Justia Tax Law Opinion Summaries

This case involves the constitutionality of a business and occupation (B&O) tax. In 2019, the Washington state legislature imposed an additional 1.2 percent B&O tax on financial institutions with a consolidated net income of at least $1 billion. The tax applied to any financial institution meeting this threshold regardless of whether it was physically located in Washington, and it was apportioned to income from Washington business activity. The Washington Supreme Court found that because the tax applied equally to in- and out-of-state institutions and was limited to Washington-related income, it did not discriminate against interstate commerce. The Court therefore reversed the trial court and upheld the constitutionality of the tax. View "Washington Bankers Ass'n v. Dep't of Revenue" on Justia Law

The School Board sought equitable relief from Crest Hill ordinances creating a real property tax increment financing (TIF) district and attendant redevelopment plan and project, pursuant to the Tax Increment Allocation Redevelopment Act (65 ILCS 5/11-74.4-1). The Board complained that Crest Hill violated the TIF Act by including parcels of realty in the redevelopment project area that were not contiguous. An excluded parcel is owned by the utility company, is located outside the incorporated boundaries of the municipality and the boundaries of the redevelopment project area, and physically separates the parcels the municipality found to be contiguous for purposes of including them in the redevelopment project area.The circuit court granted Crest Hill summary judgment. The Appellate Court reversed. The Illinois Supreme Court affirmed the reversal. A public-utility-right-of-way exception to the contiguity requirement for annexation, found in the Municipal Code (65 ILCS 5/7-1-1), does not apply as an exception to contiguity required by the TIF Act. This case does not involve contiguous properties running parallel and adjacent to each other in a reasonably substantial physical sense, wherein a public utility owns a right-of-way, or easement, to pass through one or both of the physically adjacent properties. View "Board of Education of Richland School District No. 88A v. City of Crest Hill" on Justia Law

The Supreme Court held that when a property's assessment increases by more than five percent over the previous year and the Indiana Board of Tax Review finds incorrect both parties' assessment, a statutory clause requires that the assessment reverts to the assessment for the prior tax year.In 2014, the Ross Township assessor in Lake County increased the tax assessment for Southlake Mall, Owned by Southlake Indiana, LLC. The new assessed values were more than double the assessments for the three prior tax years. The tax court affirmed in all respects except for a pair of reimbursements not at issue on appeal. Southlake appealed, arguing that the tax court erred by not applying the reversionary clause in Ind. Code 6-1.1-15-17.2(b). The Supreme Court reversed, holding that because neither party met its burden of proof, section 17.2's reversionary clause controlled, requiring that the assessments revert to the assessment for each prior tax year. View "Southlake Indiana LLC v. Lake County Assessor" on Justia Law

The Supreme Court held that a tax imposed solely upon a small number of billboard operators is a discriminatory tax that violates the rights to freedom of speech and a free press protected by the First Amendment to the United States Constitution.The City of Cincinnati imposed a tax on outdoor advertising signs, but through definitions and exemptions within the city's municipal code, the tax burdens feel predominantly on two billboard operators only. The two billboard operators (Appellants) sought a declaration that the tax violated their constitutional rights to free speech and a free press and requesting an injunction against the tax's enforcement. The trial court permanently enjoined the City from enforcing the tax. The court of appeals reversed in part. The Supreme Court reversed and reinstated the injunction, holding that the billboard tax did not survive strict scrutiny and therefore impermissibly infringed on Appellants' rights to free speech and a free press. View "Lamar Advantage GP Co. v. City of Cincinnati" on Justia Law

Petitioners, the Towns of Chester and Hudson (collectively, Towns), appealed a Board of Tax and Land Appeals (BTLA) order granting respondent Public Service Company of New Hampshire d/b/a Eversource Energy (PSNH) abatements of taxes assessed against its property located in Chester for tax years 2014 and 2016 and in Hudson for tax years 2014, 2015, and 2016. PSNH submitted an appraisal report prepared by its expert, Concentric Energy Advisors, Inc., setting forth the expert’s opinion of the aggregate fair market value of PSNH’s taxable property located in each municipality for each tax year. Two appraisers employed by the Towns’ expert, George E. Sansoucy, P.E., LLC (GES), used a substantially similar methodology in appraising the fair market value of the land interests. The BTLA compared the equalized market value to the aggregate assessed value for each municipality for each tax year. The BTLA concluded that an assessment was unreasonable and granted an abatement when it determined that the difference between the equalized market value and the aggregate assessed value was greater than five percent. The Towns argued that because both GES and Concentric relied upon the assessed value of PSNH’s land interests in reaching their opinions of fair market value, the values that the BTLA incorporated into its analysis “were already proportionate” and “should not have had the equalization ratio[s] applied to them.” The BTLA denied the Towns’ motion for reconsideration, noting that it based its calculations upon values that “were supplied by the [Towns] themselves in the stipulations agreed to by them” and adopting the arguments PSNH raised in its objection. Finding no reversible error in the BTLA's order, the New Hampshire Supreme Court affirmed. View "Appeal of Town of Chester et al." on Justia Law

