Justia Tax Law Opinion Summaries

In 2008, the taxpayers filed petitions for redetermination based on IRS notices of deficiency. The cases were consolidated for trial. With respect to Seven W, a calendar-year taxpayer, the Tax Court rejected a deficiency for calendar year 2000, but affirmed deficiencies for the years 2001 through 2003. With respect to Highland, a fiscal-year taxpayer, the court affirmed deficiencies for the fiscal years ending on April 30, 2003, and April 30, 2004. Although the opinions correctly identified the taxpayer with its respective tax liability, the decisions, entered in 2011, incorrectly stated that Seven W was responsible for deficiencies in fiscal years ending in April 2003, and April 2004, and that Highland was responsible for deficiencies for calendar years 2001 through 2003. The Commissioner discovered the error and sought to vacate the decisions. The Taxpayers did not object to correcting the errors, but did object to vacatur of the original decisions. The Tax Court vacated its decisions and entered new decisions correctly setting forth the respective deficiencies of Seven W and Highland. The Seventh Circuit vacated, with instructions to reinstate and correct the original decisions. Absent fraud that infected the Tax Court’s decision, the Tax Court cannot vacate a decision that has become final. View "Seven W. Enters., Inc. v. Comm'r of Internal Revenue" on Justia Law

Gray filed returns for tax years 2001 through 2004 after the IRS notified her in 2006 that it planned to assess her tax liability on its own. The IRS accepted Gray’s calculations, but imposed penalties for late filing and payment, 26 U.S.C. 6651. When Gray did not pay, the IRS filed liens. Gray timely requested a Collections Due Process hearing, 26 U.S.C. 6330, at which she unsuccessfully argued that penalties, liens, and levies should be eliminated. The IRS then mailed Gray “notices of determination” approving liens and levies. Gray sought review in Tax Court, waiting more than 30 days to file. The court concluded that it lacked jurisdiction because Gray’s petitions were untimely. The Seventh Circuit affirmed. The statute creates a 30-day time limit for appealing CDP determinations, 26 U.S.C. 6330(d)(1); no longer period applied to Gray’s cases. Gray then claimed that IRS employees engaged in wide-ranging wrongdoing in dealing with her and sought damages for unauthorized tax collection, 26 U.S.C. 7433. More than six months later, after the IRS moved to dismiss for failure to exhaust administrative remedies, Gray filed an administrative claim. The district court dismissed. The Seventh Circuit affirmed, stating that the exhaustion requirement is not actually jurisdictional, but is still mandatory. View "Gray v. United States" on Justia Law

Gray filed returns for tax years 2001 through 2004 after the IRS notified her in 2006 that it planned to assess her tax liability on its own. The IRS accepted Gray’s calculations, but imposed statutory penalties for late filing and late payment, 26 U.S.C. 6651. When Gray did not pay the taxes or penalties, the IRS filed liens. Gray timely requested a Collections Due Process hearing, 26 U.S.C. 6330, at which she unsuccessfully argued that her statutory penalties should be eliminated and the liens and levies withdrawn. After the hearing, the IRS mailed Gray “notices of determination” approving liens and levies to collect the delinquent taxes. Gray sought review in Tax Court, but waited more than 30 days to file her petitions. The court concluded that it lacked jurisdiction because Gray’s petitions were untimely. The Seventh Circuit affirmed, stating that the statute explicitly creates a 30-day time limit for appealing CDP determinations, 26 U.S.C. 6330(d)(1); no longer time limit applied to Gray’s cases. View "Gray v. Comm'r Internal Revenue" on Justia Law

The IRS challenged the district court's judgment upholding the bankruptcy court's decision to grant the objection of the reorganized Worldcom debtors to the IRS's proof of claim for taxes owed and the debtors' refund motion for the taxes WorldCom had already paid. At issue was whether WorldCom must pay federal excise taxes on the purchase of a telecommunications service that connected people using dial-up modems to the Internet. The court held that WorldCom purchased a "local telephone service" when it paid for the telecommunications service and that WorldCom must therefore pay federal communication excise taxes on those transactions. Accordingly, the court reversed and remanded for further proceedings. View "In Re: WorldCom, Inc." on Justia Law

