim and that the lack of standing also undermined its tax-exemption claim. The court found that the Church's religious use of Ayahuasca was illegal without a CSA exemption, and the IRS had no authority to assess whether the Church's proposed Ayahuasca use warranted a religious exemption from the CSA.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the District Court's judgment. The Court of Appeals held that the Church lacked standing to assert its RFRA claim because the economic injury it claimed was neither an injury-in-fact nor redressable. Without a cognizable RFRA claim, the Church's tax-exemption claim also failed. The Court of Appeals found that the Church could not proffer evidence of a CSA exemption to show it passed the organizational and operational tests for tax-exempt status. View "Iowaska Church of Healing v. Werfel" on Justia Law

In two consolidated property tax disputes, Oncor Electric Delivery Company NTU, LLC sought a multimillion-dollar reduction in the total values of certain electric transmission lines in the 2019 certified appraisal rolls for the Wilbarger County Appraisal District and Mills Central Appraisal District. Oncor’s predecessor had agreed to the lines’ value in each county to settle its protests of the Districts’ initial appraised values, but Oncor now contends that these agreements are void due to mutual mistake.Previously, Oncor filed unsuccessful motions for correction of the appraisal rolls with each County Appraisal Review Board (ARB) and then sued in district court in Wilbarger and Mills Counties. The trial and appellate courts below provided conflicting answers on whether questions regarding the effect of a Section 1.111(e) agreement—such as its validity and scope—are relevant to a trial court’s subject-matter jurisdiction over a suit for judicial review under Section 42.01 of the Tax Code.The Supreme Court of Texas held that the resolution of such questions does not implicate jurisdiction and remanded the cases to the trial courts for further proceedings. The court did not reach the merits of the parties’ disputes about whether Oncor has identified errors eligible for correction under Sections 25.25(c) or (d) of the Tax Code, whether any such errors fall within the scope of the parties’ Section 1.111(e) settlement agreements, and whether the doctrine of mutual mistake is an available defense to such agreements. View "MILLS CENTRAL APPRAISAL DISTRICT v. ONCOR ELECTRIC DELIVERY COMPANY NTU LLC" on Justia Law

The case revolves around a tax appraisal dispute involving Texas Disposal Systems Landfill, Inc. (the Landfill) and Travis Central Appraisal District (the District). The Landfill owns 344 acres of land in Travis County, which it operates as a landfill. In 2019, the District appraised the market value of the landfill at $21,714,939. The Landfill protested this amount under the Tax Code provision requiring equal and uniform taxation but did not claim that the District’s appraised value was higher than the market value of the property. The appraisal review board reduced the appraised value of the subject property by nearly ninety percent. The District appealed to the trial court, claiming that the board erred in concluding that the District’s appraised value was not equal and uniform when compared with similarly situated properties. The District also claimed that the board’s appraised value was lower than the subject property’s true market value.The trial court granted the Landfill’s plea to the jurisdiction, arguing that the challenge it made before the appraisal review board was an equal-and-uniform challenge, not one based on market value. Thus, the trial court lacked jurisdiction to consider market value. However, the court of appeals reversed this decision, holding that a trial court’s review of an appraisal review board’s decision is not confined to the grounds the taxpayer asserted before the board.The Supreme Court of Texas affirmed the court of appeals' judgment. The court concluded that the Tax Code limits judicial review to conducting a de novo trial of the taxpayer’s protest. In deciding the taxpayer’s protest in this case, the trial court is to determine the equal and uniform appraised value for the property subject to taxation. This limit, though mandatory, is not jurisdictional. The case was remanded to the trial court for further proceedings. View "TEXAS DISPOSAL SYSTEMS LANDFILL, INC. v. TRAVIS CENTRAL APPRAISAL DISTRICT" on Justia Law

The Supreme Court of California ruled that the Taxpayer Protection and Government Accountability Act (TPA), a proposed initiative measure, could not be placed on the November 2024 general election ballot. The TPA sought to revise the California Constitution by requiring voter approval for any new or increased state or local tax, and by expanding the definition of "tax" to include a wider range of government charges. The petitioners, the Legislature of the State of California, Governor Gavin Newsom, and former Senate President Pro Tempore John Burton, argued that the TPA was invalid because it attempted to revise the California Constitution via citizen initiative, and because it would seriously impair essential government functions.The court agreed with the petitioners, finding that the TPA would substantially alter the basic governmental framework set forth in the California Constitution. The court noted that the TPA would eliminate the Legislature's ability to levy taxes without prior voter approval, shift power between the executive and legislative branches, and transform local revenue-raising by requiring that exempt charges go through legislative rather than administrative processes. The court concluded that these changes were so significant that they amounted to a revision of the Constitution, which could not be enacted by initiative. The court therefore issued a writ of mandate directing the Secretary of State to refrain from placing the TPA on the November 2024 election ballot. View "Legislature of the State of California v. Weber" on Justia Law