Justia Tax Law Opinion Summaries

In this case, the United States Chamber of Commerce and three other trade associations sued to stop the enforcement of a new state tax in Maryland known as the Digital Advertising Gross Revenues Tax Act. The law requires large technology companies to pay a tax based on gross revenue they earn from digital advertising in the state. The plaintiffs alleged that the Act violates the Internet Tax Freedom Act, the Commerce Clause, the Due Process Clause, and the First Amendment. The United States District Court for the District of Maryland dismissed three of the counts as barred by the Tax Injunction Act, which prevents federal courts from stopping the collection of state taxes when state law provides an adequate remedy. The court dismissed the fourth count on mootness grounds after a state trial court declared the Act unconstitutional in a separate proceeding. On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court's dismissal of the first three counts, but vacated the judgment to the extent it dismissed those counts with prejudice, ordering that the dismissal be entered without prejudice. The appellate court also vacated the dismissal of the fourth count and remanded for further proceedings, as the plaintiffs' First Amendment challenge to the Act's prohibition on passing the tax onto consumers was not moot. View "Chamber of Commerce of the United States v. Lierman" on Justia Law

In the case before the Nebraska Supreme Court, Fountain II, LLC, a commercial real estate development company, disputed the denial of special valuation as agricultural or horticultural land, commonly known as "greenbelt status", for a 19.9-acre property it owned in Douglas County, Nebraska. The Douglas County Board of Equalization had denied the company's application for greenbelt status for the tax year 2018, arguing that the property was not primarily used for agricultural or horticultural purposes. The Tax Equalization and Review Commission (TERC) affirmed the county board's decision.Upon appeal, the Nebraska Supreme Court reversed TERC's decision and remanded the case with instructions to sustain the company's protest. The court found that TERC erred in considering the property's use as of July 15, 2018, instead of as of January 1, 2018, as required by Nebraska law. The court also found that the county board's decision was arbitrary and unreasonable, and TERC's decision was not supported by competent evidence, as the evidence showed that the property was primarily used for agricultural purposes as of January 1, 2018. View "Fountain II, LLC v. Douglas Cty. Bd. of Equal." on Justia Law

In this case, the United States Court of Appeals for the Federal Circuit ruled against Philadelphia Energy Solutions Refining and Marketing, LLC ("Philadelphia Energy"). Philadelphia Energy, a fuel producer, had appealed a decision by the United States Court of Federal Claims denying their claim for tax refunds for excise taxes they had paid on fuel mixtures of butane and gasoline. Philadelphia Energy argued that these fuel mixtures should be considered "alternative fuel mixtures" under 26 U.S.C. § 6426(e), making them eligible for a tax credit. However, the Court of Appeals upheld the lower court's decision, finding that butane, despite being considered a liquefied petroleum gas, is not considered an "alternative fuel" under this statute. This is because butane is also a "taxable fuel," and the statutory language creates a dichotomy between "taxable fuels" and "special motor fuels", with the two being mutually exclusive. Consequently, Philadelphia Energy's mixture of butane and gasoline does not qualify for the alternative fuel mixture credit, and they are not entitled to the claimed tax refunds. View "PHILADELPHIA ENERGY SOLUTIONS REFINING v. US " on Justia Law

In this case, the Greenspan family bought a home in Long Beach, California, for $900,000 in 2014. The land was valued at $540,000 and the improvements (the home itself) at $360,000. Two years later, the Greenspans demolished the original residence, except for the garage, and built a new home on the property. The County of Los Angeles then reappraised the property, reducing the value of the improvements to $40,000 and increasing the value of the land to $860,000. The County then added the appraised value of the new construction to the newly allocated land and improvement values. The Greenspans contested this reappraisal, arguing that the County's reallocation of their base-year land and improvement value was contrary to law. The trial court found in favor of the County, and the Greenspans appealed.The Court of Appeal of the State of California Second Appellate District reversed the trial court's decision. The court found that the County's automatic reallocation of the base-year value for the entire structure removed, leaving only a "credit" for the remaining garage, was contrary to Revenue and Taxation Code sections 51 and 75.10, which require that a property owner receive a reduction in previously assessed base values for portions of any property removed. The court held that the County's automatic reappraisal policy, based on the assumption that a property owner bought the property for the land value alone if substantial renovation occurred within two years, was inconsistent with Proposition 13 and statutory valuation standards. The court remanded the case to the trial court with directions to enter a new judgment vacating the decision of the Board and remanding the matter for further proceedings consistent with its opinion. View "Greenspan v. County of Los Angeles" on Justia Law

