Justia Tax Law Opinion Summaries

The Supreme Court affirmed in part and reversed in part the judgment of the tax court dismissing Counts I through III of the Attorney General's complaint and granting summary judgment on Count IV, holding that the tax court erred in part.At issue was the scope of three statutes the Attorney General (AG) invoked to challenge an agreement between the Arizona Board of Regents (ABOR) and a private company for the company to construct and operate a hotel and conference center on property owned by ABOR. The Supreme Court held (1) to initiate an action under Ariz. Rev. Stat. 42-1004(E) there must be an applicable tax law to enforce; (2) the AG may bring a quo warranto action pursuant to Ariz. Rev. Stat. 12-2041 to challenge the unlawful usurpation or exercise of a public franchise; and (3) the AG's public-monies claim was subject to the five-year statute of limitations set forth in Ariz. Rev. Stat. 35-212(E). View "State v. Arizona Board of Regents" on Justia Law

The Court of Appeals reversed the judgment of the tax court reversing the decision of the Comptroller of Maryland denying Broadway Services Inc.'s request for an offset and refund of the taxes it paid to cleaning supply vendors, holding that the tax court erred.Under contracts between three non-profit tax-exempt hospitals of the Johns Hopkins Health System and Broadway, a for-profit business, Broadway provided management services to the hospitals, including purchasing and providing cleaning supplies for the use of he hospitals' janitorial staff. Broadway filed a request for an offset and refund of the taxes it paid to cleaning supply vendors, asserting that Broadway was tax exempt because it was reselling the cleaning supplies. The Comptroller denied the refund. The tax court reversed, concluding that because Broadway acted as the hospitals' agent it should not have been charged sales tax. The Court of Appeals reversed, holding that the tax court erroneously conducted its agency analysis as a matter of law. View "Broadway Services v. Comptroller" on Justia Law

The Ninth Circuit reversed the tax court's decision granting summary judgment to taxpayer, holding that 26 U.S.C. 6751(b) requires written supervisory approval before the assessment of the penalty or, if earlier, before the relevant supervisor loses discretion whether to approve the penalty assessment. In this case, because the supervisor gave written approval of the initial penalty determination before the penalty was assessed and while she had discretion to withhold approval, the IRS satisfied 6751(b)(1). View "Laidlaw's Harley Davison Sales, Inc. v. Commissioner of Internal Revenue" on Justia Law

The Fifth Circuit held that 26 U.S.C. 4611(b) imposes a tax on exports in violation of the Export Clause. In this case, the United States contends that Trafigura must pay a tax on domestic crude oil that it exports from the United States. Applying Pace v. Burgess, 92 U.S. 372, 376 (1876), and United States v. U.S. Shoe Corp., 523 U.S. 360, 363 (1998), the court first considered whether the charge under section 4611(b) is based on the quantity or value of the exported oil—if so, then it is more likely a tax. Then the court considered the connection between the Fund’s services to exporters, if any, and what exporters pay for those services under section 4611(b). Finally, the court applied heightened scrutiny and strictly enforced the Export Clause's ban on taxes by guarding against the imposition of a tax under the pretext of fixing a fee.The court affirmed the district court's judgment and concluded that the United States may not enforce section 4611(b) on crude oil "exported from the United States." The court stated that Congress has crafted a scheme in which crude oil exporters are forced to subsidize activities that are not "services used or usable by the exporter." Section 4611(b) saddles exporters with the cost of anti-pollution measures that generally benefit society at large, and not specifically the exporter who pays the charge. View "Trafigura Trading LLC v. United States" on Justia Law

On February 15, 2018, GAN filed a petition for a tax deed to acquire property it purchased at Cook County’s 2016 annual tax sale for the tax year 2014. On April 24, 2018, GAN assigned its interest in the property to Blossom63. On May 6, 2018, Longmeadow, the owner of the property, transferred its interest in the property to Devonshire. On May 17, Devonshire sought to intervene in the tax deed proceedings and moved to vacate Blossom63’s tax deed on the ground Blossom63 failed to strictly comply with the notice requirements of the Property Tax Code, 35 ILCS 200/22-5.On May 18, the circuit court granted the petition for a tax deed. The county clerk issued Blossom63 a tax deed. On June 19, 2019, the circuit court granted Devonshire’s motion to vacate the order issuing a tax deed to Blossom63. The appellate court reversed, finding Blossom63’s notice strictly complied with the Tax Code. The Illinois Supreme Court affirmed. Blossom63 strictly complied with section 22-5 by listing the delinquent tax year for which the sale was held without listing the additional delinquent tax years for which it paid taxes to complete the sale. View "In re Application of the County Collector" on Justia Law