Petitioner filed a petition with the U.S. Tax Court challenging the IRS's deficiency determination and the imposition of an accuracy-related penalty. The Tax Court issued a decision upholding in part the IRS's deficiency determination and imposition of the accuracy-related penalty.After the Fifth Circuit found that collateral estoppel does not bar the Commissioner from litigating this issue, the court concluded that the Tax Court did not clearly err in finding that petitioner is not entitled to deduct his 2014 legal expenses under 26 U.S.C. 162(a). In this case, petitioner has not carried his burden of proof to show that the origin of the claims underlying his litigation to recoup his trading agreement losses—the trading agreement venture—was related to his engagement in a trade or business within the meaning of section 162(a). The court also concluded that the Tax Court did not err in finding that petitioner cannot deduct his legal expenses incurred litigating to recover on his ex-wife's indebtedness as expenses for the production of income under 26 U.S.C. 212(1). However, the court concluded that petitioner is entitled to a reasonable cause and good faith defense for his understatement attributable to deducting his trading agreement legal fees under section 162(a) rather than section 212. View "Ray v. Commissioner of Internal Revenue" on Justia Law

This appeal challenged the validity of a possessory interest tax imposed by the County of Riverside, California (the county) upon lessees of federally owned land set aside for the Agua Caliente Band of Cahuilla Indians (Agua Caliente tribe) or its members. A subset of the more than 450 plaintiffs in this appeal also challenged the validity of voter-approved taxes funding the Desert Water Agency, Coachella Valley Water District, Palm Springs Unified School District, Palo Verde School District, and Desert Community College District. A small minority of the plaintiffs claimed to hold a possessory interest in land set aside for the Colorado River Indian tribe (CRIT), but they argued the challenged taxes were invalid for the same reasons asserted by the other plaintiffs. A trial court upheld the validity of the challenged taxes and plaintiffs’ appeal, arguing the challenged taxes were preempted by federal law. The question of whether the county could impose a possessory interest tax on lessees of land set aside for the Agua Caliente tribe or its members was the subject of repeated litigation in both federal and state courts, and the validity of the county’s possessory interest tax in this context has been repeatedly upheld. During the pendency of this appeal, the Court of Appeal issued its decision in Herpel v. County of Riverside, 45 Cal.App.5th 96 (2020), again upholding the validity of the county’s possessory interest tax under almost identical circumstances as those presented here. Although plaintiffs claim that the Herpel decision was not controlling because it did not consider many of the arguments presented here, the Court concluded the facts and arguments presented in this case did not materially differ from those already considered in Herpel, and plaintiffs did not present any persuasive reason for the Court to depart from that recent decision. View "Albrecht v. County of Riverside" on Justia Law

When Seminole Nursing Home, Inc. failed to pay $61,916.19 in federal employment taxes due for 2013, the IRS provided notice to Seminole of its intent to issue a levy to collect these unpaid taxes plus penalties and interest. Seminole challenged the validity of a Tax Code regulation that restricts economic hardship to individual taxpayers who fail to pay delinquent taxes after notice and demand. Seminole contended the economic-hardship exception should be applied to all taxpayers, including corporations. The United States Tax Court rejected the contention on the ground that the regulation was a reasonable interpretation of an ambiguous statute. The Home appealed, but agreeing with the Tax Court, the Tenth Circuit Court of Appeals affirmed. View "Seminole Nursing Home v. Comm'r of Internal Revenue" on Justia Law

The Supreme Court approved the decision of the Second District Court of Appeal invalidating the decision of a property appraiser assessing back taxes after discovering his purported clerical error in undervaluing and undertaxing a taxpayer's property, holding that the district court did not err.After discovering valuation errors, the property appraiser reassessed the taxpayer's property and sent her a bill for back taxes. The taxpayer brought this action to obtain aa judgment declaring the invalidity of the back-assessment. The trial court ruled against the taxpayer. The Second District reversed, concluding that the property had not "escaped taxation," which is a prerequisite for a property appraiser's authority to assess back taxes under Fla. Stat. 193.092(1). The Supreme Court affirmed, holding that section 193.092(1) did not give the property appraiser authority to back-assess the taxpayer's property. View "Furst v. DeFrances" on Justia Law

The Supreme Court affirmed the judgment of the Tax Court upholding that constitutionality of the Minnesota sales or use tax for aircraft purchases, holding that Minn. Const. art. X, 5 bars only the application of duplicative personal property taxes to aircraft.Article X, section 5 allows the Legislature to tax aircraft using the airspace over Minnesota "in lieu of all other taxes." Relators purchased aircraft outside of the state, paid the use tax, paid a separate annual tax imposed on aircraft, and then requested a refund of the use tax. When the refunds were denied, Relators sued the Department of Revenue, arguing that the use tax is unconstitutional under Minn. Const. art. X, 5. The Tax Court granted summary judgment for the Commissioner of Revenue. The Supreme Court affirmed, holding (1) the phrase "[a]ny such tax on aircraft shall be in lieu of all other taxes," as used in article X, section 5, prohibits only the application of duplicative personal property taxes on aircraft; and (2) the tax imposed on aircraft by Minn. Stat. 297A.82 does not violate article X, section 5. View "Sheridan v. Commissioner of Revenue" on Justia Law