The case involves Alico, LLC, a Massachusetts-based company with offices in both Massachusetts and Connecticut. The company's vehicles, used for business, were registered in Massachusetts, and taxes were paid in that state. However, the vehicles were primarily used and garaged in Somers, Connecticut, where the company's sole member and his wife, who also works for the company, reside. In 2018, the tax assessor in Somers, Connecticut, became aware of the presence of these vehicles and retroactively placed them on the town's 2017 and 2018 grand lists, assessing property taxes on them. The plaintiffs, Alico and its sole member, appealed this decision, arguing it was unconstitutional under the dormant commerce clause of the United States constitution. They claimed that because the vehicles were used in interstate commerce and already taxed in Massachusetts, the Connecticut property tax led to impermissible double taxation.The Supreme Court of Connecticut disagreed with the plaintiffs' arguments. The court ruled that the property tax authorized by Connecticut's statute did not violate the dormant commerce clause. The court applied the test set forth in Complete Auto Transit, Inc. v. Brady, which determines the constitutionality of a state tax that is facially neutral but may impose a disproportionate burden on interstate commerce. The court found that the Connecticut tax was applied to an activity with a substantial nexus with the state, was fairly apportioned, did not discriminate against interstate commerce, and was fairly related to the services provided by the state. Therefore, the court affirmed the trial court's denial of the plaintiffs' request for a declaratory judgment declaring the assessments unconstitutional. The court also noted that any double taxation was not the result of a discriminatory tax scheme, but rather the plaintiffs' business decisions. View "Alico, LLC v. Somers" on Justia Law

In this case before the Indiana Supreme Court, Thomas DeCola, the appellant, filed a suit to quiet title after purchasing property owned by Norfolk Southern Corporation, the appellee, at a tax sale. The property had fallen into tax delinquency. DeCola sought judgment on the pleadings, arguing that Norfolk had not received proper notice of the tax sale, the petition for tax deed, or its right of redemption. The trial court converted DeCola's motion into one for summary judgment because it considered evidence outside the pleadings. In its detailed order, the trial court denied DeCola's summary judgment motion, finding the tax deed void due to lack of sufficient notice to Norfolk.DeCola appealed the denial of summary judgment, claiming it was a final order. However, the Indiana Supreme Court held that the trial court's order denying summary judgment was not a final judgment because it did not resolve all claims as to all parties. The Court stated that the order did not meet any of the five definitions of a "final judgment" as laid out in Rule 2(H) of the appellate rules. Therefore, the Court concluded that it did not have jurisdiction to hear the appeal.The Indiana Supreme Court granted transfer, dismissed the appeal for lack of jurisdiction, and remanded the case back to the trial court for further proceedings. View "DeCola v. Norfolk Southern Corporation, Inc." on Justia Law

This case involves a dispute over the tax assessments of 115 vacant lots in the Sunup Ridge subdivision in Converse County, Wyoming, owned by Jan Gray. Gray appealed the Converse County Board of Equalization’s decisions upholding the Converse County Assessor’s tax assessments for the years 2016, 2017, 2018, and 2020. He contended that the County Assessor failed to physically inspect each lot as required by law, and that the tax assessments were not supported by substantial evidence. Additionally, he argued that the County Board did not provide an adequate record on appeal and that he was denied an opportunity for proper discovery.The Supreme Court of Wyoming upheld the County Board's decisions. The court found that the County Assessor had complied with the requirement to physically inspect the properties, and that the tax assessments were supported by substantial evidence. Furthermore, the court determined that the County Board had provided an adequate record for appeal and that Gray had not been denied an opportunity for discovery. Therefore, the court affirmed the County Board's tax assessments for the years in question. View "Jan Charles Gray v. Converse County Assessor" on Justia Law

