Justia Tax Law Opinion Summaries

Sienega failed to file required California state income tax returns in the 1990-1992, and 1996 tax years. The IRS made upward adjustments in Sienega’s federal tax liability for those years. For each of the four tax years, Sienega’s counsel faxed to California's Franchise Tax Board (FTB) a cover sheet and IRS Form 4549-A, listing the adjustments to Sienega’s income, the corrected taxable income and tax liability, interest, and penalties. The FTB issued a notice of proposed assessment for each tax year; each stated that the FTB had “no record of receiving [Sienega’s] personal income tax return.” The notices proposed to assess state taxes based upon the federal audit report and specified that if Sienega disagreed with any of the calculations, he would need to submit a formal protest. Sienega did not file any belated tax returns or protests. The assessments became final in 2009. In 2014, Sienega filed a bankruptcy petition. The FTB filed am adversary complaint seeking to have Sienega’s outstanding state tax debts declared nondischargeable under 11 U.S.C. 523(a)(1)(B), based on the fact that he had not filed a formal state tax return in any of the relevant years. Sienega contended that he had filed state tax returns by faxing information about the adjustments.The bankruptcy court granted the FTB summary judgment. The Bankruptcy Appellate Panel and Ninth Circuit affirmed. The faxes did not constitute a return under the “hanging paragraph” in section 523(a) because the California state law process with which his faxes complied was not “similar” to 26 U.S.C. 6020(a), which authorizes the IRS to prepare a tax return when a taxpayer does not. View "Sienega v. State of California Franchise Tax Board" on Justia Law

A tax-sharing agreement between the County of San Benito and the City of Hollister requires the city to pay the county a fixed fee (Additional Amount) per residential unit constructed on land annexed into the city from the county during the period covered by that agreement. Plaintiff’s predecessor entered into an annexation agreement with the city, agreeing to comply with “all applicable provisions” of that tax sharing agreement. When the plaintiff purchased the annexed land and sought to develop it into subdivisions, the city informed the plaintiff that it was liable for the Additional Amount fees. Plaintiff paid the fees under protest, then sued, seeking a declaration of its rights and duties under various written instruments.The court of appeal affirmed a defense judgment. Plaintiff is contractually liable for the Additional Amount by the terms of the annexation agreement. Any challenge to the calculation of the Additional Amount is beyond the scope of a declaratory relief action and time-barred. The court rejected the plaintiff’s arguments that neither the annexation agreement nor the tax sharing agreement requires the plaintiff to pay the Additional Amount and that the fees violate the Mitigation Fee Act and federal constitutional constraints on development fees as monetary exactions. View "BMC Promise Way, LLC v. County of San Benito" on Justia Law

Plaintiffs challenged a surcharge that Long Beach imposes on its water and sewer customers by embedding the surcharge in the rates the Water Department charges for service. The surcharge funds are transferred from the Water Department to the city’s general fund, to be used for unrestricted general revenue purposes. The surcharge was approved by a majority of the city’s voters under California Constitution article XIII C. The plaintiffs argued that notwithstanding majority voter approval, the surcharge violates article XIII D, which prohibits a local agency from assessing a fee or charge “upon any parcel of property or upon any person as an incident of property ownership” unless the fee or charge satisfies enumerated requirements the city acknowledges were not met.The trial court found the surcharge unconstitutional and invalid. The court of appeal affirmed the judgment and an award of attorney fees. Because the surcharge qualifies as a “levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service,” it satisfies the definition of “fee” or “charge” in article XIII D and must comply with article XIII D, section 6(b)’s requirements regardless of voter approval. View "Lejins v. City of Long Beach" on Justia Law

Bittner non-willfully failed to report his interests in foreign bank accounts on annual FBAR forms, as required by the Bank Secrecy Act of 1970 (BSA), 31 U.S.C. 5314. The Act imposes no penalty for a non-willful violation if “such violation was due to reasonable cause.”The government assessed $2.72 million in civil penalties against him—$10,000 for each unreported account each year from 2007 to 2011. The district court found Bittner liable and denied his reasonable-cause defense but reduced the assessment to $50,000, holding that the $10,000 maximum penalty attaches to each failure to file an annual FBAR, not to each failure to report an account.The Fifth Circuit affirmed the denial of Bittner’s reasonable-cause defense. Bittner did not exercise ordinary business care and prudence in failing to fulfill his reporting obligations. In assessing reasonable cause, the most important factor is the extent of the taxpayer’s effort to assess his proper liability. The court reversed with respect to the application of the $10,000 penalty. Each failure to report a qualifying foreign account constitutes a separate reporting violation subject to penalty. The penalty applies on a per-account, not a per-form, basis. View "United States v. Bittner" on Justia Law

