Justia Tax Law Opinion Summaries

In this case, the Greenspan family bought a home in Long Beach, California, for $900,000 in 2014. The land was valued at $540,000 and the improvements (the home itself) at $360,000. Two years later, the Greenspans demolished the original residence, except for the garage, and built a new home on the property. The County of Los Angeles then reappraised the property, reducing the value of the improvements to $40,000 and increasing the value of the land to $860,000. The County then added the appraised value of the new construction to the newly allocated land and improvement values. The Greenspans contested this reappraisal, arguing that the County's reallocation of their base-year land and improvement value was contrary to law. The trial court found in favor of the County, and the Greenspans appealed.The Court of Appeal of the State of California Second Appellate District reversed the trial court's decision. The court found that the County's automatic reallocation of the base-year value for the entire structure removed, leaving only a "credit" for the remaining garage, was contrary to Revenue and Taxation Code sections 51 and 75.10, which require that a property owner receive a reduction in previously assessed base values for portions of any property removed. The court held that the County's automatic reappraisal policy, based on the assumption that a property owner bought the property for the land value alone if substantial renovation occurred within two years, was inconsistent with Proposition 13 and statutory valuation standards. The court remanded the case to the trial court with directions to enter a new judgment vacating the decision of the Board and remanding the matter for further proceedings consistent with its opinion. View "Greenspan v. County of Los Angeles" on Justia Law

The case involves Alico, LLC, a Massachusetts-based company with offices in both Massachusetts and Connecticut. The company's vehicles, used for business, were registered in Massachusetts, and taxes were paid in that state. However, the vehicles were primarily used and garaged in Somers, Connecticut, where the company's sole member and his wife, who also works for the company, reside. In 2018, the tax assessor in Somers, Connecticut, became aware of the presence of these vehicles and retroactively placed them on the town's 2017 and 2018 grand lists, assessing property taxes on them. The plaintiffs, Alico and its sole member, appealed this decision, arguing it was unconstitutional under the dormant commerce clause of the United States constitution. They claimed that because the vehicles were used in interstate commerce and already taxed in Massachusetts, the Connecticut property tax led to impermissible double taxation.The Supreme Court of Connecticut disagreed with the plaintiffs' arguments. The court ruled that the property tax authorized by Connecticut's statute did not violate the dormant commerce clause. The court applied the test set forth in Complete Auto Transit, Inc. v. Brady, which determines the constitutionality of a state tax that is facially neutral but may impose a disproportionate burden on interstate commerce. The court found that the Connecticut tax was applied to an activity with a substantial nexus with the state, was fairly apportioned, did not discriminate against interstate commerce, and was fairly related to the services provided by the state. Therefore, the court affirmed the trial court's denial of the plaintiffs' request for a declaratory judgment declaring the assessments unconstitutional. The court also noted that any double taxation was not the result of a discriminatory tax scheme, but rather the plaintiffs' business decisions. View "Alico, LLC v. Somers" on Justia Law

In this case before the Indiana Supreme Court, Thomas DeCola, the appellant, filed a suit to quiet title after purchasing property owned by Norfolk Southern Corporation, the appellee, at a tax sale. The property had fallen into tax delinquency. DeCola sought judgment on the pleadings, arguing that Norfolk had not received proper notice of the tax sale, the petition for tax deed, or its right of redemption. The trial court converted DeCola's motion into one for summary judgment because it considered evidence outside the pleadings. In its detailed order, the trial court denied DeCola's summary judgment motion, finding the tax deed void due to lack of sufficient notice to Norfolk.DeCola appealed the denial of summary judgment, claiming it was a final order. However, the Indiana Supreme Court held that the trial court's order denying summary judgment was not a final judgment because it did not resolve all claims as to all parties. The Court stated that the order did not meet any of the five definitions of a "final judgment" as laid out in Rule 2(H) of the appellate rules. Therefore, the Court concluded that it did not have jurisdiction to hear the appeal.The Indiana Supreme Court granted transfer, dismissed the appeal for lack of jurisdiction, and remanded the case back to the trial court for further proceedings. View "DeCola v. Norfolk Southern Corporation, Inc." on Justia Law

