Justia Tax Law Opinion Summaries

Total Renal Care, Inc. (TRC) provides dialysis services to patients in Ohio. TRC filed quarterly commercial-activity tax (CAT) returns and made corresponding payments for the period from April 1, 2012, to December 31, 2014. Later, TRC sought refunds, arguing that some of its gross receipts should be sitused outside Ohio because certain supporting services, such as laboratory and administrative functions, were performed outside the state.The Tax Commissioner denied TRC's refund claims, and the Board of Tax Appeals affirmed this decision. The Board determined that TRC's laboratory and administrative services were part of the healthcare services provided in Ohio. It concluded that the gross receipts from these services should be sitused to Ohio because the benefit of the services was received in Ohio.The Supreme Court of Ohio reviewed the case and affirmed the Board of Tax Appeals' decision. The court held that under R.C. 5751.033(I), gross receipts from services should be sitused to the location where the purchaser receives the benefit of the service. Since TRC's dialysis services were provided entirely in Ohio, the gross receipts from these services were correctly sitused to Ohio. The court found no conflict between the statute and the administrative rule, which also emphasizes the location where the purchaser benefits from the service. Therefore, TRC's gross receipts for the relevant period should be sitused to Ohio, and the Board's decision was neither unreasonable nor unlawful. View "Total Renal Care, Inc. v. Harris" on Justia Law

Joseph Anthony Borino, as part of a plea agreement, pleaded guilty to misprision of a felony (wire fraud) on July 8, 2021. He was sentenced to one year and one day of imprisonment on November 1, 2022. On March 30, 2023, the district court ordered restitution of $21,223,036.37 under the Mandatory Victims Restitution Act (MVRA), to be paid jointly and severally with Denis Joachim, Borino’s employer and co-conspirator.The district court proceedings began with the indictment of Denis and Donna Joachim in August 2018, followed by Borino’s separate indictment in November 2019. Borino was charged with conspiracy to defraud the IRS, making false statements, and wire fraud. He later pleaded guilty to misprision of a felony in June 2021. The district court adopted the Pre-Sentence Investigation Report (PSR) which attributed the entire loss of $25,543,340.78 to Borino, and scheduled a separate restitution hearing. At the restitution hearing, the court calculated the restitution amount based on the fees paid by the victims during the period of Borino’s offense, minus the claims paid by TTFG.The United States Court of Appeals for the Fifth Circuit reviewed Borino’s appeal, where he challenged the restitution order on three grounds: the applicability of the MVRA to his offense, the proof of actual pecuniary loss to the victims, and the causation of the losses. The Fifth Circuit affirmed the district court’s order, holding that the MVRA applied to Borino’s misprision offense because it involved concealment of wire fraud, a crime committed by fraud or deceit. The court found that the government had sufficiently proven the victims’ actual losses and that Borino’s continuous concealment of the fraud directly and proximately caused the victims’ losses. The court concluded that the district court did not err in ordering restitution of $21,223,036.37. View "United States v. Borino" on Justia Law

Blake Adams failed to file federal income tax returns for the years 2007 and 2009-2015. The IRS calculated that he owed over $1.2 million in back taxes, interest, and penalties. Due to the significant amount of unpaid taxes, the IRS certified Adams's tax debt as seriously delinquent to the State Department, which could then deny, revoke, or limit his passport. Adams received notice of this certification and subsequently sued the IRS in Tax Court, claiming procedural errors in the assessment of his tax debt.The Tax Court found that Adams had forfeited his opportunities to contest his underlying tax liability through the procedures provided by the Tax Code. Specifically, Adams did not file a petition in Tax Court within the 90-day period after receiving deficiency notices, nor did he request any collection due process hearings after receiving notices of lien and intent to levy. The Tax Court granted summary judgment in favor of the government, concluding that Adams's challenge under section 7345 was foreclosed.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court affirmed the Tax Court's decision, holding that the certification of Adams's seriously delinquent tax debt was not erroneous. The court found that all elements defining a seriously delinquent tax debt under section 7345(b)(1) were satisfied: the tax debt was assessed, exceeded the statutory threshold, and Adams's administrative rights had lapsed. The court also noted that Adams's attempt to challenge the underlying tax liability was untimely, as he had not utilized the available administrative procedures when initially notified. Thus, the court upheld the certification and denied Adams's motion to transfer venue to the Eleventh Circuit. View "Adams v. Commissioner of Internal Revenue Service" on Justia Law

