Justia Tax Law Opinion Summaries

Petitioners sought a redetermination in the Tax Court challenging the Commissioner's determination of tax deficiencies and assessment of penalties against them under section 6662 of the Internal Revenue Code, 26 U.S.C. 1 et seq. The Commissioner determined that petitioners were deficient based on a contribution by the McGehee Family Clinic to a multiple-employer welfare benefit plan. The Commissioner concluded that the Plan was not an "ordinary and necessary" business expense within the meaning of I.R.C. 162(a) and that the Plan was "substantially similar" to the listed tax-avoidance transaction described by the IRS in I.R.S. Notice 95-34. The court held that the Plan is substantially similar to the listed tax-avoidance transactions under Notice 95-34 and, therefore, upheld the Commissioner's assessment of accuracy-related penalties against petitioners under section 6662A. Further, the court held that petitioners had adequate notice of the potential for penalties under section 6662A and that the increased penalty rate under section 6662A(c) is applicable to the Clinic. The court affirmed the judgment of the Tax Court. View "Prosser v. Commissioner of Internal Revenue" on Justia Law

Two landowners (Landowners) each owned property served by a regional sewer district (District). Because the Landowners’ property had outstanding fees owed to the District, the District perfected liens against the properties, and the county treasurer and auditor ordered that the properties be sold at a tax sale. The Landowners petitioned the trial court requesting that the court find that their respective properties cannot be sold at a tax sale pursuant to Ind. Code 13-26-14-4. The district court ordered that both properties be removed from the tax sale because the District maintained the only lien and therefore was precluded from foreclosing on the parcels pursuant to the lien foreclosure prohibition clause in Ind. Code 13-26-14-4, which governs the collection of regional sewer district sewer liens. The Supreme Court reversed, holding (1) the lien foreclosure prohibition of section 13-26-14-4 does not apply to collection by tax sale; and (2) because the District employed the tax sale method and did not seek collection of the Landowners’ unpaid sewer bills and penalties through the lien foreclosure method, the lien foreclosure prohibition clause did not apply. View "Twin Lakes Reg’l Sewer Dist. v. Ray" on Justia Law

The prior owners were unable to pay the property taxes on the shopping center beginning in 2010. When petitioner purchased the property, taxes assessed for fiscal years 2010-2011, 2011-2012, and 2012-2013 were delinquent, totaling $568,627.94. Petitioner requested that the tax collector cancel penalties. Revenue and Taxation Code section 4985.2(a) provides that a penalty resulting from failure to make a timely property tax payment may be canceled if the failure “is due to reasonable cause and circumstances beyond the taxpayer’s control ... notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the principal payment for the proper amount of the tax due is made.” The tax collector determined only $2,670.10 of the $142,521.68 in penalties should be waived, because the statement for the second installment of taxes due in the 2012-2013 fiscal year had been mailed to the previous owners’ address. The trial court dismissed the owner’s suit, concluding that writ of mandate was not the appropriate remedy and payment of the tax was a prerequisite to cancellation of penalties and the taxes had not been paid. The court of appeal affirmed. View "Ashlan Park Center, LLC v. Crow" on Justia Law

Anadarko Petroleum Corporation, which acquired Kerr-McGee Oil & Gas Onshore L.P. in 2006, operated oil and gas wells from 2008 to 2011 and filed severance tax returns during this period. The severance tax rate an owner of oil and gas interests must pay depends on the fair market value of the owner’s interest. At issue in this case was how the value of such an interest is to be calculated. In 2010, the Auditing Division of the Utah State Tax Commission issued notices to Anadarko and Kerr-McGee (collectively Anadarko) informing Anadarko of a deficiency in its 2009 severance tax and assessing additional taxes and interest, and informing Kerr-McGee that its claimed 2009 refund was being reduced. Anadarko filed a petition for determination with the Commission. At issue before the Commission was whether the Auditing Division had applied the correct tax rate. The Commission granted summary judgment for the Auditing Division. The Supreme Court reversed, holding that the Commission improperly disallowed deductions Anadarko made for tax-exempt federal, state, and Indian tribe royalty interests under the severance tax statute. Remanded. View "Anadarko Petroleum Corp. v. Utah State Tax Comm’n" on Justia Law

Plaintiff filed suit against the IRS under 26 U.S.C. 7426(a)(1), alleging that the IRS wrongfully seized $13,000 from plaintiff. The IRS thought the money belonged to plaintiff's father and, after seizing it, applied the funds to pay down the father's tax debts. Plaintiff was 10 years old at the time of the seizure and plaintiff alleged that he did not find out about it until after he turned 18 years old. The court reaffirmed its prior holding that the nine-month limitations period set by section 6532(c) is not jurisdictional and may be equitably tolled. In this case, because the district court dismissed plaintiff's suit without determining whether he has established grounds for equitable tolling, the court reversed and remanded, leaving that question for the district court to resolve. View "Volpicelli v. United States" on Justia Law

