Justia Tax Law Opinion Summaries

This action arose from a partnership's attempted use of a bogus tax shelter to offset capital gains and the Commissioner's subsequent denial of a $32.5 million "loss" claimed by the partnership to eliminate income tax liability on an asset sale resulting in a $28 million capital gain. The Tax Court ruled that a taxpayer holding both direct and indirect interests in a partnership may elect under section 6223(e)(3)(B) of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), 26 U.S.C. 6221-6232, not to be bound by the results of a partnership proceeding - or partnership audit - as to some, but not all, of those interests held during the relevant taxable year. The court held that the meaning of the statutory language is clear and unambiguous, and it means that unless a partner elects to have all of his or her partnership items treated as nonpartnership items, the partner cannot elect out of the TEFRA proceeding. The court concluded that the Tax Court's reading of the disputed statute was incorrect. The court also concluded that the IRS's sloppy administrative errors, including mailing the wrong form letter to the taxpayers, were not sufficient either to require a different outcome or to stop the IRS from pursuing this matter and its claims. Because the court held that the taxpayers' disputed elections to opt out were invalid, the court remanded for further proceedings. View "JT USA v. CIR" on Justia Law

FFRF, a Wisconsin-based organization of atheists and agnostics, gives its co-presidents housing allowances. They paid income tax on that portion of their salaries. Neither sought to exclude this income on their tax returns and neither has claimed a refund. FFRF and the co-presidents challenged the parsonage exemption, 26 U.S.C. 107, which allows a minister to receive tax-free housing from his church, whether by giving the minister access to a church-owned residence or by giving the minister an allowance to obtain housing. Plaintiffs conceded that they lacked standing to challenge section 107(1), covering in-kind housing, but argued that they had standing to challenge section 107(2), which applies to rental allowances. The district court agreed and held that the subsection is an unconstitutional establishment of religion under the First Amendment. The Seventh Circuit vacated with instructions to dismiss. A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise “similarly situated” to those who receive the benefit. Only a person that has been denied such a benefit can be deemed to have suffered a cognizable injury. The plaintiffs were not denied the parsonage exemption. View "Freedom From Religion Found., Inc. v. Lew" on Justia Law

Two taxpayers appealed a trial court judgment affirming a decision of the board of abatement of the Town of Pownal, which denied their request for tax abatement. The taxpayers sought abatement of the property taxes on several contiguous properties for the years 2005 through 2011. First, taxpayers argued that the Town's delinquent-tax collector erred in assessing interest and fees on the entirety of an overdue tax bill after refusing to accept a partial payment that taxpayers had proffered in 2011. Second, taxpayers argued that the listers had erroneously and without notice to taxpayers reclassified their property for several years, resulting in improperly inflated tax bills. Third, the taxpayers argued that one sewer-bond payment is applied to each parcel. Fifth, taxpayer Guntlow explained that a house site up to two acres around a house was subject to an exemption in the taxation calculus that was unavailable to taxpayers during the years when their property was misclassified. Upon review, the Supreme Court reversed and remanded the case the trial court with instructions to remand to the Board of Abatement, for a more detailed explanation of the reasons for its denial of taxpayers' request for abatement on the ground that the misclassification of their property over a course of years amounted to a manifest error or mistake, and its request for abatement on the ground that taxation of their .66-acre leach field from 2005 to 2010 as an individual property amounted to manifest error or mistake. In the alternative, the Board could hold a new hearing on those two issues. The Court affirmed in all other respects. View "Guntlow v. Town of Pownal Board of Abatement" on Justia Law

Cable One, Inc., is a Delaware corporation headquartered in Phoenix, Arizona. In 2005, Cable One received business income from four types of activities in Idaho: cable television services, internet access services, advertising services, and cable modem leasing. In its Idaho income tax return for that year, it included revenues earned from all of those activities except revenues from providing internet access services to Idaho customers. It excluded those revenues on the ground that providing such services to customers in Idaho constituted Arizona sales, although it also excluded such revenues from its 2005 Arizona income tax return on the ground that they came from Idaho sales. In 2008, the Idaho Tax Commission issued a notice of deficiency determination asserting a tax and interest deficiency on Cable One for the 2005 tax year. Cable One petitioned for redetermination, which the Tax Commission denied. Cable One then filed a complaint in the district court, which tried the matter de novo, and ruled in favor of the Tax Commission. Cable One then appealed to the Idaho Supreme Court. Finding no reversible error, the Supreme Court affirmed the district court. View "Cable One, Inc. v. Idaho State Tax Commission" on Justia Law

Appellants Homesales, Inc., JPMorgan Chase Bank, N.A., and Jason L. Howell, appealed the district court's order certifying this case as a class action at the request of Appellee Marshall County. This case centered on the Documentary Stamp Tax Act, and its applicability to a sheriff's deed granted to Homesales in a mortgage foreclosure action prosecuted by JPMorgan. Homesales claimed that the transaction was exempt from documentary tax. The County disagreed and sued to collect the tax it claimed was due. The County also moved to certify the case as a class action in which all Oklahoma counties would join as plaintiffs. The district court granted the County's motion and certified the case pursuant to Title 12 O.S. Supp. 2013 sec. 2023 (B)(3) and the defendants appealed. Because the County was precluded by the Oklahoma Supreme Court's holding in "Murray Cnty. v. Homesales, Inc.," (330 P.3d 519) from suing to collect unpaid taxes allegedly due pursuant to the DSTA, the district court's class certification order was reversed and this case was remanded for further proceedings. View "Marshall County v. Homesales, Inc." on Justia Law

