Justia Tax Law Opinion Summaries

In this case, the Supreme Court of the State of North Dakota dealt with a dispute between divorced parents, Nickolette Keller and Michael Keller, over tax exemptions for their children. The divorce judgement had allocated the right to claim the oldest child to Michael Keller and the younger child to Nickolette Keller. In 2023, Michael Keller attempted to claim his eldest child on his taxes, but received a letter from the child, facilitated by Nickolette Keller, stating the child would be filing his own taxes. Consequently, Michael Keller filed a motion for contempt against Nickolette Keller.The district court found Nickolette Keller in contempt for willful and inexcusable intent to violate the court order and awarded Michael Keller attorney’s fees up to when Nickolette Keller provided the necessary tax form. The Supreme Court of the State of North Dakota affirmed the district court's decision, holding that Nickolette Keller's refusal to comply with the divorce judgement and her facilitation of the child's letter constituted contempt.Michael Keller cross-appealed, arguing the district court erred in not awarding him the full amount of attorney’s fees. The Supreme Court denied his claim, holding that the district court did not abuse its discretion in not awarding Michael Keller attorney’s fees incurred after Nickolette Keller provided him the IRS form. Michael Keller also unsuccessfully requested attorney’s fees on appeal, which the Supreme Court denied due to inadequate briefing and argument. View "Keller v. Keller" on Justia Law

In the case before the Court of Appeal of the State of California First Appellate District Division Two, the appellant, Debra Abney, challenged the decision of the State Department of Health Care Services and the City and County of San Francisco to consider money garnished from her Social Security payments as income for the purposes of determining her eligibility for benefits under Medi-Cal.Abney's Social Security payments were being reduced by nearly $600 each month to satisfy a debt she owed to the IRS. The authorities considered this garnished money as income, which led to Abney being ineligible to receive Medi-Cal benefits without contributing a share of cost. Abney argued that the money being garnished was not income “actually available to meet her needs” under the regulations implementing the Medi-Cal program.The trial court rejected Abney's argument, and she appealed. The Court of Appeal affirmed the trial court's decision. The Court of Appeal held that the tax garnishment was "actually available" to meet Abney's needs because it benefitted her financially by helping to extinguish her debt to the IRS. Therefore, the garnished money was correctly considered as income for the purpose of calculating her eligibility for the Medi-Cal program. View "Abney v. State Dept. of Health Care Services" on Justia Law

The case concerned the valuation of agricultural land owned by Donald V. Cain Jr. for the 2013 tax year. Cain appealed the decision of the Custer County Board of Equalization, which upheld the assessed values of his land as determined by the county assessor. The Nebraska Tax Equalization and Review Commission (TERC) affirmed the decision of the Board. Cain then appealed to the Nebraska Supreme Court, arguing that the valuation attributed to the property for the 2012 tax year should have been used for the 2013 tax year. The Supreme Court disagreed and affirmed TERC's decision. The Supreme Court held that each year’s assessment is separate and a property's valuation for one year depends upon the evidence pertaining to that year. The Court also found sufficient evidence of the actual value that the Assessor and the Board attributed to the property, and that the Assessor's mass appraisal methodology was appropriately conducted and supported the assessed valuation of the property. View "Cain v. Custer Cty. Bd. of Equal." on Justia Law

The Supreme Court of the State of Montana affirmed a lower court's ruling in a tax dispute between Bluebird Energy LLC and the State of Montana Department of Revenue. Bluebird Energy acquired three oil wells that had previously qualified for a tax incentive known as the New Well Tax Incentive, which provides a reduced tax rate for the first 18 months of production from a well. After acquiring the wells, Bluebird Energy invested in permanent production facilities and resumed oil production, believing that it would qualify for the New Well Tax Incentive. However, the Department of Revenue determined that the wells were not eligible for the incentive because the initial 18-month incentive period had already expired under the previous ownership. Bluebird Energy appealed this decision.The Supreme Court held that, according to the statutes governing the New Well Tax Incentive, the 18-month period for the reduced tax rate begins when production begins and runs contiguously, regardless of whether production is continuous. The court found that the Department of Revenue's interpretation of the statutes was correct and consistent with the legislative intent. The court also held that the relevant administrative rules were consistent with and reasonably necessary to carry out the purpose of the Oil and Gas Production Tax statutes. Therefore, Bluebird Energy was not entitled to the reduced tax rate. View "Bluebird Energy v. DOR" on Justia Law