In 1990 Plummer, a recognized expert in horse-breeding and the tax consequences of related investments, created the Mare Lease Program to enable investors to participate in his horse-breeding business and take advantage of tax code provision classification of horse-breeding investments as farming expenses, with a five-year net operating loss carryback period instead of the typical two years, 26 U.S.C. 172(b)(1)(G). Plummer’s investors would lease a mare, which would be paired with a stallion, and investors could sell resulting foals, deducting the amount of the initial investment while realizing the gain from owning a thoroughbred foal. If they kept foals for at least two years, the sale qualified for the long-term capital gains tax rate, 26 U.S.C. 1231(b)(3)(A). Between 2001 and 2005, the Program generated more than $600 million. Law and accounting firms hired by defendants purportedly vetted the Program. Plummer and other defendants began funneling Program funds into an oil-and-gas lease scheme. It was later discovered that the Program’s assets were substantially overvalued or nonexistent. Investors sued under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c), also alleging fraud and breach of contract. The district court granted summary judgment and awarded $49.4 million with prejudgment interest of $15.6 million. The Sixth Circuit affirmed, stating that there was no genuine dispute over any material facts. View "West Hills Farms, LLC v. ClassicStar Farms, Inc." on Justia Law

Ten valuation complaints were filed by a salaried employee on behalf of a corporate entity as the property owner. In each case, the county board of revision (BOR) ordered a decrease in value. The school board argued before the board of tax appeals (BTA) that the original complaints should be dismissed because a salaried employee of the corporation who was not himself a lawyer but purported to act on behalf of the corporate owner signed the complaints. The school board acknowledged that Ohio Rev. Code 5715.19(A)(1) explicitly authorizes salaried corporate employees to file on behalf of the corporate owner but argued that the statute cannot be given effect because that kind of filing constitutes the unauthorized practice of law. The BTA granted the school board's motion and ordered that the appeals be remanded to the BOR to be dismissed for lack of jurisdiction. The Supreme Court reversed, holding that the complaints properly invoked the jurisdiction of the BOR where the legislature acted within its authority in amending section 5715.19(A)(1) to permit a salaried employee of a corporation who is not a lawyer to file a complaint on behalf of the corporation. Remanded. View "Marysville Exempted Village Sch. Dist. Bd. of Educ. v. Union County Bd. of Revision" on Justia Law

In 2006, Taxpayers acquired a two-story building pursuant to a contract by which they acquired a business on the first floor of the building. Thus, the asset purchase included personal property consisting of restaurant equipment and a covenant not to compete, as well as the realty. In 2007, the auditor used the entire aggregate price, $325,000, as the property value even though in 2006 the auditor had determined the value to be only $116,700. The county board of revision (BOR) reduced the value to $175,000. The board of tax appeals reinstated the $325,000 aggregate price as the value of the property. The Supreme Court ordered the value be modified to $160,000, a figure supported by the mortgage loan secured by the real property, holding that the adoption of the full sale price was unreasonable and unlawful. View "Sapina v. Cuyahoga County Bd. of Revision" on Justia Law

Plaintiff owned and operated a public golf course and rented golf carts to golfers. The director of revenue issued an assessment of unpaid sales taxes on the golf cart rentals, finding that because the cart rentals were mandatory, they were subject to sales tax regardless of the fact that Plaintiff had paid sales tax when it purchased the carts. The administrative hearing commission reversed, finding that Plaintiff did not owe sales tax on the golf cart rentals because it previously paid sales tax on its purchase or lease of the carts. The Supreme Court affirmed, holding that, pursuant to Mo. Rev. Stat. 144.020.1(8) and Westwood Country Club v. Director of Revenue, Plaintiff was not required to charge sales tax on the golf cart rentals. View "PF Golf, LLC v. Dir. of Revenue" on Justia Law

The Town and the State appealed from the district court's adverse summary judgment ruling in a suit where the Tribe challenged the Town's imposition of the State's personal property tax on the lessors of slot machines used by the Tribe at Foxwoods Casino. The court held that the district court properly exercised jurisdiction; the Tribe had standing; neither the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. 2701 et seq., nor the Indian Trader Statutes, 25 U.S.C. 261-64, expressly barred the tax; and, under the White Mountain Apache Tribe v. Bracker test, federal law did not implicitly bar the tax because the State and Town interests in the integrity and uniform application of their tax system outweighed the federal and tribal interests reflected in IGRA. Accordingly, the court concluded that the district court erred in granting summary judgment for the Tribe and in denying summary judgment for the Town and State. View "Mashantucket Pequot Tribe v. Town of Ledyard" on Justia Law

Action Recycling moved to quash summonses from the IRS to produce records that Action Recycling had already produced for the IRS to review, arguing that the summonses for those records were issued in violation of the prohibition on summonses for information already in the possession of the IRS. The documents at issue were reviewed by an IRS agent who eventually left the IRS, the IRS then transferred the open investigation to another agent, and the new agent sought to further review the documents. The court held that an IRS Revenue Agent's review of records did not automatically give the IRS permanent possession of all of the information in those records and that a later summons for the same records was permissible under the Supreme Court's decision in United States v. Powell. Accordingly, the court affirmed the district court's denial of the motion to quash. View "Action Recycling, Inc. v. United States" on Justia Law