Justia Tax Law Opinion Summaries

The Supreme Court affirmed the judgment of the district court affirming the decision of the Montana Department of Revenue (MDOR) denying Appellant's petition to adopt a proposed administrative rule construing Mont. Code Ann. 15-30-2605(3), holding that the MDOR correctly construed sections 15-30-2605(1) and (3) and did not capriciously, arbitrarily, or unlawfully preliminarily deny Appellant's petition for adoption of a proposed rule interpreting the section 15-30-2605(3).At issue were internal MDOR reviews initiated by clients of Appellant, a certified public accountant, regarding 2021 MDOR adjustment notices regarding their 2017 income tax returns. Appellant argued that the noticed MDOR adjustments were untimely beyond the three-year deadline set forth in section 15-30-2605(3) and petitioned MDOR to adopt a rule to clarify section 15-30-2605 based on his contrary interpretation of section 15-30-2605(3). MDOR denied the petition, and the district court affirmed. The Supreme Court affirmed, holding that the district court did not err in determining that MDOR's construction of section 15-30-2605(3) was correct and that Appellant failed to demonstrate that the denial of his rulemaking petition was arbitrary, capricious, or based on an erroneous conclusion of law. View "Wangerin v. Dep't of Revenue" on Justia Law

The First Circuit affirmed the judgment of the district court affirming the ruling of the bankruptcy court that the tax liabilities relevant to this appeal had not been discharged, holding that, under the subjective version of the so-called "Beard test," Appellant never filed "returns" for the tax years at issue.The IRS assessed tax believed to be due from Appellant, including penalties and interest, for tax year 1997 in the amount of $30,568 and tax year 2000 in the amount of $46,344. Appellant did not pay the overdue taxes and later filed a chapter 13 petition for bankruptcy. In 2017, Appellant received a discharge. At issue was whether Appellant's discharge covered his debts to the IRS. The bankruptcy court concluded that the tax liabilities at issue had not been discharged. The district court affirmed. The First Circuit affirmed, holding that, applying the Beard test that Appellant urged the bankruptcy court to adopt, Appellant's filings did not represent "an honest and reasonable attempt to satisfy the requirements of the Federal income tax law." View "Kriss v. United States" on Justia Law

The Supreme Court affirmed the decision of the court of appeals reversing the order of the circuit court denying the City of Milwaukee's motion to dismiss this action brought by Saint John's Communities for recovery of unlawful taxes under Wis. Stat. 74.35, holding that Saint John's claim was procedurally deficient because Saint John did not pay the tax before filing its claim.Saint John's argued on appeal that section 74.35 contained no requirement that, prior to filing a claim for recovery of unlawful taxes against the City, taxpayers first pay the challenged tax. The Supreme Court disagreed and affirmed, holding (1) the plain language of section 74.35 required Saint John's first to pay the challenged tax or any authorized installment payment prior to filing a claim; and (2) the circuit court erred in denying the City's motion to dismiss Saint John's section 74.35 claim because it was procedurally deficient. View "Saint John's Communities, Inc. v. City of Milwaukee" on Justia Law

The Supreme Court reversed in part the decision of the Board of Tax Appeals (BTA) affirming a final assessment imposed by the tax commissioner determining that NASCAR owed taxes, interest, and penalties in the amount of $549,520, holding that the bulk of the tax assessment was unlawful.The Ohio Department of Taxation conducted an audit and determining that NASCAR had improperly failed to pay Ohio's commercial-activity tax (CAT), Ohio Rev. Code 5751.91 et seq., from 2005 to 2010 and owed Ohio more than in back taxes and penalties. The BTA affirmed the assessment, determining that for the four revenue streams under review - broadcast, media, licensing, and sponsorship - the receipts were properly situated to Ohio. NASCAR appealed, arguing that its broadcast revenue, media revenue, licensing revenue, and sponsorship revenue were not subject to the CAT. The Supreme Court reversed the tax assessment as to NASCAR's broadcast revenue, media revenue, licensing fees, and sponsorship fees, holding (1) the broadcast revenue was not based on the right to use NASCAR's property in Ohio; and (2) the media revenue, licensing fees, and sponsorship fees situated to Ohio were not "based on the right to use" NASCAR's property in Ohio. View "NASCAR Holdings, Inc. v. McClain" on Justia Law

The Fox and Puchlak filed purported class actions, alleging that Michigan counties seized property to satisfy property-tax delinquencies, sold the properties, and kept the difference between the sales proceeds and the tax debts.. The suits assert that the counties committed takings without just compensation or imposed excessive fines in violation of the Michigan and federal constitutions. Genesee County’s insurance, through Safety, precludes coverage for claims “[a]rising out of . . . [t]ax collection, or the improper administration of taxes or loss that reflects any tax obligation” and claims “[a]rising out of eminent domain, condemnation, inverse condemnation, temporary or permanent taking, adverse possession, or dedication by adverse use.”Safety sought a ruling that it owed no duty to defend or to indemnify. The district court entered summary judgment, finding no Article III case or controversy between Safety and Fox and Puchlak. The court also held that Safety owes Genesee County no duty to defend. The Sixth Circuit affirmed. Safety lacks standing to sue Fox and Puchlak over its duty to defend and its claim for the duty to indemnify lacks ripeness. Safety owes no duty to defend; the alleged tax-collection process directly caused the injuries underlying each of Fox’s and Puchlak’s claims. View "Safety Specialty Insurance Co. v. Genesee County Board of Commissioners" on Justia Law