The Supreme Court of the State of Colorado reviewed a case involving a dispute over the methodology for implementing Tax Increment Financing (TIF) under Colorado's Urban Renewal Law (URL). The respondents, collectively known as AURA, argued that the methodology applied by the Colorado State Property Tax Administrator and the Arapahoe County Assessor was in violation of the URL because it differentiated between direct and indirect benefits when adjusting the base and increment values of blighted property in urban renewal areas. They contended that this methodology deprived urban renewal authorities of property tax revenues they should receive due to enhanced market perceptions of properties located in a TIF plan. The court of appeals agreed with AURA and reversed the district court's summary judgment favoring the Assessor. However, the Supreme Court held that the Administrator's methodology does not violate the URL. The URL does not prescribe a specific methodology but gives the Administrator broad authority to determine how to calculate and proportionately adjust the base and increment values. The court concluded that the Administrator's differentiation between direct and indirect benefits does not conflict with the URL, and therefore, reversed the portion of the division’s judgment concerning the Administrator’s methodology and affirmed that the district court correctly entered summary judgment. View "Kaiser v. Aurora Urban Renewal Authority" on Justia Law

The Supreme Court of the State of Washington found that the initiation fees charged by Royal Oaks Country Club, a nonprofit corporation, are fully deductible from the business and occupation (B&O) tax under RCW 82.04.4282. The statute permits taxpayers to deduct "bona fide" initiation fees, among other things, from their B&O tax. The court held that these initiation fees were "bona fide" as they were paid solely for the privilege of membership, and did not automatically entitle a member to use any service or facility of the club. The court differentiated between dues and initiation fees, noting that the statute treats these two terms separately. The court rejected the Washington Department of Revenue's argument that a portion of the initiation fee was for access to facilities and thus not subject to the exemption, stating that there is a difference between access and use. The court affirmed the Court of Appeals' decision that Royal Oaks' initiation fees qualify as bona fide initiation fees and are therefore wholly deductible. View "Royal Oaks Country Club v. Dep't of Revenue" on Justia Law

In South Dakota, McLane Western, Inc. and McLane Minnesota, Inc., South Dakota-licensed wholesalers of tobacco products, purchased Other Tobacco Products (OTP) from U.S. Smokeless Tobacco Brands, Inc. (UST Sales), who in turn purchased the products from U.S. Smokeless Tobacco Manufacturing Company, LLC (UST Manufacturing), a federally licensed tobacco manufacturer. McLane brought the OTP into South Dakota and paid the state's 35% tobacco tax. They calculated the tobacco tax they owed using the amount they paid to UST Sales for the OTP, a price higher than what UST Sales paid UST Manufacturing for the same OTP. McLane later submitted numerous refund requests to the South Dakota Department of Revenue, arguing that they overpaid their tax obligations as their tax should have been based on the price UST Sales paid UST Manufacturing.The Supreme Court of the State of South Dakota agreed that McLane overpaid its tobacco tax as it was based on the higher price it paid to UST Sales instead of the price at which UST Manufacturing sold tobacco products to UST Sales. However, the court also concluded that McLane was not entitled to a refund for the overpaid amounts. The court reasoned that although McLane overpaid its advance tax obligation, it fully recovered the advance tax it paid from the dealers to whom it subsequently sold the OTP. The dealers then recovered that tax from the consumers who purchased the OTP. Thus, McLane was made whole by its resale of the OTP and is not entitled to any refund. The court affirmed the Department’s denial of McLane’s request for a refund. View "Mclane Western, Inc. v. South Dakota Department Of Revenue" on Justia Law

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