Justia Tax Law Opinion Summaries

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

The Supreme Court affirmed the judgment of the tax court ruling on certain motions filed by Taxpayer and rejecting Taxpayer's statutory claim that its property was unequally assessed, holding that the tax court did not abuse its discretion in ruling on the motions, and Taxpayer failed to present evidence to support the unequal assessment claim.On appeal, Taxpayer challenged the tax court's denial of its motion to compel Washington County to produce information about other similar properties, its motion to amend the pleadings to add unequal assessment and disparate treatment claims, and its motion to compel the county assessor to testify. Taxpayer further appealed the tax court's rejection of Taxpayer's unequal assessment claim. The Supreme Court affirmed, holding (1) the tax court's denial of Taxpayer's motions was not an abuse of discretion; and (2) the tax court did not err in rejecting the unequal assessment claim. View "Chambers Self-Storage Oakdale, LLC v. County of Washington" on Justia Law

The Ninth Circuit affirmed the tax court's decision dismissing for lack of jurisdiction petitions for redetermination of federal income tax deficiencies for a partnership. Appellants argue that their petition was timely because I.R.C. 6223(f) barred the Commissioner from issuing more than one notice of Final Partnership Administrative Adjustment (FPAA) pertaining to a partnership's taxable year, and the FPAA issued by the Commissioner on March 6, 2018 was the only valid FPAA.The panel concluded that the FPAA issued on November 1, 2017, was the only valid FPAA, and therefore appellants' petition was untimely. Because the Commissioner sent the November 1, 2017 FPAAs addressed to SNJ's TMP to the address given by appellants, the tax court properly held that the November 2017 FPAAs were not invalid by reason of being improperly addressed. The panel stated that there is no evidence that any other information that the Commissioner had or should have had according to appellants was furnished to the Commissioner according to the applicable regulations. Even though the Commissioner may have had access to the other address information presented by appellants, the Commissioner was not required to use it. Because the August 1, 2017 letter is not a notification of the beginning of an administrative proceeding, the November 1, 2017 FPAAs did not violate I.R.C. 6223(d)(1). Furthermore, the FPAAs issued on November 1, 2017 were valid and the 2018 FPAAs were invalid. Because June 7, 2018 is more than 150 days after November 1, 2017, the tax court properly dismissed appellants' petition. Finally, the panel concluded that the filing deadline in I.R.C. 6226 is jurisdictional and, because the filing deadline is jurisdictional, equitable tolling is unavailable. View "SNJ Limited v. Commissioner of Internal Revenue" on Justia Law

The Fourth Circuit concluded on the merits that, under the Bankruptcy Code and the applicable state fraudulent transfer statutes, tax penalty obligations are not voidable, and relatedly, tax penalty payments are not recoverable. Accordingly, the court affirmed the district court's decision upholding the bankruptcy court's dismissal of the trustee's claims seeking to void tax penalty obligations owed by the debtor to the IRS and to recover prior payments made by the debtor to the IRS upon such obligations.The court found the Sixth Circuit's decision in In re Southeast Waffles, LLC, 702 F.3d 850 (6th Cir. 2012), persuasive and concluded that tax penalties do not fit within the obligations contemplated in the North Carolina Uniform Voidable Transactions Act. Because tax penalties are not obligations incurred as contemplated by the Act, it cannot be the "applicable law" required for the trustee to bring this action under 11 U.S.C. 544(b)(1). If there is no applicable law for the trustee's section 544(b)(1) claim, the court concluded that the claim must be dismissed. The court noted that its conclusion about the tax penalty payments turns on the legitimacy of the underlying tax penalty obligation; not the fact that the payments reduced the amount of the tax penalty obligations dollar for dollar. Since the underlying tax penalty obligation is not voidable, neither are Yahweh Center’s payments on that obligation. View "Cook v. United States" on Justia Law

