Justia Tax Law Opinion Summaries

This appeal arose from a converted Chapter 7 bankruptcy filed in 2017. In 2014, the debtor, All Resorts Group, Inc., paid personal tax debts of two of its principals totaling $145,138.78 to the Internal Revenue Service. Plaintiff, the United States Trustee, brought an adversary proceeding in bankruptcy court against the United States pursuant to Code 11 U.S.C. § 544(b)(1) to avoid these transfers. The “applicable law” on which the Trustee relied was now-former § 25-6-6(1) of Utah’s Uniform Fraudulent Transfer Act (amended 2017) as part of Utah’s Uniform Voidable Transactions Act. The United States (Government) did not contest the substantive elements required for the actual creditor (in this case, an individual with an employment discrimination claim against the debtor) to establish a voidable transfer under § 25-6-6(1). The Government acknowledged: (1) the debtor had made the transfers; (2) an actual creditor had an unsecured claim against the debtor arising before the transfers; (3) the debtor did not receive a reasonably equivalent value in exchange for the transfers; and (4) the debtor was insolvent at the time of the transfers. The Government further acknowledged that the sovereign immunity waiver contained in 11 U.S.C. § 106(a)(1) made it amenable to the Trustee’s § 544(b)(1) action. The Government contested § 544(b)(1)’s “actual creditor requirement,” arguing the actual creditor could not avoid the debtor’s tax payments made on behalf of its principals to the IRS because sovereign immunity would bar such creditor’s action against the Government outside of bankruptcy. According to the Trustee, the waiver contained in Code § 106(a) abrogated sovereign immunity not only as to his § 544(b)(1) adversary proceeding against the Government, but also as to the underlying Utah state law cause of action he invoked under subsection (b)(1) to avoid the transfers. On cross-motions for summary judgment, the bankruptcy court ruled in favor of the Trustee and avoided the transfers. The Government appealed. Finding no reversible error in the bankruptcy court's judgment, the Tenth Circuit affirmed. View "Miller v. United States" on Justia Law

In 2008, Debtors Mosaic Management Group, Inc., Mosaic Alternative Assets, Ltd., and Paladin Settlements, Inc. filed for Chapter 11 bankruptcy in the Southern District of Florida, a “UST district” in which the U.S. Trustee program operates. In June 2017, the bankruptcy court confirmed a joint Chapter 11 plan, under which most of the Debtors’ assets were transferred to an Investment Trust managed by an Investment Trustee. The issue before the court is the appropriate remedy for the constitutional violation the Supreme Court found in Siegel. The Debtors in this case—being debtors in a U.S. Trustee district—have been required to pay higher fees than a comparable debtor in one of the six BA districts in Alabama or North Carolina.   The Eleventh Circuit vacated and remanded. The court concluded that Reich, Newsweek, Bennett, McKesson, and the long line of similar state tax cases are closely analogous to the instant case and provide strong precedent supporting the refund remedy urged upon us by the Debtors. Accordingly, the court held that the appropriate remedy in this case for the constitutional violation identified in Siegel is the refunds that the Debtors in this case seek. View "United States Trustee Region 21 v. Bast Amron LLP" on Justia Law

The Supreme Court affirmed the order of the Nebraska Tax Equalization and Review Commission (TERC) reversing three decisions made by the Lincoln County Board of Equalization upholding the assessed value of certain property for tax years 2018 through 2020, holding that TERC did not err in finding the Board's decision to uphold the valuations was arbitrary and unreasonable.The property at issue was subject to rent restrictions under the Internal Revenue Code. Appellant protested the 2018, 2019, and 2020 valuations of the property, and the Board of affirmed the county assessor's valuation for each year. After a hearing, TERC reversed. The Supreme Court affirmed, holding (1) TERC correctly determined that the property's assessed value was arbitrary and unreasonable for each year; and (2) TERC was permitted to consider all evidence of actual value on appeal and was not limited to the income approach. View "Lincoln County Bd. of Equalization v. Western Tabor Ranch Apartments, LLC" on Justia Law

