Justia Tax Law Opinion Summaries

The Supreme Court affirmed the order of the district court granting summary judgment in favor of the Board of County Commissioners of Laramie County and Laramie County Assessor Kenneth Guille (collectively, the County) and concluding that the durational residency requirement in Wyo. Stat. Ann. 39-13-105(a)(vi) is constitutional, holding that there was no error.Section 39-13-105(a)(vi) grants qualified veterans an annual property tax exemption if they have been Wyoming residents for at least three years. Plaintiff brought this action seeking a declaration that the durational residency requirement for the veteran tax exemption is unconstitutional. The district court granted summary judgment for the County. The Supreme Court affirmed, holding (1) section 39-13-105(a)(vi) does not infringe on Plaintiff's fundamental right to travel, and therefore, the rational basis test applies; and (2) the statute does not violate either the equal protection and privileges and immunities clauses of the Fourteenth Amendment or the constitutional right to interstate travel. View "Martin v. Board of County Commissioners of Laramie County" on Justia Law

The Supreme Court affirmed the decision of the tax court concluding that three clinics - Perham Clinic, Ottertail Clinic, and New York Mills Clinic - were not subject to property tax because they clinics were exempt under Minn. Stat. 447.31, subd. 6, holding that there was no error.The exemption at issue is provided for hospital districts. At issue on appeal was whether to classify the three medical clinics that were owned and operated by Perham Hospital District as taxable or exempt. Otter Tail County classified the clinics as commercial and thus subject to property tax, concluding that the tax exemption at issue was available to hospitals and not to clinics. After a trial, the tax court concluded that the clinics were exempt from tax under Minn. Stat. 447.31, subd. 6. The Supreme Court affirmed, holding that the tax court did not clearly err in finding that the District used the clinics to improve and run Perham Hospital during the tax years at issue. View "Perham Hospital District v. County of Otter Tail" on Justia Law

Under 26 U.S.C. 7345, if a court determines that a "seriously delinquent" certification was erroneous, it may order the Secretary of the Treasury to notify the Secretary of State of that fact. No other relief is authorized. The Second Circuit affirmed the tax court's dismissal in part insofar as it dismissed certain of petitioner's claims as moot, and vacated and remanded in part with instructions to the tax court court to dismiss all the remaining claims as moot insofar as it dismissed those claims for lack of statutory jurisdiction.In 2019, petitioner filed a petition with the tax court challenging the Commissioner's certification that she had a "seriously delinquent tax debt" under 26 U.S.C. 7345. While her challenge was pending, the Commissioner reversed the certification as erroneous and so notified the Secretary of State. In 2020, the tax court dismissed the petition, holding that it lacked jurisdiction to assess the validity of her underlying liability for the penalties the IRS had assessed against her, which formed the basis for her debt, and that her challenge to her certification was moot in light of the IRS's reversal. In this case, petitioner has received all the relief to which she is entitled by statute and, to the extent that the voluntary cessation doctrine exists primarily to keep parties from acting strategically to avoid judicial review, that is not a concern here. Finally, petitioner's challenge, under section 7345, to the underlying penalties assessed against her was moot at the time the tax court issued its order. View "Ruesch v. Commissioner of Internal Revenue" on Justia Law

The government accused Orrock of tax evasion for concealing income he received from the sale of a vacant lot that he controlled. Rather than report the sale proceeds on his personal tax return, Orrock belatedly disclosed the sale in the tax return for a partnership that he also controlled. In that return, he significantly underreported the sale proceeds.The Ninth Circuit affirmed his conviction for evading the assessment of taxes, 26 U.S.C. 7201, rejecting Orrock’s argument that the statute of limitations barred his conviction because it ran from the date he filed his false personal tax return, not from the later act of filing the partnership return. Acknowledging that some language in precedent may seemingly support that argument, the court clarified that the statute of limitations for evasion of assessment cases under section 7201 runs from the last act necessary to complete the offense, either a tax deficiency or the last affirmative act of evasion, whichever is later. The court aligned evasion of assessment cases with evasion of payment cases and joined all the other circuit courts that have addressed the issue. The indictment was filed within six years of Orrock’s last affirmative act of evasion, the filing of the partnership tax return, and was timely. View "United States v. Orrock" on Justia Law

Taxpayer conceded that he failed to report his foreign bank accounts to the IRS, but contested the IRS's determination that his violations were willful and argued for vacatur of his civil penalties. The district court held that taxpayer's violations were reckless, and therefore willful, in most of the tax years at issue. The district court also held that the IRS had miscalculated taxpayer's civil penalties and set them aside under the Administrative Procedure Act (APA), and then sua sponte calculated and imposed a fresh set of penalties.The Eleventh Circuit concluded that the district court applied the correct legal standard in analyzing whether taxpayer willfully violated the FBAR reporting requirements. The court explained that willful conduct in the FBAR context includes knowing and reckless conduct. Reckless conduct is action that objectively entails a high risk of harm, which is the standard the district court applied. Nevertheless, the court concluded that the civil penalties assessed by the IRS were unlawful under the APA and must be recalculated. In this case, the IRS erred by using the wrong foreign bank account balances to calculate taxpayer's penalties, contravening the relevant statute and regulations. The district court further erred by calculating and imposing new penalties instead of remanding to the agency, as required by the APA. The court explained that, even though the district court ultimately arrived at the same total penalty amount the IRS did originally, the IRS's original errors were not harmless. Accordingly, the court vacated and remanded for recalculation. View "United States v. Schwarzbaum" on Justia Law