The Supreme Court held that the Pinal County Regional Transportation Authority (RTA) and the Penal County Board of Supervisors (Board) acted unlawfully when they adopted a two-tiered retail transaction privilege tax (TPT) on tangible personal property as part of a transportation excise tax.At issue was (1) Pinal County's adoption of Proposition 416, a regional transportation plan, and Proposition 417, a transportation excise tax; and (2) a two-tiered TPT structure whereby the first $10,000 of any single item was taxed at one rate and any amount in excess was taxed at a rate of zero percent adopted as part of a transportation excise tax in Pinal County. The Supreme Court held (1) Pinal County complied with state law in adopting the transportation excise tax; but (2) the County's two-tiered retail transaction privilege tax was invalid. View "Vangilder v. Arizona Department of Revenue" on Justia Law

In Case No. S21A0899, Lynnette Riley, the former State Revenue Commissioner, appealed the partial grant of summary judgment in favor of petitioner Georgia Association of Club Executives (“GACE”), contending that the trial court erred by permanently enjoining the enforcement of OCGA 15-21-201(1)(B) – one of the definitions of “adult entertainment establishment” – based on the court’s ruling that the provision was unconstitutionally vague. In Case No. S21X0900, GACE cross-appealed, contending the trial court erred in granting partial summary judgment in Riley’s favor on the remaining claims of GACE’s petition, arguing that OCGA 15-21-209, by imposing an annual assessment on adult entertainment establishments, violated constitutional due process and free speech protections. Although these appeals presented challenges to the constitutionality of state statutes, the Georgia Supreme Court did not address the merits of the appellant’s or the cross-appellant’s claims of error. Instead, the Court vacated the trial court’s summary judgment order and subsequent final judgment because the Court determined GACE’s action against Riley was moot when the trial court ruled. "Because Riley was no longer Revenue Commissioner at the time the trial court entered its summary judgment order and subsequent final judgment, an injunction against her in her individual capacity could not give GACE the relief it seeks. ... A court may not address the constitutionality of the tax at issue absent the presence of a proper defendant in the action." View "Riley v. Georgia Assn. of Club Executives., Inc." on Justia Law

In 2002-2004, Mohamad was an Atek shareholder with no direct role in its operations. Mohamad timely 2002 and 2003 tax returns, paying the taxes due on shareholder income of $85,010 and $77,813 respectively. In 2007, Mohamad sought a refund for overpaid taxes, claiming he did not receive the full amount of reported shareholder income on which he paid taxes but received only $20,000 before Atek was shut down. He filed amended tax returns deducting the unpaid income as bad debt. The IRS maintains that it never received an amended tax return for 2003 and, consequently, there is no record of the IRS disallowing the 2003 refund claim. In 2018, the Federal Circuit affirmed the dismissal of the 2002 and 2004 refund claims but vacated the dismissal of the 2003 claim and remanded to the Claims Court the questions: whether Mohamad filed a timely 2003 claim, and, if so, whether it was timely, and whether the IRS disallowed that claim.The Federal Circuit affirmed the Claims Court’s holding that IRC 7502, as interpreted by Treasury Regulation 301.7502–1(e)(2)(i), displaced the common-law mailbox rule for determining IRS filing dates and, alternatively, that dismissal was appropriate for failure to show that the tax refund claim was filed within the three-year limitations period, IRC 6511. The issue was not “business debt” so Mohamad was not entitled to a seven-year limitations period. View "Taha v. United States" on Justia Law

The Town of Sheldon appealed a hearing officer’s valuation of the subject property, a hydroelectric generating facility, as of April 1, 2019. It challenged the hearing officer’s application of the Income Approach to determine the property’s fair market value and his rejection of the Town’s Direct Sale Comparison approach. The Town essentially argued that the hearing officer’s findings were insufficient to support his conclusions. Finding no reversible error, the Vermont Supreme Court affirmed the valuation. View "Missisquoi Assoc. Hydro c/o Enel Green Power v. Town of Sheldon" on Justia Law