The Supreme Court affirmed the judgment of the superior court granting summary judgment in favor of Respondent, the tax assessor for the City of East Providence, and dismissing Petitioner's complaint brought pursuant to R.I. Gen. Laws 44-5-26(c) alleging that Respondent conducted an illegal property tax assessment for tax year 2012 and an excessive tax assessment for tax year 2013, holding that the superior court did not err.In moving for summary judgment Respondent asserted that Petitioner's claims fell outside the three-month statute of limitations contained in R.I. Gen. Laws 44-5-26 and 44-5-27. Petitioner appealed, arguing that the ten-year statute of limitations generally applicable to civil actions governed its tax assessment challenges. The Supreme Court disagreed and affirmed, holding (1) the General Assembly intended for the three-month statute of limitations to apply to petitions for relief such as the instant petition; and (2) Petitioner's challenges to the illegality of the 2012 and 2013 tax assessments were untimely filed after the three-month statute of limitations had expired. View "Newport & New Road, LLC v. Hazard" on Justia Law

The Supreme Court affirmed the judgment of the Minnesota Tax Court reducing the Commissioner of Revenue's valuations of CenterPoint Energy Minnegasco's natural gas distribution pipeline system for January 2, 2018 through January 2, 2019, holding that the Commissioner was not entitled to relief.The tax court reduced the Commissioner's valuations and ordered the Commissioner to recalculate Minnegasco's tax liability. The Commissioner appealed, challenging the tax court's income-equalization and cost approaches. The Supreme Court affirmed, holding that the tax court (1) did not err in the way that it used the Commissioner's initial assessments when evaluating the totality of the evidence and making its independent evaluations; (2) did not abuse its discretion in considering the conflicting expert opinions; and (3) did not clearly err in finding external obsolescence. View "Commissioner of Revenue v. CenterPoint Energy Resources Corp." on Justia Law

Gulf South Pipeline Company, LLC owned an underground natural gas storage facility in Rankin County, Mississippi. It owned additional properties that ran through thirty-two Mississippi counties. As a public service corporation with property situated in more than one Mississippi county, property belonging to Gulf South was assessed centrally by the Mississippi Department of Revenue rather than by individual county tax assessors. After conducting the central assessment, MDOR apportions the tax revenues among the several counties in which the property is located. A significant amount of the natural gas stored in Gulf South’s Rankin County facility is owned by Gulf South’s customers and, therefore, it is excluded from MDOR’s central assessment. The Rankin County tax assessor requested that Gulf South disclose the volume of natural gas owned by each of its customers. Following Gulf South’s refusal to provide these data, in September 2021 the Rankin County tax assessor gave notice of its intention to assess Gulf South more than sixteen million dollars for approximately four billion cubic feet of natural gas stored by Gulf South but owned by its customers. Gulf South filed suit at the Chancery Court in Hinds County, seeking to enjoin the assessment and seeking a declaratory judgment that MDOR was the exclusive entity with the authority to assess a public service corporation with property located in more than one Mississippi county. On interlocutory appeal, the Mississippi Supreme Court was asked to determine whether venue was proper in Hinds County when Rankin County was named as a defendant and MDOR was joined as a necessary party. The Court held that, under the venue provisions of Mississippi Code Section 11-45-17 and the Court’s consistent construction of these statutory provisions as mandatory and controlling, venue was proper only in Rankin County. Therefore, the chancellor erred by denying Rankin County’s motion to transfer venue. View "Rankin County v. Boardwalk Pipeline Partners, L.P., et al." on Justia Law