The 2021 American Rescue Plan Act (ARPA) set aside $195.3 billion in stimulus funds, to be distributed to states and the District of Columbia. Kentucky and Tennessee challenged ARPA’s requirement that states certify that they would comply with an “Offset Provision” that bars the states from enacting tax cuts and then using ARPA funds to “directly or indirectly offset a reduction" in net tax revenue resulting from such tax cuts. 42 U.S.C. 802(c)(2)(A). Because money is fungible, enacting any tax cut and then spending ARPA funds could be construed, the states argued, as impermissibly using those funds to “indirectly offset” a revenue reduction from the tax cut. A subsequent Treasury regulation (the Rule) offered a narrowing construction; the states asserted that this construction in no way follows clearly from the Offset Provision itself. The states argued they were coerced into relinquishing control over their sovereign taxing authority.The district court entered a permanent injunction. The Sixth Circuit vacated in part. Kentucky’s challenge is non-justiciable. After the promulgation of the Rule, the states offered no evidence of a concrete plan to violate the Rule. Kentucky offered no other theory of injury. Tennessee offered another theory of injury: that Treasury’s Rule burdened the state with compliance costs that it would not incur were enforcement of the Offset Provision enjoined. On the merits of Tennessee’s claim, the court affirmed the injunction; the Offset Provision is impermissibly vague under the Spending Clause. Treasury cannot use its Rule to impose compliance requirements that are not authorized by the Offset Provision itself. View "Kentucky v. Yellen" on Justia Law

The 2021 American Rescue Plan Act (ARPA), 42 U.S.C. 802, appropriated $195.3 billion in aid to the states and the District of Columbia. To get the money, states had to certify that they would comply with several conditions, including ARPA’s “Offset Provision,” which forbids a state from using the funds “to either directly or indirectly offset a reduction in the net tax revenue” that “result[s] from” a tax cut. Claiming that this condition amounted to a prohibition on tax cuts during ARPA’s “covered period,” and that such a condition would violate the Constitution in multiple respects, Ohio filed suit. The district court permanently enjoined enforcement of the Offset Provision on the ground that its terms are “unconstitutionally ambiguous” under the Spending Clause.The Sixth Circuit vacated the injunction, finding the case moot. The district court should not have reached the merits of the case, as Ohio failed to establish a justiciable controversy. Treasury later promulgated a regulation disavowing Ohio’s interpretation of the Offset Provision and explaining that it would not enforce the Provision as if it barred tax cuts per se. There is no reason to believe that Treasury will not abide by its disavowal of Ohio’s interpretation of the Offset Provision as it administers the statute. View "Ohio v. Yellen" on Justia Law

The Supreme Court reversed the decision of the district court holding that three roadside services offered by Big Al's Towing and Recovery were taxable under Wyo. Stat. Ann. 37-15-103(a)(i)(J), holding that the Wyoming Board of Equalization correctly concluded that the roadside services were not taxable under the statute.At issue were Big Al's roadside services for jumping-starting a vehicle, unlocking a vehicle, and replacing a flat tire with a spare tire. The Wyoming Department of Revenue determined that Big Al's owed taxes and interest on the roadside assistance revenue it collected between 2016 to 2019. The Board reversed, concluding that the roadside services did not constitute a taxable event. The district court reversed, ruling that the services were taxable under section 39-15-103(a)(I)(J). The Supreme Court reversed, holding that the Board's decision that Big Al's roadside services were not taxable under the statute was in accordance with law. View "Big Al's Towing & Recovery v. State, Department of Revenue" on Justia Law

The Supreme Court reversed the judgment of the circuit court reversing the orders issued by Petitioner while sitting as the Berkeley County Board of Assessment Appeals arising from appeals of ad valorem assessments owned by Taxpayers, as determined by the Berkeley County Assessor for the 2019 tax year, holding that circuit court erred in reversing the Board.Although the two consolidated appeals dealt with different pieces of property owned by two different entities the Supreme Court concluded that resolution dependent on two overarching questions common to both appeals. The Court then held (1) Petitioner waived any objection to the Assessor not being named as a party to this action; and (2) the circuit court erred in determining the assessments as affirmed by the Board were not supported by substantial evidence or were otherwise in contravention of any regulation, statute, or constitutional provision. View "Berkeley County Council v. Government Properties Income Trust LLC" on Justia Law

The Supreme Court reversed the orders of the district court granting Zinvest, LLC's motion for summary judgment and dismissing Wells Fargo Bank, N.A.'s complaint alleging that Zinvest failed to give proper notice of pending tax deeds under Mont. Code Ann. 15-18-212 and requesting the tax deeds issued to Invest be declared void, holding that the district court erred.Wells Fargo held a deed of trust against two parcels of land. Because the taxes assessed against each parcel for the tax year 2014 were unpaid the Missoula County treasurer conducted a tax lien sale for both parcels. Missoula County purchased the tax liens, executed a county treasurer's certificate of tax sale for both parcels and assigned the certificates to Zinvest. When Zinvest mailed notices that tax deeds may issue to Wells Fargo, they were returned. The Missoula County treasurer then executed tax deeds conveying the parcels to Zinvest. Wells Fargo subsequently brought its complaint. The district court granted summary judgment for Zinvest. The Supreme Court reversed, holding that Zinvest's failure to mail notices that the tax deeds may issue to Wells Fargo violated Mont. Code Ann. 15-18-212. View "Wells Fargo Bank, N.A. v. Zinvest, LLC" on Justia Law