Justia Tax Law Opinion Summaries

Tyler's Hennepin County, Minnesota condominium accumulated about $15,000 in unpaid real estate taxes plus interest and penalties. The County seized the condo and sold it for $40,000, keeping the $25,000 excess over Tyler’s tax debt for itself, Minn. Stat. 281.18, 282.07, 282.08. The Eighth Circuit affirmed the dismissal of Tyler’s suit.The Supreme Court reversed. Tyler plausibly alleges that Hennepin County’s retention of the excess value of her home above her debt violated the Takings Clause. Whether the remaining value from a tax sale is property protected under the Takings Clause depends on state law, “traditional property law principles,” historical practice, and Supreme Court precedents. Though state law is an important source of property rights, it cannot “sidestep the Takings Clause by disavowing traditional property interests” in assets it wishes to appropriate. The County's use of its power to sell Tyler’s home to recover the unpaid property taxes to confiscate more property than was due effected a “classic taking in which the government directly appropriates private property for its own use.” Supreme Court precedent recognizes that a taxpayer is entitled to any surplus in excess of the debt owed. Minnesota law itself recognizes in other contexts that a property owner is entitled to any surplus in excess of her debt. The Court rejected an argument that Tyler had no property interest in the surplus because she constructively abandoned her home by failing to pay her taxes. View "Tyler v. Hennepin County" on Justia Law

RAR2 Villa Marina Center CA SPE, Inc., RAR2-Villa Marina Center CA, LLC, and Villa Marina Company, LLC (collectively, Villa entities) appealed from a judgment entered in this property tax refund action after the trial court sustained the demurrer filed by the County of Los Angeles (County) and denied the Villa entities’ summary judgment motion, upholding the decision of the Los Angeles County Assessment Appeals Board (Board) concerning the 2011 valuation of a shopping center owned by the Villa entities. In 2011 the Los Angeles County Assessor’s Office (Assessor) determined the value of the shopping center had decreased, setting the assessment roll value (roll value) at approximately $94 million. The Villa entities filed an assessment appeal with the Board seeking a further reduction of the assessed value to $48 million. On appeal, the Villa entities contend the Assessor had no authority to issue a raise letter recommending an increase in the property’s valuation more than one year after the initial assessment.   The Second Appellate District affirmed the trial court’s judgment. The court explained that a raise letter issued under section 1609.4 providing notice, in the context of an assessment appeal, that the assessor recommends a higher valuation than the roll value is not properly characterized as a proposal by the assessor to correct the roll value to reflect a decline in the property’s value, even if the initial assessment reflected a decline in value, and therefore, the one-year limitations period under section 4731, subdivision (c), does not apply. The court agreed that the County and the Board carried out their statutory duty in adopting the higher valuation for the property. View "RAR2 Villa Marina Center CA SPE, Inc. v. County of L.A." on Justia Law

The Court of Appeals affirmed the judgment of the appellate division affirming the judgment of Supreme Court denying the County of St. Lawrence's action seeking a declaratory judgment that Local Law No. 2-2021 of the City of Ogdensburg was inconsistent with N.Y. Real. Prop. Tax Law (RPTL) 1150 or otherwise unconstitutional under the home rule article of the New York State Constitution, holding that there was no error.The law at issue in this case repealed a prior local law validly opting out of the application of RPTL article 11. The County commenced this proceeding arguing that the law was not in accord with state law and impaired the rights of the County and the County Treasurer. Supreme Court denied the petition and declared the law to be valid and enforceable. The appellate division affirmed. The Court of Appeals affirmed, holding that the law did not violate the statutory and constitutional protections at issue in this case but effectuated a power granted by the legislature to cities wishing to revoke their opt-out from article 11. View "St. Lawrence County v. City of Ogdensburg" on Justia Law

