Justia Tax Law Opinion Summaries

A certified question of law from the U.S. District Court for the District of Idaho was presented to the Idaho Supreme Court. Karen White and her development company, Elkhorn, LLC, sought to recover $166,496 paid to Valley County for "capital investments for roads in the vicinity of [their] White Cloud development." Phase I of White Cloud was completed and it was undisputed by the parties that the tax monies paid for Phase I were used by the County to complete capital investments for roads in the vicinity of the White Cloud development. The County conceded that it did not adopt an impact fee ordinance or administrative procedures for the impact fee process as required by the Idaho Development Impact Fees Act (IDIFA). The County also conceded it did not enact an IDIFA-compliant ordinance, because, at the time, the County believed in good faith that none was required. Plaintiff filed suit against the County claiming that the road development fee imposed by the County as a condition for approval of the White Cloud project violated Idaho state law and deprived Plaintiff of due process under both the federal and Idaho constitutions. In her Second Amended Complaint, Plaintiff raised two claims for relief. The first claim for relief alleged that “Valley County’s practice of requiring developers to enter into a Road Development Agreement ("RDA," or any similar written agreement) solely for the purpose of forcing developers to pay money for its proportionate share of road improvement costs attributable to traffic generated by their development is a disguised impact fee, is illegal and therefore should be enjoined." The first claim for relief also alleged that, because the County failed to enact an impact fee ordinance under IDIFA, the imposition of the road development fees constituted an unauthorized tax. Plaintiff’s second claim for relief alleged that the County’s imposition of the road development fee constituted a taking under the federal and Idaho constitutions. The County argued Plaintiff voluntarily agreed to pay the RDA monies. Plaintiff denies that the payment was voluntary since it was required to obtain the final plat approval. The issue the federal district court presented to the Idaho Supreme Court centered on when the limitations period commences for statutory remedies made available under Idaho law to obtain a refund of an illegal county tax. The Court answered that the limitations period for statutory remedies made available under Idaho law to obtain a refund of an illegal county tax commences upon payment of the tax. View "White v. Valley County" on Justia Law

Plaintiffs, two limited partnerships, each owned an apartment building in Puerto Rico that qualified for low-income housing tax credits. Defendant was the agency responsible for allocating the credits. Plaintiffs and Defendant entered into agreements setting the applicable percentage for their covered projects at 8.12 percent. Thereafter, Congress passed legislation providing that the applicable percentage for developments such as those owned by Plaintiffs should not be less than nine percent. Defendant, however, allocated to Plaintiffs the exact amount of credits specified in the agreements. Plaintiffs sued Defendant in federal court, alleging that Defendant had unlawfully seized the additional tax credits to which they were apparently entitled. Defendant moved for judgment on the pleadings, asserting, among other things, that Plaintiffs’ action was time-barred. The district court granted the motion, identifying three justifications supporting for the entry of judgment on the pleadings: waiver, untimeliness, and the absence of any cognizable property interest in the additional tax credits. The First Circuit affirmed on the basis that Plaintiffs’ action was brought outside the applicable limitations period, and equitable tolling did not apply. View "Jardin de las Catalinas Ltd. P’ship v. Joyner" on Justia Law

Appellant, a Delaware corporation registered to do business in Nevada, purchased four aircraft to transport its employees and guests to and from its worldwide establishments. Each of the aircraft consistently flew to and from Nevada while in service and were continuously used in interstate commerce. Appellant paid Nevada use tax on each of the aircraft but later requested refunds for the taxes paid, claiming that the aircraft were not purchased for use in Nevada within the meaning of Nev. Rev. Stat. 372. The Nevada Department of Taxation denied the requested refunds. The Nevada Tax Commission and the district court upheld the denial. At issue before the Supreme Court was whether, by purchasing the aircraft out of state and later bringing them to Nevada, Appellant became subject to the use tax imposed by section 372.185. The Supreme Court reversed, holding that the Department erred in its interpretation of chapter 372, and Appellant’s aircraft were not subject to Nevada’s use tax.View "Harrah's Operating Co. v. State Dep't of Taxation" on Justia Law

Elsass and his companies, FRG, and STS, were charged with violations of the Tax Code, including claiming theft-loss deductions for losses that did not involve criminal conduct, claiming those deductions before it was clear that there was no reasonable prospect of recovery, falsely characterizing theft losses as losses incurred in a trade or business to artificially inflate refunds, claiming theft-loss deductions to which taxpayers were not entitled because the losses were incurred by deceased relatives, negotiating customers’ tax-refund checks and depositing them into defendants’ bank accounts, falsely indicating that Elsass was an attorney in good standing, making deceptive statements to customers that substantially interfered with the administration of the tax laws, promoting an abusive tax shelter through false or fraudulent statements about the tax benefits of participation, and aiding and abetting the understatement of tax liability. The district court held that there was no genuine issue as to whether Elsass and FRG had engaged in each of these prohibited practices and enjoined them from serving as tax-return preparers. While it granted summary judgment to STS with respect to all claims except on, because STS is wholly owned by Elsass, it enjoined STS to the same extent as Elsass and FRG. The Sixth Circuit affirmed. View "United State v. Elsass" on Justia Law

