Justia Tax Law Opinion Summaries

In 2017, the County initiated an administrative tax foreclosure against BSI. The County Board of Revision (BOR) issued its final adjudication of foreclosure in June 2019. Because the County had opted for the alternative right of redemption, BSI had 28 days to pay the taxes before the County took title to the property. Days later, BSI filed a Chapter 11 bankruptcy petition, which automatically stayed the BOR’s final judgment and 28-day redemption period. The bankruptcy court granted the County relief from the stay on January 17, 2020. The BOR determined that the statutory redemption period expired on January 21, 2020. On January 30, rather than sell the property, the County transferred it to its land bank (Ohio Rev. Code 323.78.1). When a county sells foreclosed property at auction, it may not keep proceeds beyond the taxes the former owner owed; if the county transfers the property to the land bank, “the land becomes ‘free and clear of all impositions and any other liens.’”BSI filed suit, 42 U.S.C. 1983, alleging that a significant difference between the appraised value of the property and the amount that the County alleged BSI owed meant that the County’s action violated the Takings Clause. The district court dismissed the case under the two-year statute of limitations. The Sixth Circuit reversed. The limitations period began to run when the redemption period ended on January 21, 2020. If BSI paid its delinquent taxes during that period, the County would have been prohibited from taking the property. View "Beaver Street Investments, LLC v. Summit County, Ohio" on Justia Law

Air 7, LLC, a Delaware limited liability company, and its owner, the Peter J. Koral Trust, owned a Gulfstream G-550 jet aircraft. Air 7’s headquarters were located at the Camarillo Airport in Ventura County. The owner was a resident of California. The County of Ventura (the “County”) imposed a tax on the aircraft that was permanently removed from California before the tax lien date of January 1 for the tax year 2017. Air 7 sued the County for a refund of the taxes, statutory interest, and penalties the County had imposed. The trial court found the aircraft was not permanently removed from Ventura County on the tax lien date because it had not established situs elsewhere. The trial court entered judgment for the County.   The Second Appellate District reversed. The court explained that the aircraft was removed from California with the intent that removal be permanent, and the aircraft never returned to California during the 2017 tax year. Accordingly, the court concluded the aircraft was not “situated” or “habitually situated” in California. The tax imposed on the aircraft violates California law irrespective of whether the aircraft was situated and taxed in another state. View "Air 7, LLC v. County of Ventura" on Justia Law

The Supreme Court affirmed the decision of the administrative hearing commission (AHC) finding that Charter Communications Entertainment I, LLC (CCE I) was entitled to manufacturing exemptions with respect to its 2011 and 2012 purchases of replacement equipment used to provide telecommunications service, holding that the AHC's decision was authorized by law.Specifically, the Supreme Court held that the AHC did not err in (1) finding CCE I's provision of telecommunications service qualified as "manufacturing" for purposes of the sales and use tax exemptions in Mo. Rev. Stat. 144.030.2(4) and 144.054.2; and (2) finding that CCE I was not required to establish that its replacement equipment was "substantially used" in manufacturing in addition to proving that the equipment satisfied the integrated plant doctrine and was "used directly" in manufacturing. View "Charter Communications Entertainment I, LLC v. Director of Revenue" on Justia Law

Article XIIIC was added to the California Constitution in 1996 after the passage of the Right to Vote on Taxes Act, or Proposition 218. Article XIIIC required that any new tax or increase in tax be approved by the voters. In 2010, article XIIIC was amended when Proposition 26 passed. Since then, “'tax' has been broadly defined to encompass 'any levy, charge, or exaction of any kind imposed by a local government.'” Several charges were expressly excluded from this definition, but at issue in this case are charges “imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.” The government service or product at issue was electricity: Appellant was an individual residing in the City of Anaheim (the City) who claimed her local public electric utility approved rates which exceed the cost of providing electricity. She claimed the City has been transferring utility revenues to its general fund and recouping these amounts from ratepayers without obtaining voter approval. But because voters approved the practice through an amendment to the City’s charter, the Court of Appeal concluded the City has not violated article XIIIC, and affirmed the trial court’s grant of summary judgment to the City on this basis. View "Palmer v. City of Anaheim" on Justia Law

Defendant was charged with thirteen charges related to fraud and tax evasion. Defendant insisted on representing himself, despite the District Court’s thorough colloquy. Ultimately, Defendant was convicted and sentenced to 97 months imprisonment, followed by three years of supervised release.Defendant appealed on several grounds, including insufficiency of the evidence, the district court’s acceptance of his expressed desire to represent himself, evidentiary issues, and sentencing issues. The court rejected Defendant’s appellate issues in turn and affirmed his conviction.However, on the government’s cross-appeal, the court vacated the judgment. The District Court erred in failing to award the government the costs of the prosecution. View "United States v. Jeffrey Kock" on Justia Law

The Supreme Court affirmed the judgments of the tax court declining to include a "concession fee" as rental income attributable to the properties in this case under the income-capitalization approach to property valuation, holding that the tax court did not err.At issue was Hennepin County's valuation of the respective properties owned by Enterprise Leasing Company of Minnesota and Avis Budget Car Rental, LLC at the Minneapolis-St. Paul International Airport. The tax court disagreed with Hennepin County's approach, decided not to include the concession fee as rental income, and estimated a market value in each case that was lower than the value that the County sought at trial. The Supreme Court affirmed in both cases, holding that the tax court did not clearly err in excluding the concession fee from rental income. View "Enterprise Leasing Co. of Minn. v. County of Hennepin" on Justia Law