This case involves a dispute over the tax assessments of 115 vacant lots in the Sunup Ridge subdivision in Converse County, Wyoming, owned by Jan Gray. Gray appealed the Converse County Board of Equalization’s decisions upholding the Converse County Assessor’s tax assessments for the years 2016, 2017, 2018, and 2020. He contended that the County Assessor failed to physically inspect each lot as required by law, and that the tax assessments were not supported by substantial evidence. Additionally, he argued that the County Board did not provide an adequate record on appeal and that he was denied an opportunity for proper discovery.The Supreme Court of Wyoming upheld the County Board's decisions. The court found that the County Assessor had complied with the requirement to physically inspect the properties, and that the tax assessments were supported by substantial evidence. Furthermore, the court determined that the County Board had provided an adequate record for appeal and that Gray had not been denied an opportunity for discovery. Therefore, the court affirmed the County Board's tax assessments for the years in question. View "Jan Charles Gray v. Converse County Assessor" on Justia Law

In Mississippi, Jackson Sales & Storage Co. (JSSC), a subsidiary of National Presto Industries, was granted an annual exemption from ad valorem property taxes by Hinds County for almost forty years. This exemption was based on a free-port-warehouse license issued to JSSC by the State Tax Commission in 1981. In 2019, however, Hinds County denied the exemption and assessed JSSC back taxes for 2012-18, arguing JSSC lacked the requisite free-port-warehouse license. JSSC sought relief in Hinds County Circuit Court, which held that JSSC’s license remained valid and in effect since 1981 and was not subject to renewal. The Circuit Court also ruled that JSSC owed no taxes for 2012-19. On appeal, the Supreme Court of Mississippi partially affirmed and partially reversed the lower court's ruling. The Supreme Court agreed that JSSC's license was valid since 1981 and that JSSC owed no taxes for 2012-18. However, the Supreme Court disagreed with the lower court’s finding that the license wasn’t subject to renewal and that JSSC owed no taxes for 2019. The Supreme Court held that the county could require JSSC to renew its license and that JSSC owes Hinds County the remaining $290,724.52 in ad valorem taxes for 2019. The court clarified that moving forward, the board of supervisors has discretion over whether it grants JSSC an exemption and over the period of time that exemption is in effect. View "Stokes v. Jackson Sales & Storage Co" on Justia Law

The Supreme Court affirmed the decision of the Minnesota Tax Court affirming the assessment of the Commissioner of Revenue assessing tax on an apportioned share of Cities Management, Inc.'s (CMI) income from the sale of the S corporation, holding that the income from the corporation's sale was apportionable business income.CMI, which did business in Minnesota and Wisconsin, and its nonresidential partial owner filed Minnesota tax returns characterizing the sale of CMI's goodwill as income that was not subject to apportionment by the State under Minn. Stat. Ann. 290.17. The Commissioner disagreed and assessed tax on an apportioned share of the corporation's income from the sale. The tax court affirmed. The Supreme Court affirmed, holding that CMI's income did not constitute "nonbusiness" income under section 290.17, subd. 6 and may be constitutionally apportioned as business income. View "Cities Management, Inc. v. Commissioner of Revenue" on Justia Law

In April 2017 and June 2017, Appellant Diane Zilka filed petitions with the Philadelphia Department of Revenue (the “Department”), seeking refunds for the Philadelphia Tax she paid from 2013 to 2015, and in 2016, respectively. During the relevant tax years, Appellant resided in the City, but worked exclusively in Wilmington, Delaware. Thus, she was subject to four income taxes (and tax rates) during that time: the Philadelphia Tax; the Pennsylvania Income Tax (“PIT”); the Wilmington Earned Income Tax (“Wilmington Tax”); and the Delaware Income Tax (“DIT”). The Commonwealth granted Appellant credit for her DIT liability to completely offset the PIT she paid for the tax years 2013 through 2016; because of the respective tax rates in Pennsylvania versus Delaware, after this offsetting, Appellant paid the remaining 1.93% in DIT. Although the City similarly credited against Appellant’s Philadelphia Tax liability the amount she paid in the Wilmington Tax — specifically, the City credited Appellant 1.25% against her Philadelphia Tax liability of 3.922%, leaving her with a remainder of 2.672% owed to the City — Appellant claimed that the City was required to afford her an additional credit of 1.93% against the Philadelphia Tax, representing the remainder of the DIT she owed after the Commonwealth credited Appellant for her PIT. After the City refused to permit her this credit against her Philadelphia Tax liability, Appellant appealed to the City’s Tax Review Board (the “Board”). The issue this case presented for the Pennsylvania Supreme Court's review as whether, for purposes of the dormant Commerce Clause analysis implicated here, state and local taxes had to be considered in the aggregate. The Court concluded state and local taxes did not need be aggregated in conducting a dormant Commerce Clause analysis, and that, ultimately, the City’s tax scheme did not discriminate against interstate commerce. Accordingly, the Court affirmed the Commonwealth Court order. View "Zilka v. Tax Review Bd. City of Phila." on Justia Law