At issue in this case was whether the land and improvements on certain leaseholds that were created under long-term leases granted by Santa Rosa County were subject to the ad valorem real property tax. The leaseholders argued that the leasehold interests were taxable only as intangible personal property because the leaseholders were not the actual owners of the property under Florida law, and there could be no equitable ownership absent the right to acquire legal title. The First District Court of Appeals concluded that, given the nature of their perpetual leasehold interests, the leaseholders were the equitable owners of the real property and the improvements thereon, and therefore, the land and improvements at issue were subject to the ad valorem real property tax. The Supreme Court approved of the decision reached by the First District, concluding that the leaseholders were the equitable owners of the real property at issue.View "Accardo v. Brown" on Justia Law

At issue in this case were improvements on certain leaseholds that were created under leases granted by Escambia County. The leaseholders (Petitioners) contended that the improvements were not subject to ad valorem taxation. The First District Court of Appeal determined that Petitioners were the equitable owners of the improvements, and therefore, the improvements were subject to ad valorem taxation. The Supreme Court approved the decision reached by the First District, holding that a lessee can have equitable ownership for purposes of ad valorem taxation of improvements on real property even if the lessees have neither a perpetual lease of the underlying real property nor an option to ultimately purchase such property for nominal value.View "1108 Ariola, LLC v. Jones" on Justia Law

From 1993 through 2006, Dow engaged in transactions with foreign banks to operate two partnerships that generated over one billion dollars in tax deductions for Dow. The court affirmed the district court's holding that the partnerships were shams where the district court did not clearly err in holding that Dow lacked the intent to share the profits and losses with the foreign banks. The court vacated, however, the district court's penalty award where, in light of United States v. Woods, the district court erred in foreclosing the applicability of both the substantial-valuation and gross-valuation misstatement penalties. The court remanded for the district court to determine whether to impose either or both of these penalties. View "Chemtech Royalty Assoc. LP, et al. v. United States" on Justia Law

LumiData, Inc. is a software company that sells a software program called SOLYS to retail suppliers. Between 2005 and 2008, LumiData did not file Minnesota sales tax returns or pay sales tax on its SOLYS sales. The Commissioner of Revenue assessed sales tax on LumiData’s SOLYS sales for the period at issue, concluding the software sales were subject to sales tax. LumiData appealed the Commissioner’s order to the tax court, arguing that its software sales were nontaxable because modifications it made to its software removed it from the definition of “prewritten computer software” within the meaning of Minn. Stat. 297A.61(17). The tax court upheld the assessment, concluding that SOLYS was taxable, prewritten computer software. The Supreme Court affirmed, holding (1) because LumiData did not separately state its customization charges in its invoices, the tax court correctly concluded that the sales price for SOLYS was taxable as a sale of prewritten computer software; and (2) because the record did not establish that LumiData had reasonable cause to believe that its sales of SOLYS were not taxable, the tax court did not err in upholding the Commissioner’s penalty assessments. View "LumiData, Inc. v. Comm’r of Revenue" on Justia Law

Taxpayers petitioned the Tax Court, challenging the Commission's notices of deficiency regarding their farmhouse. The Tax Court denied the petition, disallowing $42,694 in claimed deductions because taxpayers failed to prove that the farmhouse expenses were tied to a real estate property rental business for purposes of 26 U.S.C. 162, or related to property held for the production of income within the meaning of IRC 212. The court affirmed the judgment of the Tax Court. View "Meinhardt v. CIR" on Justia Law

Panther II Transportation, Inc. (Appellee) requested refunds for tax years 2005 and 2006, claiming that state law exempted it from the imposition of a local income tax on its net profit. The Board of Tax Appeals (BTA) concluded that state law preempted local tax on net profits as applied to “motor transportation companies” that are subject to state taxes, fees, and regulatory requirements, as was Appellee. The court of appeals affirmed. The Central Collection Agency and its tax administrator and the Seville Board of Income Tax Review appealed, arguing that the state law at issue did not preclude the imposition of generally applicable local income taxes. The Supreme Court affirmed, holding that the BTA and court of appeals correctly determined that the local tax on corporate net profits was preempted by state law.View "Panther II Transp., Inc. v. Seville Bd. of Income Tax Review" on Justia Law