Verisign, Inc. claimed large net operating loss deductions on its 2015 and 2016 Delaware income tax returns, which reduced its bill to zero in both years. The Division of Revenue reviewed the returns and found that Verisign’s use of net operating losses violated a longstanding, but non-statutory, Division policy. Under the policy, a corporate taxpayer that filed its federal tax returns with a consolidated group was prohibited from claiming a net operating loss deduction in Delaware that exceeded the consolidated net operating loss deduction on the federal return in which it participated. The Division applied the policy, determined that Verisign had underreported its income, and assessed the company $1.7 million in unpaid taxes and fees. After Verisign’s administrative protest of the assessment was denied, it appealed to the Superior Court. The Superior Court held that the policy violated the Uniformity Clause of Article VIII, section 1 of the Delaware Constitution. The Delaware Supreme Court agreed with the Superior Court that the Division’s policy was invalid, but it affirmed on alternate grounds: the policy exceeded the authority granted to the Division by the General Assembly in 30 Del. C. sections 1901– 1903. As a result, the Court declined to reach Verisign’s constitutional claims. View "Director of Revenue v. Verisign, Inc." on Justia Law

Appellee Greenwood Gaming & Entertainment Inc. (“Greenwood”) operated Parx Casino (“Parx”), located in Bensalem, Pennsylvania. During 2014, as part of its efforts to encourage slot machine and table game play, Greenwood distributed to patrons of Parx who played its slot machines and table games various “promotions, giveaways and direct player development:” items given away included cash, department store gift cards, and items of personal property. Parx also gave away tickets to attend live concerts and entertainment performances. In 2016, Greenwood filed a petition for refund with the Board of Appeals of the Department of Revenue (“Board of Appeals”) for the calendar year 2014, contending that it was entitled under Section 1103 of the Pennsylvania Gaming Act to exclude from the taxable revenue attributable to its table games and slot machines the value of all cash and personal property it distributed to the players of those games. The Pennsylvania Supreme Court concluded that concert tickets were not services within the meaning of Section 1103, and so were excludible from these taxable revenues. View "Greenwood Gaming v. Pennsylvania" on Justia Law

The Supreme Court denied the writ of mandamus sought by Pike County Convention and Visitor's Bureau (Relator) against Pike County Board of Commissioners and the Pike County auditor ordering them to disburse to the bureau the proceedings of a "bed tax," a county-imposed sales tax on hotel lodging, holding that Relator was not entitled to the writ.In 2020, the county commissioners for Pike County enacted a resolutions that redirected the bureau's portion of the bed-tax proceeds to the chamber "acting as a Convention and Visitors Bureau, as defined by law," stating as justification the bureau's "financial mismanagement." The bureau brought this action seeking disbursement of bed-tax proceeds that had been withheld by the county. The Supreme Court denied the writ, holding that the county commissioners' action lay within their discretion. View "State ex rel. Pike County Convention & Visitor's Bureau v. Pike County Board of Commissioners" on Justia Law

The primary issue in this case was whether imposing sales tax on in-state lessors of business equipment to a title insurer violated Article XIII, section 28(f) of the California Constitution. The California Department of Tax and Fee Administration (Department) contended it did not because the lessor, not the title insurer/lessee, was the taxpayer. In the Department’s view, whether the lessee reimburses the lessor for its sales tax obligation was strictly a matter of contract and did not implicate the constitutional limit on taxing insurers. Conversely, First American Title Insurance Company (First American) pointed out that in equipment leases not involving an insurer, the state assesses a use tax, not a sales tax. But where, as here, the lessee is constitutionally exempt from paying use tax, Regulation 1660(c)(1) solved that problem by providing that the sales tax applied instead. First American argued that as a result, Regulation 1660(c)(1) imposed a de facto use tax on title insurers in violation of Article XIII, section 28(f). The trial court agreed with First American and ordered the Department to “remove, strike out and otherwise give no force or effect to that portion of Regulation 1660(c)” providing that when the lessee is not subject to use tax, the sales tax applies. The Court of Appeal reversed: “Article XIII, section 28(f) does not prohibit a sales tax whose legal incidence is on a lessor, even though the economic burden of the tax is ultimately borne by the title insurer/lessee.” View "First American Title Insurance Co. v. Cal. Dept. of Tax and Fee Admin." on Justia Law

The Supreme Court affirmed the final decree of the superior court foreclosing Respondent's right of reception for property sold at a tax sale, holding that there was no error.Petitioner purchased the property at issue in this case at a tax sale. More than one year after the tax sale and the recording of the deed, Petitioner filed a petition seeking to foreclose Respondent's right of redemption. The superior court held a hearing on the petition and determined that Respondent was in default and that Petitioner was entitled to its requested relief. The Supreme Court affirmed, holding that Respondent waived all of the arguments that he raised on appeal. View "E.T. Investments, LLC v. Riley" on Justia Law

In these consolidated appeals, the Supreme Court reversed two judgments of the superior court entered in favor of Petitioners, a group of taxpayers who challenged the City of Providence's tax assessments on their properties for tax years 2014 and 2015, holding that the trial justice erred.The trial justice ruled that a revaluation conducted in 2013 of property values was illegal and invalid and that the tax bills for the relevant tax years shall be revised based on the 2012 revaluation. The superior court entered judgment in favor of Petitioners in excess of $1.5 million. The Supreme Court reversed, holding that the trial justice improperly weighed the evidence and erred as a matter of law in finding that the 2013 revaluation was illegal, invalid, selective, arbitrary, and discriminatory. View "Athena Providence Place v. Pare" on Justia Law