Several homeowners sued an irrigation district, claiming that the district's refusal to remove over twenty-year-old charges from the tax rolls was an ultra vires act, violating the Tax Code's twenty-year limitations period. The district argued that the charges were Water Code assessments, not taxes, and thus not subject to the limitations period.The trial court granted the district officials' jurisdictional plea without permitting discovery, dismissing the homeowners' claims for lack of jurisdiction. The Court of Appeals for the Thirteenth District of Texas affirmed in part, concluding that the pleadings did not support an ultra vires claim under the Tax Code because the homeowners had not sought a refund from the tax assessor and the district had clarified that the charges were assessments under the Water Code.The Supreme Court of Texas reviewed the case and determined that the homeowners had sufficiently pleaded facts to demonstrate the trial court's jurisdiction over their ultra vires claim. The court held that the homeowners' pleadings, viewed liberally, alleged that the charges were taxes, had been delinquent for more than twenty years, and that no related litigation was pending at the time of the request to remove the charges. The court concluded that these allegations were sufficient to establish subject matter jurisdiction and did not implicate the district's governmental immunity.The Supreme Court of Texas reversed the Court of Appeals' judgment regarding the Tax Code ultra vires claim and remanded the case to the trial court for further proceedings consistent with its opinion. View "Herrera v. Mata" on Justia Law

George Martens filed a complaint in the Third District Court of Appeals for a writ of mandamus against various judges and courts in Hancock County, alleging that they lacked jurisdiction to decide certain tax cases. Martens did not allege that he was a party to any tax case pending before those courts when he filed this action. The judges and courts filed a motion to dismiss, arguing that Martens lacked standing and had not stated a cognizable mandamus claim.The Third District Court of Appeals dismissed the case, concluding that Martens lacked standing to bring the complaint and had failed to state a claim for mandamus relief. Martens appealed to the Supreme Court of Ohio, arguing that he did not need to meet the traditional standing requirement based on the public-right doctrine recognized in State ex rel. Ohio Academy of Trial Lawyers v. Sheward. Alternatively, he claimed taxpayer standing.The Supreme Court of Ohio rejected Martens's reliance on Sheward, overruling the public-right doctrine established in that case. The court held that Sheward was contrary to the deeply rooted standing requirement and the Ohio Constitution. The court also found that Martens could not establish taxpayer standing, as he had not shown any special interest in the public funds at issue or cited statutory authority authorizing him to bring a taxpayer suit. Consequently, the Supreme Court of Ohio affirmed the Third District's dismissal of Martens's complaint for lack of standing. View "State ex rel. Martens v. Findlay Municipal Court" on Justia Law

The City of Rittman filed an original action in prohibition against Judge Corey E. Spitler of the Wayne County Common Pleas Court. Rittman sought to prevent Judge Spitler from exercising jurisdiction over a class-action lawsuit in which Rittman was named as a defendant. The lawsuit, filed by Tara Boler and Trista Bise, alleged that Rittman had illegally collected a 0.5 percent income tax increase beyond its authorized period and sought refunds for the overcharged taxes from 2008 to 2022.In the Wayne County Common Pleas Court, Judge Spitler denied Rittman’s motion to dismiss and motion to stay discovery, and he established a case-management schedule. Rittman then sought a writ of prohibition from the Supreme Court of Ohio to stop Judge Spitler from proceeding with the case, arguing that the lawsuit was an impermissible attempt to bypass the statutory process for obtaining tax refunds.The Supreme Court of Ohio reviewed the case and determined that Judge Spitler had jurisdiction and statutory authority under R.C. 2723.01 to hear the case. The court found that the plaintiffs' claims were substantively governed by R.C. 2723.01, which allows common pleas courts to enjoin the illegal levy or collection of taxes and entertain actions to recover them when collected. The court concluded that although the plaintiffs did not explicitly invoke R.C. 2723, their claims fit within its scope. Therefore, the Supreme Court of Ohio denied the writ of prohibition, allowing Judge Spitler to continue exercising jurisdiction over the underlying case. View "State ex rel. Rittman v. Spitler" on Justia Law

The City of Obetz initiated a mandamus and prohibition action against Franklin County Auditor Michael Stinziano and Franklin County Treasurer Cheryl Brooks Sullivan. The dispute arose from a tax-increment-financing (TIF) arrangement established by Obetz in 1997. Obetz erroneously received TIF proceeds in 2015, 2016, and 2017. To correct this, Obetz returned some funds to the county, but the county also withheld Obetz's real-property-tax distribution for the first half of 2022 and reallocated it to other taxing jurisdictions.The Franklin County Court of Common Pleas initially reviewed the case, where Obetz sought to compel the county to return the funds it had tendered and to pay future settlement distributions without setoff. The lower court's decision led to the current appeal.The Supreme Court of Ohio reviewed the case. The court held that Obetz was not entitled to the return of the $212,963.01 it had voluntarily paid to the county. Additionally, the court denied Obetz's request for the county to pay $194,944.32, which had been withheld and reallocated to other jurisdictions. However, the court granted a limited writ of mandamus, compelling the county to pay future settlement distributions to Obetz without setoff. The court found that the county did not have the authority under R.C. 319.44, R.C. 323.133(B), R.C. 5713.08, or R.C. 5715.22 to withhold future settlement funds from Obetz. The court also denied Obetz's request for a writ of prohibition, as the county's actions did not constitute the exercise of judicial power. View "State ex rel. Obetz v. Stinziano" on Justia Law