The Supreme Court reversed the judgment of the circuit court granting summary judgment for Respondent in this action claiming that Respondent owned fifty percent interest in the oil and gas estate Petitioners purchased at prior tax sales, holding that the circuit court erred.In 1989, Respondent and Petitioners participated in a tax sale after a delinquent taxpayer neglected to pay taxes on 135 acres of property and twenty-five percent of its subjacent oil and gas estate. Respondent bought the property, and Petitioners bought the interest in the oil and gas estate. In 1993, Petitioner brought another twenty-five percent interest in the same oil and gas estate after another tax resulting from a different taxpayer's delinquency. Respondent subsequently filed this lawsuit claiming ownership in the fifty percent interest in the oil and gas estate Petitioners had purchased. The circuit court granted summary judgment for Respondent. The Supreme Court reversed, holding (1) Petitioners purchased a valid tax deed to the oil and gas estate, and Respondent lacked grounds to challenge Petitioners' tax-sale deed; and (2) as to Petitioners' 1995 deed, the delinquent taxpayer clearly owned the twenty-five percent interest in the oil and gas estate for which his taxes were delinquent. View "Collingwood Appalachian Minerals III, LLC v. Erlewine" on Justia Law

In these consolidated appeals from the circuit court relating to the administration of the estate of Shirley Martin and of the trusts established by Carl Martin, Sr. and Shirley Martin the Court of Appeals reversed the order of the circuit court granting partial summary judgment in favor of Sherree Martin approving the payment of certain federal estate taxes from the Carl Martin Trust, the Supreme Court reversed and remanded the order in Case No. 21-0757 and affirmed the order in Case No. 22-0417, holding (1) the circuit court erred in concluding in Case No. 21-0757 that a preliminary injunction was warranted and that Sherree Martin should have been removed from her former fiduciary roles; and (2) the circuit court erred in concluding in Case No. 22-0417 regarding the payment of federal estate taxes. View "Martin v. Martin" on Justia Law

Plaintiffs, two brothers, were the sole shareholders of Crown C Corporation. The corporation obtained life insurance on each brother so that if one died, the corporation could use the proceeds to redeem his shares. When one brother died, the Internal Revenue Service assessed taxes on his estate, which included his stock interest in the corporation. According to the IRS, the corporation’s fair market value includes the life insurance proceeds intended for the stock redemption. The brother's estate argues otherwise and sued for a tax refund. The district court agreed with the IRS.   The Eighth Circuit affirmed. The court explained that here the estate argues that the court should look to the stock-purchase agreement to value of the brother’s shares because it satisfies these criteria. But the estate glosses over an important component missing from the stock purchase agreement: some fixed or determinable price to which we can look when valuing the brother’s shares. Further, the Treasury regulation that clarifies how to value stock subject to a buy-sell agreement refers to the price in such agreements and “the effect, if any, that is given to the . . . price in determining the value of the securities for estate tax purposes.” 26 C.F.R. Section 20.2031-2(h). Here, the stock-purchase agreement fixed no price nor prescribed a formula for arriving at one. Further, the court explained that the proceeds were simply an asset that increased shareholders’ equity. A fair market value of the brother's shares must account for that reality. View "Thomas Connelly v. United States" on Justia Law

The Board of Supervisors for Lowndes County appealed the trial court’s grant of summary judgment in favor of the Lowndes County School District. The Board argued that the trial court erred in its interpretation of Mississippi Code Section 37-57-107(1) (Rev. 2014) and that the trial court lacked jurisdiction to review the Board’s September 15, 2020 decision to exclude $3,352,0751 from the District’s requested ad valorem tax effort. The Mississippi Supreme Court found that the District appealed the decision of a county board of supervisors. As such, the District’s exclusive remedy was Section 11-51-75. Because the District failed to meet these requirements and because Section 11-51-75 was the District’s exclusive remedy, the chancery court was without jurisdiction to hear this matter and issue a declaratory judgment. Therefore, the trial court’s grant of summary judgment was reversed, and the matter remanded to the chancery court for it to enter an order dismissing the case for lack of jurisdiction. View "Board of Supervisors for Lowndes County v. Lowndes County School District" on Justia Law