This case involved the tax-year-2009 value of a parcel of property and presented the question of whether an auction sale price can ever be regarded as evidence of a property’s value and, if so, under what circumstances. The Board of Tax Appeals (BTA) found that the auction sale in this case was a voluntary, arm’s-length transaction, and therefore, that the sale price was the best evidence of the true value of the property. The Supreme Court affirmed, holding (1) Ohio Rev. Code 5713.04, read in conjunction with former Ohio Rev. Code 5713.03, requires the taxing authorities to presume that an auction sale price is not a voluntary, arm’s-length transaction, but that presumption may be rebutted by evidence that a particular sale was in fact voluntary and did occur at arm’s length; and (2) the record supported the BTA’s finding that this particular auction sale was voluntary and occurred at arm’s length. View "Olentangy Local Sch. Bd. of Educ. v. Delaware County Bd. of Revision" on Justia Law

In this tax refund case, Chevron challenged the method by which the Kern County Assessor and Assessment Appeals Board valued oil and gas wells as new construction during three tax years, Rev. & Tax. Code, 5140 et seq. The trial court found that the Board used the wrong valuation method and remanded. Both parties appealed. The court concluded that Chevron has standing to maintain this action; concluded that the Board did not abuse its discretion or act contrary to law when it approved the assessor's valuation method; rejected Chevron's exemption argument; and reversed in part, affirming in part. View "Chevron USA v. County of Kern" on Justia Law

In 2006, the City of Cincinnati filed an application for exemption from real-property tax for property that constituted part of the City’s convention center. The tax commissioner granted the exemption for 2006 but denied it for subsequent years. While the City’s appeal was pending at the Board of Tax Appeals (BTA), new legislation was enacted that provided an exemption in the present situation. Therefore, the BTA remanded the case to the tax commissioner. While the 2006 exemption application was again pending before the tax commissioner, the Cincinnati City School District Board of Education attempted to intervene as a party. The tax commissioner denied the school board’s motion to intervene and, pursuant to the newly enacted legislation, granted the exemption for 2007 and later years. The school board appealed. The BTA dismissed the appeal on the grounds that the school board lacked standing to appeal. The Supreme Court affirmed, holding that the BTA acted reasonably and lawfully in determining that the school board lacked standing to appeal because of its failure to comply with Ohio Rev. Code 5715.27(C). View "Cincinnati City Sch. Dist. Bd. of Educ. v. Testa" on Justia Law

In August 2006, Nagel Beverage Company approached the Youth Ranch and the Idaho Youth Ranch Foundation, Inc., about the sale of the real property. Nagel was looking to sell the property as part of a 1031 exchange and offered it to the Youth Ranch for $1,136,000 below the appraised value as a noncash donation. The Youth Ranch wanted to purchase the property and began to explore financing options with Key Bank. The Ada County Board of Equalization (the BOE) denied an application for a property tax exemption that the Youth Ranch and Idaho Youth Ranch Nagel Center, LLC asked for resulting from the donation. The Idaho Board of Tax Appeals affirmed that decision. The Youth Ranch and the LLC appealed. Ruling on the parties' cross-motions for summary judgment, the district court held that the property was not exempt from taxation. Finding no reversible error, the Supreme Court affirmed. View "Idaho Youth Ranch v. Ada County Bd of Equalization" on Justia Law

The issue this case presented for the Court of Appeal centered on a property tax refund action for the 2007 tax year filed by plaintiff, Verizon California Inc. The trial court dismissed the case after it sustained defendants’ demurrer without leave to amend. Defendants are the Board of Equalization and nine individual counties. Verizon owned property in 38 counties, but it sought a refund for taxes paid for the 2007 tax year only from nine counties. The trial court sustained the demurrer on the ground Verizon failed to name indispensable parties, i.e., 29 absent counties in which Verizon owns property, even though Verizon sought no refund from those counties, pursuant to Rev. & Tax. Code, secs. 741, 5148, subds. (e)-(g). With the statute of limitations having run on filing a complaint against the absent parties, the case was dismissed. After its review, the Court of Appeal concluded section 5148 did not require a plaintiff to name as a defendant every county in which it owns property, unless it is seeking a refund from the county. Furthermore, the Court concluded that in this case the trial court abused its discretion in finding the absent counties were indispensable parties: "There is no evidence in the record that the absent counties will necessarily be affected in the future by a change in the 2007 assessment, and the absent counties’ object in seeing that the Board appraise the property at its highest value in future tax years will be adequately litigated by the named defendants." View "Verizon California v. Bd. of Equalization" on Justia Law