The Fifth Circuit affirmed the district court's denial of partial summary judgment in an action brought by Vitol against the United States, seeking an $8.8 million tax refund. The court concluded that the plain language of the statute, taken in context, excludes butane from the definition of a liquefied petroleum gas (LPG) under 26 U.S.C. 6426(d)(2).In this case, the court applied the standard tools of statutory interpretation in their proper order, and the court need not consider legislative history or abstract congressional purpose. The court explained that, although the common meaning of LPG includes butane, section 6426(d)(2) is a subsidiary part of a broader statutory framework that treats a given fuel as either a taxable fuel or an alternative fuel, but not both. Therefore, the statutory context of section 6426 provides sound reason to depart from butane's common meaning. Furthermore, section 4083 defines butane as a taxable fuel for purposes of the excise tax imposed at section 4081. The court reasoned that, if butane is a taxable fuel, it cannot be an alternative fuel and thus it is not an LPG under section 6426(d)(2). View "Vitol, Inc. v. United States" on Justia Law

Under the “individual mandate” within the Patient Protection and Affordable Care Act of 2010, non-exempt individuals must either maintain a minimum level of health insurance or pay a “penalty,” 26 U.S.C. 5000A, the “shared responsibility payment” (SRP). The McPhersons did not maintain health insurance for part of 2017, and Juntoff did not maintain health insurance in any month in 2018. They did not pay their SRP obligations. In each of their Chapter 13 bankruptcy cases, the IRS filed proofs of claim and sought priority treatment as an “excise/income tax”: for Juntoff, $1,042.39, and for the McPhersons, $1,564.The bankruptcy court confirmed their plans, declining to give the IRS claims priority as a tax measured by income. The Bankruptcy Appellate Panel reversed. DIstinguishing the Sebelius decision in which the Supreme Court determined that the SRP constituted a “penalty” for purposes of an Anti-Injunction Act analysis and a “tax” under a constitutionality analysis, the Panel concluded that the SRP is not a penalty but a tax measured by income. It is “calculated as a percentage of household income, subject to a floor based on a specified dollar amount and a ceiling based on the average annual premium the individual would have to pay for qualifying private health insurance.” View "In re: Juntoff" on Justia Law

The Supreme Court affirmed the judgment of the district court granting summary judgment for Continental Resources in this quiet title action against Kevin and Terry Fair, holding that the district court did not err in granting Continental's summary judgment motion to quiet title.At issue on appeal was the constitutionality of the statute that authorize the process allowing the county in which a property is located to sell a tax certificate for the property to a private party if the property owner fails to pay property taxes. If the owner fails to pay the taxes owed after a period of time and the tax certificate purchaser complies with certain requirements, the purchaser can obtain a deed to the property free of encumbrances. The Supreme Court affirmed, holding that Nebraska's tax certificate sale statutes are not unconstitutional in the manner assigned by Fair. View "Continental Resources v. Fair" on Justia Law

The Supreme Court affirmed in part and vacated in part the decision of the Board of Tax Appeals (BTA) upholding the tax commissioners denial of Appellant's claim for a sales tax refund, holding that the BTA erred in part.Appellant Cincinnati Federal Savings & Loan Co. filed a refund claim seeking recovery of $57,412.58, claiming that it purchased nontaxable accounting services or, alternatively, nonntaxable customized software. The tax commissioner denied the claim. The BTA affirmed. The Supreme Court affirmed in part and vacated in part the BTA's decision, holding (1) with respect to the customization of software, the BTA erred by failing to apply the true-object test to the charges at issue; and (2) Appellant's remaining propositions of law were without merit. View "Cincinnati Federal Savings & Loan Co. v. McClain" on Justia Law

Under 26 U.S.C. 170(h), taxpayers who donate an easement to a land conservation organization may be eligible to claim a charitable deduction on their federal income tax returns if the easement’s conservation purpose is guaranteed to extend in perpetuity. A Department of Treasury rule, 26 C.F.R. 1.170A-14(g)(6), provides that if unforeseen changes to the surrounding land make it “impossible or impractical” for an easement to fulfill its conservation purpose; the conservation purpose may still be protected in perpetuity “if the restrictions are extinguished by judicial proceeding and all of the donee’s proceeds . . . from a subsequent sale or exchange of the property are used by the donee” to further the original conservation purpose. Proceeds are calculated by a formula in 1.170A-14(g)(6)(ii), the “proceeds regulation.”After the IRS denied its charitable deduction, Oakbrook challenged the proceeds regulation, arguing that, in promulgating this rule, Treasury violated the notice-and-comment requirements of the Administrative Procedure Act; that Treasury’s interpretation of section 170(h) is unreasonable; and that the proceeds regulation is arbitrary. The Sixth Circuit affirmed the Tax Court in rejecting those arguments. Oakbrook’s deed to the conservation trust violated the proceeds regulation by ascribing a fixed rather than proportionate value upon judicial extinguishment, and by subtracting from this amount any post-donation improvements that Oakbrook made to the land. View "Oakbrook Land Holdings, LLC v. Commissioner of Internal Revenue" on Justia Law