The Fourth Circuit held that, after the Commissioner of Internal Revenue conceded that a taxpayer owed $0 and was entitled to the removal of any lien or levy, the United States Tax Court did not have jurisdiction to determine that the taxpayer overpaid and to order a refund. The court affirmed the district court's judgment, explaining that, when as here, the Commissioner has already conceded that a taxpayer has no tax liability and that the lien should be removed, any appeal to the Tax Court of the Appeals Office's determination as to the collection action is moot. The court stated that the phrase "underlying tax liability" does not provide the Tax Court jurisdiction over independent overpayment claims when the collection action no longer exists. View "McLane v. Commissioner of Internal Revenue" on Justia Law

The Supreme Court affirmed the order of the district court granting summary judgment in favor of Plaintiffs in their appeal from the order of the state tax administrator denying a refund with respect to a conveyance tax paid pursuant to a memorandum of agreement, holding that Plaintiffs were entitled to judgment as a matter of law.In this dispute surrounding the conveyance tax Plaintiffs paid to expediently transfer a mall and an associate parking garage, the district court concluded that the transfer of interest in a lease entered into by Plaintiffs was not subject to the conveyance tax under R.I. Gen. Laws 44-25-1(a) because of a tax exemption granted through action by the Rhode Island Economic Development Corporation. The district court granted final judgment in favor of Plaintiffs. The Supreme Court affirmed, holding that the district court did not err in granting summary judgment for Plaintiffs. View "Providence Place Group Limited, Partnership v. State ex rel. Division of Taxation" on Justia Law

Petitioner City of Berlin (City) appealed a New Hampshire Board of Tax and Land Appeals (BTLA) order determining that the City over-assessed respondent Public Service Company of New Hampshire d/b/a Eversource Energy (PSNH), for tax year 2017. The City challenged the BTLA’s decision to apply the New Hampshire Department of Revenue Administration (DRA) 2017 median equalization ratio to determine the proportionality of the City’s assessment of PSNH’s J. Brodie Smith hydroelectric facility (Smith Hydro). It argued the 2016 median equalization ratio — the most recent DRA ratio available at the time the City prepared the 2017 tax assessment — should have applied. Because the New Hampshire Supreme Court agreed, it reversed and remanded. View "Appeal of City of Berlin" on Justia Law

In 2018, Li filed a Form 211 with the IRS Whistleblower Office (WBO) alleging tax violations by the “target taxpayer,” seeking a monetary whistleblower award under 26 U.S.C. 7623(b). A WBO classifier reviewed Li’s Form 211 and the target taxpayer’s returns and concluded that Li’s allegations were “speculative and/or did not provide specific or credible information regarding tax underpayments or violations of internal revenue laws,” making Li ineligible for an award. The WBO did not forward Li’s form to an IRS examiner for any potential action against the target taxpayer.Li appealed to the Tax Court, which rejected the case on summary judgment. The court found that the WBO adequately performed its evaluative function and did not abuse its discretion by rejecting the form for an award. The D.C. Circuit remanded for dismissal of the case for lack of jurisdiction. The WBO rejected Li’s Form 211 for providing vague and speculative information it could not corroborate and did not forward it to an IRS examiner; the IRS did not take any action against the target taxpayer. There was no proceeding and no “award determination,” so the Tax Court had no jurisdiction to review the WBO’s threshold rejection of Li’s Form 211. View "Li v. Commissioner of Internal Revenue" on Justia Law

Polselli underpaid his federal taxes. The IRS has made formal assessments against him; the outstanding balance is over $2 million. While investigating assets to satisfy those liabilities, IRS Officer Bryant learned that Remo used entities to shield assets and that Remo “may have access to and use of” bank accounts held in the name of his wife, Hanna. Bryant served a summons on a bank, seeking account and financial records of Hanna “concerning” Remo. Remo was a client of the law firm Abraham & Rose; Bryant served the firm with a summons. The firm asserted attorney-client privilege and represented that it did not retain any of the requested documents. Bryant then issued identical summonses against banks, seeking any financial records of Abraham & Rose and a related law firm, “concerning” Remo. Bryant did not notify Hanna or the law firms of the bank summonses.After receiving notices from their banks, Hanna and the law firms petitioned to quash the summonses, alleging that the IRS failed properly to notify them under 26 U.S.C. 7609(a). The district court and Sixth Circuit agreed with the IRS that 7609(b)(2) and (h) waived sovereign immunity only for parties entitled to notice of the summonses and because the IRS was seeking the bank records “in aid of the collection” of Remo’s assessed liability, there was no entitlement to notice under 7609(c)(2)(D)(i). The district court, therefore, lacked subject-matter jurisdiction. View "Polselli v. United States Department of the Treasury" on Justia Law