The Supreme Court held that no statute expressly authorizes a school district to retain a lawyer on a contingent-fee basis to prosecute litigation designed to increase the appraised value of property so as to generate more tax receipts for the school district and that authority for such an arrangement cannot be implied from a school district's express authority to bring litigation regarding appraisals.Iraan-Sheffield Independent School District employed attorney D. Brent Lemon on a contingent-fee basis to pursue claims designed to increase the appraised value of property so as to generate more tax receipts. After the Appraisal Review Board denied the challenge the school district appealed. The district court granted Defendants' Rule 12 motion challenging Lemon's authority to represent the school district and then dismissed the case with prejudice. The court of appeals reversed, concluding that Tex. Tax Code 6.30(c) authorized the contingent-fee arrangement. The Supreme Court affirmed on different grounds and remanded the case, holding that the district court (1) correctly granted Defendants' Rule 12 motion; but (2) erred in dismissing the case with prejudice. View "Pecos County Appraisal District v. Iraan-Sheffield Independent School District" on Justia Law

When the IRS issues a summons, it must generally provide notice to any person identified in the summons, 26 U.S.C. 7609(a)(1). Anyone entitled to such notice may move to quash the summons. When the IRS issues a summons “in aid of the collection of” an assessment made “against the person with respect to whose liability the summons is issued,” no notice is required, 7609(c)(2)(D)(i).The IRS entered assessments against Polselli for more than $2 million in unpaid taxes and penalties. Revenue Officer Bryant issued summonses to three banks seeking financial records of third parties, including the petitioners. Bryant did not provide notice to the petitioners, but the banks did. The petitioners moved to quash the summonses. The district court concluded that no notice was required and that the petitioners therefore could not bring a motion to quash. The Sixth Circuit affirmed, finding that the summonses fell within section 7609(c)(2)(D)(i)'s exception to the general notice requirement.A unanimous Supreme Court affirmed, rejecting an argument that 7609(c)(2)(D)(i) applies only if the delinquent taxpayer has a legal interest in the accounts or records summoned by the IRS. The statute identifies three conditions to exempt the IRS from providing notice: the summons must be “issued in aid of” collection of “an assessment made or judgment rendered,” and must aid the collection of assessments or judgments “against the person with respect to whose liability the summons is issued.” The statute does not mention legal interest. To “aid” means “[t]o help” or “assist.” A summons that may not itself reveal taxpayer assets may nonetheless help the IRS find such assets. View "Polselli v. Internal Revenue Service" on Justia Law

The United States sued several heirs of A.P., alleging that they were trustees of the trust or received estate property as transferees or beneficiaries and were thus personally liable for estate taxes under 26 U.S.C. Section 6324(a)(2). The United States also alleged that two of the heirs were liable for estate taxes under California state law. The district court ruled in favor of Defendants on the Tax Code claims and in favor of the United States on the state law claims.   The Ninth Circuit reversed the district court’s judgment in favor of Defendants, and remanded with instructions to enter judgment in favor of the government on its claims for estate taxes and to conduct any further proceedings necessary to determine the amount of each defendant’s liability for unpaid taxes. The panel held that Section 6324(a)(2) imposes personal liability for unpaid estate taxes on the categories of persons listed in the statute who have or receive estate property, either on the date of the decedent’s death or at any time thereafter (as opposed to only on the date of death), subject to the applicable statute of limitations. The panel next held that Defendants were within the categories of persons listed in Section 6324(a) when they had or received estate property and are thus liable for the unpaid estate taxes as trustees and beneficiaries. The panel further held that each Defendant’s liability cannot exceed the value of the estate property at the time of the decedent’s death or the value of that property at the time they received or had it as trustees and beneficiaries. View "USA V. JAMES D. PAULSON, ET AL" on Justia Law

Idaho Power Company and Avista Corporation (collectively the “Companies”) contested the the Idaho State Tax Commission (the “Commission”), in its capacity as the State Board of Equalization, assessments of their operating property during 2019 and 2020, asserting that those assessments violated the proportionality and uniformity requirements set out in Article VII, sections 2 and 5 of the Idaho Constitution. The Commission rejected the Companies’ challenges and upheld its assessments. The Companies then sought judicial review of the Commission’s decision in district court, arguing that the Commission had erred in two significant ways: (1) because the Commission reduced the assessed values of certain railroads’ operating property in compliance with federal law, the assessed values of the Companies’ operating property were unconstitutionally assessed at a higher percentage of their actual cash value than were the railroads’ operating properties (the "4-R" claim); and (2) that commercial property had been assessed (and therefore taxed) at a lower percentage of its actual cash value than the Companies’ operating property, rendering the Companies’ operating property unconstitutionally disproportionally over-taxed (the "alternative claim"). The district court granted summary judgment to the Commission as to the Companies’ first argument. However, the district court concluded genuine issues of material fact existed as to the Companies’ second argument and declined to grant the Commission’s request for summary judgment. Both parties appealed. The Idaho Supreme Court concluded the district court erred in dismissing the 4-R claim, but did not err as to the alternative claim. Judgment was reversed in part, affirmed in part, and remanded for further proceedings. View "Idaho Power Company v. Idaho State Tax Commission" on Justia Law