In Mississippi, Jackson Sales & Storage Co. (JSSC), a subsidiary of National Presto Industries, was granted an annual exemption from ad valorem property taxes by Hinds County for almost forty years. This exemption was based on a free-port-warehouse license issued to JSSC by the State Tax Commission in 1981. In 2019, however, Hinds County denied the exemption and assessed JSSC back taxes for 2012-18, arguing JSSC lacked the requisite free-port-warehouse license. JSSC sought relief in Hinds County Circuit Court, which held that JSSC’s license remained valid and in effect since 1981 and was not subject to renewal. The Circuit Court also ruled that JSSC owed no taxes for 2012-19. On appeal, the Supreme Court of Mississippi partially affirmed and partially reversed the lower court's ruling. The Supreme Court agreed that JSSC's license was valid since 1981 and that JSSC owed no taxes for 2012-18. However, the Supreme Court disagreed with the lower court’s finding that the license wasn’t subject to renewal and that JSSC owed no taxes for 2019. The Supreme Court held that the county could require JSSC to renew its license and that JSSC owes Hinds County the remaining $290,724.52 in ad valorem taxes for 2019. The court clarified that moving forward, the board of supervisors has discretion over whether it grants JSSC an exemption and over the period of time that exemption is in effect. View "Stokes v. Jackson Sales & Storage Co" on Justia Law

The Supreme Court affirmed the decision of the Minnesota Tax Court affirming the assessment of the Commissioner of Revenue assessing tax on an apportioned share of Cities Management, Inc.'s (CMI) income from the sale of the S corporation, holding that the income from the corporation's sale was apportionable business income.CMI, which did business in Minnesota and Wisconsin, and its nonresidential partial owner filed Minnesota tax returns characterizing the sale of CMI's goodwill as income that was not subject to apportionment by the State under Minn. Stat. Ann. 290.17. The Commissioner disagreed and assessed tax on an apportioned share of the corporation's income from the sale. The tax court affirmed. The Supreme Court affirmed, holding that CMI's income did not constitute "nonbusiness" income under section 290.17, subd. 6 and may be constitutionally apportioned as business income. View "Cities Management, Inc. v. Commissioner of Revenue" on Justia Law

In April 2017 and June 2017, Appellant Diane Zilka filed petitions with the Philadelphia Department of Revenue (the “Department”), seeking refunds for the Philadelphia Tax she paid from 2013 to 2015, and in 2016, respectively. During the relevant tax years, Appellant resided in the City, but worked exclusively in Wilmington, Delaware. Thus, she was subject to four income taxes (and tax rates) during that time: the Philadelphia Tax; the Pennsylvania Income Tax (“PIT”); the Wilmington Earned Income Tax (“Wilmington Tax”); and the Delaware Income Tax (“DIT”). The Commonwealth granted Appellant credit for her DIT liability to completely offset the PIT she paid for the tax years 2013 through 2016; because of the respective tax rates in Pennsylvania versus Delaware, after this offsetting, Appellant paid the remaining 1.93% in DIT. Although the City similarly credited against Appellant’s Philadelphia Tax liability the amount she paid in the Wilmington Tax — specifically, the City credited Appellant 1.25% against her Philadelphia Tax liability of 3.922%, leaving her with a remainder of 2.672% owed to the City — Appellant claimed that the City was required to afford her an additional credit of 1.93% against the Philadelphia Tax, representing the remainder of the DIT she owed after the Commonwealth credited Appellant for her PIT. After the City refused to permit her this credit against her Philadelphia Tax liability, Appellant appealed to the City’s Tax Review Board (the “Board”). The issue this case presented for the Pennsylvania Supreme Court's review as whether, for purposes of the dormant Commerce Clause analysis implicated here, state and local taxes had to be considered in the aggregate. The Court concluded state and local taxes did not need be aggregated in conducting a dormant Commerce Clause analysis, and that, ultimately, the City’s tax scheme did not discriminate against interstate commerce. Accordingly, the Court affirmed the Commonwealth Court order. View "Zilka v. Tax Review Bd. City of Phila." on Justia Law