Justia Tax Law Opinion Summaries

Tyler owned a Minneapolis condominium. She stopped paying her property taxes and accumulated a tax debt of $15,000. To satisfy the debt, Hennepin County foreclosed on Tyler’s property and sold it for $40,000. The county retained the net proceeds from the sale. Tyler sued the county, alleging that its retention of the surplus equity—the value of the condominium in excess of her $15,000 tax debt—constituted an unconstitutional taking, an unconstitutionally excessive fine, a violation of substantive due process, and unjust enrichment under state law.The Eighth Circuit affirmed the dismissal of her complaint. Minnesota’s statutory tax-forfeiture plan allocates the entire surplus to various entities with no distribution of net proceeds to the former landowner; the statute abrogates any common-law rule that gave a former landowner a property right to surplus equity. Nothing in the Constitution prevents the government from retaining the surplus where the record shows adequate steps were taken to notify the owners of the charges due and the foreclosure proceedings. View "Tyler v. Minnesota" on Justia Law

The Supreme Court affirmed the judgment of the circuit court holding that the Virginia Department of Taxation's corporation income tax assessments for the years in issue were erroneous and ordering the Department to refund Lorillard Tobacco Company the amount of its overpayments on the assessments for the years in issue, holding that there was no error.Lorillard filed an application for correction of erroneous assessment of corporation income taxes challenging the denial of its refund claims for certain assessments. The circuit court held that the Department's assessments were erroneous and ordered the Department to correct the assessments by refunding Lorillard the amount of its overpayments. The Supreme Court affirmed, holding that the circuit court did not err. View "Virginia Department of Taxation v. R.J. Reynolds Tobacco" on Justia Law

The Supreme Court affirmed the order of the district court denying Movants' motions to intervene in an action commenced by Verizon New England Inc. by way of appeal from a decision of the Tax Administrator for the State of Rhode Island, holding that the trial judge did not err.This appeal arose from Verizon's challenge to a final decision of the tax administrator that upheld an assessment of Verizon's tangible personal property (TPP) tax and denied Verizon's request for a lower assessment and a partial refund. Verizon appealed to the district court. The City of Pawtucket and the City of Cranston (collectively, Movants) moved to intervene as of right, claiming an interest in the TPP tax. The district court denied the motions. The Supreme Court affirmed, holding that the trial judge did not err or abuse his discretion in concluding that Movants failed to demonstrate that their interests were not adequately represented. View "Verizon New England Inc. v. Savage" on Justia Law

JetPay is a national company offering credit card processing services to merchants and banks. JetPay processed credit card payments for customers purchasing tickets from Direct Air, placing the funds in Direct Air's escrow account until the passengers took the flights. After Direct Air ended its operations and filed for bankruptcy, JetPay asserts that it was contractually obligated to use its own funds to reimburse thwarted passengers. JetPay timely filed with the IRS for a refund of the excise taxes it repaid to the consumers, but the IRS denied the claim.The Fifth Circuit affirmed the district court's adverse grant of summary judgment against JetPay, agreeing with the district court that the company was not a proper party to seek a refund from the IRS. JetPay did not pay the tax to the Secretary, and thus the court did not consider whether the company qualifies as "the person who collected the tax" under 26 U.S.C. 6415(a). In this case, JetPay is neither a customer required to pay the tax before taking a flight nor an airline required to collect it. The court also concluded that the economic burden test does not apply to JetPay's case. Finally, the court rejected JetPay's equitable subrogation claim. View "JetPay Corp. v. United States" on Justia Law

Barringer was the Executive Vice President and a Board member of J&R, a Virginia manufacturing company. By 2014, J&R was delinquent on filing and paying its 941 (employee withholding) taxes. Fearing personal liability, Barringer submitted a Hardship Withdrawal Form requesting $311,859.04 from her 401(k) account “[t]o prevent eviction or ... foreclosure of the mortgage on [her] principal residence.” Barringer deposited the funds into J&R's account to pay the delinquent taxes. Barringer’s mortgage balance was approximately $200,000 at the time; her payments were not delinquent. In 2016, J&R was again behind on its 941 taxes. Barringer requested a final distribution from her 401(k) account, falsely citing the end of her employment with J&R. Barringer again deposited the funds, plus some of her personal savings, into the J&R account. Instead of paying delinquent taxes, Barringer paid herself and vendors. After providing misinformation to federal agents, Barringer was convicted of willfully failing to collect and truthfully account for and pay taxes, 26 U.S.C. 7202, and making materially false statements to federal agents, 18 U.S.C. 1001(a)(2).The Fourth Circuit affirmed the convictions and 36-month sentence. Any error in the denial of Barringer’s pretrial motion to dismiss the wire fraud counts was harmless because the court subsequently granted her motion for a judgment of acquittal on those charges. Barringer’s false statements to investigators were “material to a matter within the jurisdiction of the agency.” The court upheld an abuse-of-trust enhancement under U.S.S.G. 3B1. View "United States v. Barringer" on Justia Law

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