Petitioner sent $10,263,750 to the United States Internal Revenue Service (“IRS”) as a “deposit” toward his expected gift tax liability. After an IRS audit examination and Petitioner’s tax deficiency proceeding in the Tax Court, Petitioner and the IRS settled the deficiency proceeding, stipulating that Petitioner owed a gift tax deficiency of $6,790,000 for 2011. The IRS applied the $10,263,750 to that 2011 deficiency and issued Petitioner a check for the balance of $3,473,750. The parties disputed the interest rate. The IRS used the interest rate for deposits, which is the federal short-term rate. Petitioner wanted the interest rate for overpayments, which is the federal short-term rate plus three percentage points. In the Tax Court, Petitioner filed a petition to reopen his case to redetermine interest. The Tax Court has jurisdiction to redetermine interest due to a taxpayer if the court previously found a remittance was an overpayment. So its jurisdiction turns on whether the Tax Court found that Petitioner made an overpayment of tax.   The Eleventh Circuit affirmed the Tax Court’s decision denying Petitioner’s motion to redetermine interest for lack of jurisdiction. The court concluded that there is no Tax Court finding that Petitioner made an overpayment of tax, and thus the Tax Court did not have jurisdiction over Petitioner’s post-judgment motion to redetermine interest. The court explained that, at most, the Tax Court was silent on whether Petitioner made an overpayment for the tax year 2011. The Tax Court’s silence cannot be, and is not, a finding of an overpayment for Section 6512(b)(1) jurisdictional purposes. View "Albert G. Hill, III v. Commissioner of Internal Revenue" on Justia Law

Tax assessors sometimes appraise commercial property using the income method: they forecast yearly income the property will yield and discount the future stream to present value. This method requires assessors to subtract income fairly ascribed to intangible assets, including those directly necessary to the productive use of the property. (Roehm v. Orange County (1948) 32 Cal.2d 280, 285 (Roehm); Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593, 614–615, 617–619 (Elk Hills). Defendant County of Los Angeles assessed a hotel owned by the protesting taxpayer, Olympic and Georgia Partners, LLC (Olympic). The County’s assessor included income from three intangibles: a subsidy, a discount; and some hotel enterprise assets.The Second Appellate District reversed the portion of the judgment concerning the subsidy and the discount. Regarding the hotel enterprise assets, the court affirmed the trial court’s remand of the case to the County’s Assessment Appeals Board (Board) for re-evaluation. The court explained that Defendant violated the Roehm and Elk Hills rules. The court explained that the County argued there is no agreement the subsidy is an intangible asset. But the Board did find it was an intangible asset. The County does not argue the subsidy is something tangible you can touch. Accordingly, the court found that this argument is ineffective. View "Olympic and Georgia Partners, LLC v. County of Los Angeles" on Justia Law

Ahmed was President of Aspen Construction, which failed to pay the IRS federal income, Social Security, and Medicare taxes withheld from employees' wages, 26 U.S.C. 7501, 3102(a), 3402(a). Aspen owed more than $600,000 in withheld taxes. Without recourse against Aspen’s individual employees (who were credited with withheld taxes when their net wages were paid), the IRS shifted liability to Ahmed, 26 U.S.C. 6672. Whether Ahmed received notification of proposed penalties is unclear. The IRS assessed the penalties and later filed liens against Ahmed’s property to secure the penalties. Ahmed immediately sought a Collection Due Process review with the IRS Independent Office of Appeals.While Ahmed’s petition was pending, he sent the IRS $625,000, with instructions that it be treated as a “deposit” to freeze the running of interest on his disputed penalties. The IRS instead applied the money as a direct payment to the tax bill, thereby ending the matter. Without any remaining tax liability to dispute, the Tax Court dismissed Ahmed’s petition. The Third Circuit vacated. Ahmed’s petition was moot only if the IRS properly treated his remittance as a payment, which depends on whether he sent money to the IRS after it validly assessed his penalties. There is ambiguity in the record on that issue. View "Ahmed v. Commissioner of Internal Revenue" on Justia Law

The Supreme Court quashed the decision of the Second District Court of Appeal affirming the judgment of the circuit court in favor of Landlord in this action he brought seeking a refund of the amount he paid after a property appraiser determined that he had improperly received a homestead tax exemption, holding that Landlord's arguments in support of the district court's decision were unpersuasive.At issue in this case was how to determine the scope of Landlord's residence for purpose of the homestead tax exemption. Landlord lived on the bottom floor, and during the entire time period in question Landlord rented a portion of the structure to at least one tenant. When the county property appraiser concluded that at least fifteen percent of the property was not being used as Landlord's residence and thus revoked the homestead exemption as to fifteen percent of the total property. After he paid $7,000 in back taxes, penalties, and interest Landlord brought this action. The circuit court granted judgment for Landlord, and the court of appeal affirmed. The Supreme Court quashed the decision below, holding that the district court erred by concluding that, for purposes of applying the homestead tax exemption, the entire structure was Landlord's residence. View "Furst v. Rebholz" on Justia Law