The IRS may penalize taxpayers who fail to report a “listed transaction” that the agency determines is similar to one already identified as a tax-avoidance scheme, 26 U.S.C. 6707A(a), (c)(2). IRS Notice 2007-83 listed employee-benefit plans with cash-value life insurance policies. In 2013, Mann created trusts for its co-owners that paid the premiums on their cash-value life insurance policies. Mann deducted the expenses on its tax forms, and the owners counted the death benefits as income. None of them reported the trusts as a listed transaction.In 2019, the IRS determined that the trusts failed to comply with Notice 2007-83 and imposed penalties, which were paid. After the IRS refused requests for refunds, the taxpayers filed suit. The district court granted the IRS summary judgment on a claim that the Notice violated the Administrative Procedures Act’s notice-and-comment requirements. The Sixth Circuit reversed, concluding that Notice 2007- 83 was a legislative rule that lacked exemption from the requirements; “we must set [Notice 2007-83] aside” and “need not address the taxpayers’ remaining claims.”Before the district court ruled on remand, the IRS refunded the past penalties with interest and agreed not to apply the Notice to anyone within the Sixth Circuit. The district court concluded that it retained jurisdiction to set aside and vacate the Notice nationwide. The Sixth Circuit vacated. The taxpayers sought a refund of past tax penalties and prospective relief against Notice 2007-83; the IRS’s actions mooted their claim and left nothing more for the court to do. View "Mann Construction, Inc. v. United States" on Justia Law

The Court of Appeals affirmed the judgment of the appellate division in this action, holding that substantial evidence supported the determination of the Tax Appeals Tribunal that Petitioner willfully failed to pay employee withholding taxes on behalf of New England Construction Company, Inc. (NECC) in violation of N.Y. Tax Law 685(g).At issue in this case was whether the Tribunal employed an incorrect legal test in determining that Petitioner was a "responsible person" under section 685 for the collection and payment of employee withholding taxes on behalf of NECC. Petitioner was president and the primary shareholder of NECC and had repeatedly held himself out as being responsible for payment of taxes on behalf of the corporation. The Tribunal determined that Petitioner willfully failed to pay the withholding taxes. The appellate division confirmed the Tribunal's determination. The Court of Appeals affirmed, holding (1) the Tribunal employed the proper legal standard in this case; and (2) substantial evidence supported the Tribunal's determination that Petitioner had actual authority over NECC's finances and the ability to remit the overdue withholding tax during the time period in question. View "Black v. New York State Tax Appeals Tribunal" on Justia Law

Four inmates at the Buckingham Correctional Center in Dillwyn, Virginia, commenced this action pro se against agents of the IRS, alleging that the IRS unlawfully denied them all or part of their COVID-19 stimulus payments. The complaint alleged that the IRS was categorically denying payments to inmates on account of their incarcerated status. The four inmates contended that the IRS had “violated their Fourteenth Amendment rights to due process and equal protection of the law,” and they sought an injunction requiring the IRS to disburse the proper payments to them. The four inmates filed a motion to amend it by adding five additional inmates with the same claims. The three inmates whose claims were severed from the original action filed these appeals, challenging the legal and factual underpinnings of the district court’s order. They contend that the district court erred both in applying Section 1915(b)(1) as they were not proceeding in forma pauperis and in making factual findings that were not supported by the record.   The Fourth Circuit vacated the court’s order severing Plaintiffs’ claims and its order denying amendment and remanded. The court explained that Section 1915(b)(1), by its explicit terms, is restricted to in forma pauperis actions. The court wrote that because Plaintiffs here did not proceed in forma pauperis, the court should not have construed Section 1915(b)(1) and applied it to them, and it was an error to have done so. View "Aaron Ellis v. Daniel I. Werfel" on Justia Law