Marathon Petroleum Company LP (Marathon) was audited by the Cook County Department of Revenue (Department) for gasoline and diesel transactions between January 2006 and July 2014. The Department determined that Marathon failed to collect and remit taxes on certain transactions, specifically "book transfers," and assessed taxes, interest, and penalties. Marathon argued that these transactions were financial settlements of forward contracts, not taxable sales, and sought administrative review.An administrative law judge (ALJ) upheld the Department's assessments, finding that Marathon did not provide sufficient documentary evidence to prove that the book transfers did not involve a change of ownership or movement of fuel. Marathon then sought judicial review, and the circuit court reversed the ALJ's decision, finding that the Department's assessments were unreasonable and that Marathon had provided sufficient evidence to rebut the Department's prima facie case.The appellate court reversed the circuit court's decision, affirming in part the ALJ's decision and remanding for a recalculation of the amount due. The appellate court held that the Department's auditing method was reasonable and that Marathon did not meet its burden of rebutting the Department's prima facie case. The appellate court also found that the transfer of an intangible ownership interest was enough to make the book out transactions taxable.The Supreme Court of Illinois reviewed the case and found that the ALJ misunderstood some of the evidence presented by Marathon. The court held that Marathon provided sufficient documentary evidence to rebut the Department's prima facie case and that the ALJ's conclusion was clearly erroneous. The court reversed the appellate court's judgment, affirmed in part and reversed in part the circuit court's judgment, and remanded the case to the Cook County Department of Administrative Hearings for further proceedings to determine if the Department can prove its case of taxability under the Fuel Tax Ordinance. View "Marathon Petroleum Co. LP v. Cook County Department of Revenue" on Justia Law

Alcatel-Lucent USA Inc. (Alcatel) challenged the constitutionality of Pennsylvania's 2014 cap on net-loss carryover (NLC) deductions for corporate net income (CNI) tax. The cap allowed corporations to carry forward net operating losses up to the greater of $4 million or 25% of the company's 2014 net income. Alcatel, with a net income of $27,332,333 and accumulated losses exceeding that amount, could only carry over $6,833,083 due to the cap, resulting in a taxable income of around $20 million and a tax liability of approximately $2 million. Alcatel paid the tax and sought a refund, arguing the cap violated the Uniformity Clause of the Pennsylvania Constitution.The Department of Revenue's Board of Appeals and the Board of Finance and Revenue denied Alcatel's refund request, citing lack of authority to decide constitutional issues. Alcatel then appealed to the Commonwealth Court, which initially affirmed the Board's decision, applying the Chevron test and concluding that the Nextel decision should not apply retroactively. However, after the Pennsylvania Supreme Court's decision in General Motors Corp. v. Commonwealth, which held that Nextel applies retroactively, an en banc panel of the Commonwealth Court reversed the earlier decision, sustaining Alcatel's exceptions and ordering a refund.The Supreme Court of Pennsylvania reviewed the case and concluded that the General Motors decision was erroneous. The Court held that Nextel should apply only prospectively, not retroactively, as it established a new principle of law. The Court applied the Chevron test, determining that retroactive application would not further the operation of the rule and would cause significant financial harm to the Commonwealth. Consequently, the Court reversed the Commonwealth Court's decision, ruling that due process does not require the Commonwealth to refund the taxes paid by Alcatel in 2014. View "Alcatel-Lucent USA Inc. v. Commonwealth" on Justia Law

Rockwater, Inc., doing business as Peerless Manufacturing Company, sold three peanut-drying trailers and was audited by the IRS, which determined that Rockwater owed excise taxes on these sales. Rockwater paid the taxes, statutory interest, and penalties, then filed a claim for a refund with the IRS. Subsequently, Rockwater filed a lawsuit against the United States for a full refund and attorney’s fees. The United States District Court for the Middle District of Georgia granted summary judgment in favor of Rockwater for the refund of excise taxes, statutory interest, and penalties but denied the request for attorney’s fees. The United States appealed the decision regarding the taxes and statutory interest but not the penalties.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court concluded that the district court erred in determining that Rockwater’s peanut-drying trailers were “off-highway transportation vehicles” exempt from the excise tax. The court found that the trailers were not specially designed for the primary function of transporting peanuts off-highway and that their capability to transport a load over public highways was not substantially limited or impaired. The trailers had standard highway equipment, could travel at road speed limits, and did not require special permits for highway use.The Eleventh Circuit reversed the district court’s grant of summary judgment to Rockwater regarding the excise taxes and statutory interest and remanded with instructions to enter final judgment for the United States for taxes and statutory interest. The court affirmed the district court’s ruling that Rockwater was not required to pay penalties, as the government did not appeal this part of the decision. View "Rockwater, Inc. v. United States" on Justia Law