In 2017, Dixon’s tax preparer filed amended tax returns for him, within the time permitted by law, claiming a refund for tax years 2013 and 2014. After an audit, the IRS denied those claims and assessed additional taxes. Dixon filed suit. During the litigation, it became clear that Dixon had not personally signed his name on the 2017 amended returns—the tax preparer had signed Dixon’s name—and no authorizing power-of-attorney documentation accompanied the amended returns. Because 26 U.S.C. 7422(a) prevents a taxpayer from filing suit to claim a refund without having earlier submitted a “duly filed” refund claim to the IRS, and the 2017 amended returns were not “duly filed,” the Claims Court dismissed the case. Within days, Dixon filed duly signed amended returns for the 2013 and 2014 tax years, though the time allowed for amended returns claiming a refund for those years had passed. He filed another suit based on the IRS’s failure to act on his 2020 amended returns.The Claims Court again dismissed. Dixon’s first action was properly dismissed because the claims, though timely filed, were not “duly filed.” By the time MDixon filed corrected claims with the IRS, the time limits for filing with the IRS had passed unless the corrected claims related back to the earlier claims under the informal-claim doctrine, which does not apply because the IRS loses authority to act on an amendment of an unperfected claim once a suit is filed. View "Dixon v. United States" on Justia Law

Petitioner, a federal prisoner proceeding pro se, moved for leave to proceed in forma pauperis and a change of venue for his tax appeal to the United States Court of Appeals for the District of Columbia Circuit.   The Fifth Circuit dismissed the appeal for lack of jurisdiction. The court explained that the United States Courts of Appeals have exclusive jurisdiction to review decisions of the Tax Court. 26 U.S.C. Section 7482(a)(1). As such, absent certification under 28 U.S.C. Section 1292(b) or a separate Rule 54(b) type order, an order disposing of fewer than all parties or claims in an action is unappealable, subject to exceptions not applicable here, as is the case here. Since no certification under Section 1292(b) or a separate Rule 54(b) type order exists, and Petitioner’s pleading is still pending before the Tax Court, the court held that it lacks jurisdiction over this appeal. View "Pejouhesh v. CIR" on Justia Law

Upshur and Thompson operated a trust; people wired fees to Upshur and allowed the defendants to file tax forms representing that the Trust had withheld income tax on their behalf, hopefully yielding sizable refunds. The defendants themselves also participated. Though this scheme was largely unsuccessful, the IRS issued one $1.5 million refund but, realizing, its mistake, froze the payment. In another scheme, they made large fraudulent tax overpayments, hoping to generate refunds. This scheme apparently did not generate any payments from the IRS, but the two schemes, together, resulted in over $325 million in fraudulent tax claims.Upshur was convicted of conspiracy to defraud the United States and eight counts of aiding and assisting in the preparation of false tax returns, 18 U.S.C. 371, 26 U.S.C. 7206(2). The court recognized there was no actual loss to the U.S. Treasury, and calculated Upshur’s base offense level under U.S.S.G. 2T1.4 using the intended-loss figure of $325 million, for a Guidelines range of 324-348 months. The Third Circuit affirmed his 84-month sentence. The court acknowledged its 2022 “Banks” holding that for theft offenses, absent Guideline text extending “loss” to intended loss, U.S.S.G. 2B1.1’s loss table reached only actual loss. However. the texts of sections 2T1.1 and 2T1.4, applicable to tax fraud, indicated that 2T4.1’s loss table covers the loss the perpetrator intended. View "United States v. Upshur" on Justia Law