Geosyntec, a specialty consulting and engineering firm, filed suit seeking a federal income tax refund under 26 U.S.C. 41. Under section 41, a taxpayer may claim a tax credit for increased spending on qualified research. Geosyntec claimed that it was entitled to the research tax credit under section 41 for qualified research expenses that it incurred on client projects in taxable years, 2002-2005. The district court found that research conducted by Geosyntec under two particular contracts was funded by Geosyntec's clients, making Geosyntec ineligible for the research tax credit for those contracts. The court agreed, concluding that the district court was correct in its interpretation of section 41. Accordingly, the court affirmed the grant of summary judgment against Geosyntec. View "Geosyntec Consultants v. United States" on Justia Law

At issue in this case was the financial institution excise tax (FIET) liability of GATE Holdings, Inc., a wholly owned subsidiary of The First Marblehead Corporation (FMC). The Appellate Tax Board concluded (1) Gate qualified as a “financial institution” within the meaning of Mass. Gen. Laws ch. 63, 1 and was entitled to apportion its income pursuant to Mass. Gen. Laws ch. 63, 2A; but (2) in applying the apportionment rules of section 2A, all of Gate’s taxable property, which consisted of securitized student loans, was properly assigned to Massachusetts, rather than States outside the Commonwealth, which resulted in a greater FIET liability than anticipated by Gate. The Supreme Judicial Court affirmed, holding (1) the Board properly concluded that section 2A(e)(vi)(B) creates a rebuttable presumption that where a taxpayer seeks to assign loans to a location that is not a regular place of that taxpayer’s business, the loans should be assigned to its commercial domicile; (2) all of the student loans were properly located at Gate’s commercial domicile in Massachusetts; and (3) the Board’s decisions did not violate the due process or commerce clause. View "First Marblehead Corp. v. Comm’r of Revenue" on Justia Law

Textron, Inc. appealed a Superior Court judgment which held that the company was not entitled to reimbursement from its former fastening manufacturing business, now known as Acument Global Technologies, Inc. for paying certain pre-closing contingent liabilities in the United States. The Superior Court's opinion centered on the meaning of a "tax benefit offset" provision in the parties' Purchase Agreement under which Acument was required to reimburse Textron if Acument received a "tax benefit" related to the contingent liabilities. Textron argued that even if the tax benefit had to be actual rather than merely hypothetical, the Superior Court erred by not finding that Acument actually enjoyed the right to tax benefits. Textron contended that its payment of the pre-closing liabilities constituted a tax benefit because the payments automatically increase Acument's tax basis under U.S. tax law. The Supreme Court disagreed after its review of the appeal: the Agreement, taken as a whole, guaranteed that Acument would not receive a net tax benefit simply because Textron made a required indemnification payment. Accordingly, Textron's argument that Acument has received a tax benefit triggering Textron's right to reimbursement was without merit, as the total effect of Textron's payments is tax-neutral. Similarly, Textron's second and related claim that the Superior Court erred in "redefining" the required tax benefit to mean only a "deduction" rather than any "reduction" was meritless. The therefore affirmed the Superior Court's judgment. View "Textron v. Acument Global Technologies, Inc." on Justia Law

Plaintiff, a fraternal organization and tax exempt not-for-profit corporation, owns and operates, a Macon nursing home that s licensed by the Illinois Department of Public Health, with a permit to enter into life care contracts under 210 ILCS 40/1. In 2002, the Department of Public Aid directed plaintiff to pay the “Nursing Home License Fee” of $1.50 for each licensed nursing bed day for each calendar quarter, 305 ILCS 5/5E-10. The Department then claimed that plaintiff was delinquent since 1993 and owed $244,233 in back fees plus $237,890 in penalties. Plaintiff paid under protest and sought a declaratory judgment, alleging that the fee was unconstitutional as applied to it because the fee’s purpose is to fund Medicaid-related expenditures that are neither precipitated by nor paid to plaintiff. The trial court granted plaintiff summary judgment under the uniformity clause The Illinois Supreme Court reversed. The taxing classification “every nursing home,” bears some reasonable relationship to the object of the legislation and to public policy. The object of the fee is not simply Medicaid reimbursement; all fees are deposited into the Long-Term Care Provider Fund, which may be used for Medicaid reimbursement, administrative expenses of the Department and its agents, enforcement of nursing home standards, the nursing home ombudsman program, expansion of home-and community-based services, and the General Obligation Bond Retirement and Interest Fund. View "Grand Chapter, Order of the E. Star of Ill. v. Topinka" on Justia Law

The law firm challenged the validity and scope of Proposition Q, which amended the Payroll Expense Tax Ordinance of the City and County of San Francisco (San Francisco Bus. & Tax Reg. Code, article 12-A, 901). Plaintiff paid the payroll expense tax calculated under Proposition Q, and the city rejected its Administrative claim. The firm sought a refund of that portion of the tax that it paid on the profits distributed to its equity partners. The court of appeal dismissed an appeal, ruling that some portion of the firm’s profit distributions to its equity partners represents “compensation for services,” to be included in the payroll expense tax base and that Proposition Q does not violate either article XIIIC of the California Constitution. View "Coblentz, Patch, Duffy & Bass, LLP v. City & Co. of San Francisco" on Justia Law