Justia Tax Law Opinion Summaries

The Supreme Court affirmed the decision of the Board of Tax Appeals (BOTA) upholding county appraisers' application of the Kansas Oil and Gas Appraisal Guide developed by the Kansas Department of Revenue's Property Valuation Division for valuations given for the 2016 tax year to the working interest of River Rock Energy Co. in 203 gas wells and related equipment, holding that the BOTA did not err.In its dispute, River Rock argued that the Guide produced inflated values for its working gas leases by capping operating expense allowances to arrived at a "working interest minimum lease value." The BOTA upheld the county appraisers' application of the Guide. The court of appeals affirmed in part and reversed in part, holding that the Guide overvalued River Rock's wells. The Supreme Court affirmed in part and reversed in part, holding (1) the county appraisers correctly applied the Guide; and (2) the court of appeals correctly decided that it had jurisdiction to entertain River Rock's challenge to BOTA's order refusing to abate filing fees. View "In re Tax Appeal of River Rock Energy Co." on Justia Law

In this dispute between a municipality seeking tax setoffs and a county that refused to grant them, the Court of Appeals affirmed the conclusion of the court of special appeals that Md. Code Tax-Prop. ** 6-305 and 6-306 do not fall within a category of constitutionally prohibited legislation, holding that the provisions are permissible within the scope of article XI-E, 1 of the Maryland Constitution.Ocean City, the second largest municipality in Worcester County, repeatedly requested tax setoffs for the money that the city spent on governmental services, such as fire, police, and ambulance services. In lieu of granting Ocean City's requested tax setoffs, Worcester County provided discretionary funding to the city in the form of annual grants. Ocean City then filed this action seeking a declaratory judgment that TP 6-305 and 6-305, which granted the county the ability to deny municipal tax setoff requests, were unconstitutional as violating Md. Const. Art. XI-E, 1. The circuit court granted summary judgment in favor of Worcester County. The court of special appeals affirmed. The Court of Appeals affirmed, holding that TP 6-305 and 6-306 are constitutional within the language of Article XI-E, Section 1. View "Ocean City v. Worcester County" on Justia Law

The Ninth Circuit affirmed the district court's preliminary injunction in favor of BNSF in an action brought by BNSF, alleging that several California counties are taxing railroad property at a higher rate than the rate applicable to commercial and industrial property in the same assessment jurisdiction, in violation of the Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. 11501(b)(3).As a preliminary matter, the panel held that the district court had jurisdiction over the action under section 11501(c), and the panel has jurisdiction under 28 U.S.C. 1292(a). The panel concluded that the district court applied the correct preliminary injunction standard under section 11501, which does not require courts to consider traditional equitable factors. Rather, binding circuit precedent establishes that a railroad is entitled to a preliminary injunction if its evidence demonstrates reasonable cause to believe that a violation of section 11501 has been, or is about to be committed. The panel also concluded that the district court properly analyzed BNSF's tax rate under the Trailer Train framework, and concluded that the counties were overtaxing BNSF's property in violation of section 11501(b)(3). The court suggested, as proceedings continue, that the district court consider in the first instance whether the State or the county is the proper assessment jurisdiction. View "BNSF Railway Co. v. County of Alameda" on Justia Law

The Supreme Court affirmed the decision of the Tax Commission affirming the deficiency assessment imposed by the Nebraska Department of Revenue upon a Nebraska corporation, which purchased an interest in an airplane from a Kansas seller without paying Nebraska sales or use taxes, holding that there was no error.The Department issued a notice of deficiency determination to the corporation in the total amount of $161,373. The corporation appealed, claiming that no taxes were owed because the airplane purchase was a "sale for resale." The Tax Commission found that the purchase was not a sale for resale and affirmed the Department's deficiency assessment. The district court affirmed. The Supreme Court affirmed, holding that the district court's finding that the corporation's airplane purchase did not qualify as a nontaxable sale for resale was supported by sufficient competent evidence and was not contrary to law. View "Big Blue Express v. Nebraska Department of Revenue" on Justia Law

The estate of Helene Evans, a deceased Oregon resident, challenged the Oregon Tax Court’s determination that the Department of Revenue lawfully included in Evans’s taxable Oregon estate the principal assets of a Montana trust, of which Evans had been the income beneficiary. Although Evans had a right to receive income generated by those assets during her lifetime and potentially had the right to tap the assets themselves, the estate claimed she had not owned, and did not have control over the assets. Under those circumstances, plaintiff argued, Oregon did not have the kind of connection to the trust assets that the Due Process Clause of the Fourteenth Amendment to the United States Constitution required for a state to impose a tax on a person, property, or transaction. The Oregon Supreme Court concluded that Oregon’s imposition of its estate tax on the trust assets in this case comported with the requirements of due process. It, therefore, affirmed the judgment of the Tax Court. View "Estate of Evans v. Dept. of Rev." on Justia Law

Taxpayers for Michigan Constitutional Government and several individuals brought an original action to the Court of Appeals against the state of Michigan; the Department of Technology, Management, and Budget; and the Office of the Auditor General to enforce section 30 of the Headlee Amendment, Const 1963, art 9, which prohibited the state from reducing its budget for total state spending paid to all units of local government, taken as a group, below that proportion in effect in fiscal year 1978–1979. Plaintiffs: (Count I) alleged the state violated section 30 by classifying as state spending paid to local government monies paid to school districts pursuant to Proposal A, Const 1963, art 9, section 11; (Count II) alleged the same assertion as to monies paid to public school academies (PSAs) pursuant to Proposal A and MCL 380.501(1); (Count III) alleged the state improperly classified as section 30 state spending those funds paid to maintain trunk-line roads; and (Count IV) sought a determination that state funds directed to local governments for new state mandates could not be counted toward the proportion of state funds required by section 30. The Court of Appeal dismissed Count III without prejudice upon stipulation of the parties; all parties moved for summary judgment on the remaining claims. The appellate court granted the state defendants motion on Counts I and II; plaintiffs' motion was granted as to Count IV. Finally, the court granted plaintiffs mandamus relief and directed the state to comply with reporting requirements found in MCL 21.235(3) and MCL 21.241. The Michigan Supreme Court concluded the appellate court erred when it held that PSAs were “school districts” as the term was used in the Headlee Amendment. Further, the Court held PSAs were themselves not a “political subdivision of the state” as voters would have understood the term when the Headlee Amendment was ratified. The Court thus reversed the conclusion reached in Part III(C) of the Court of Appeals opinion that PSAs were “school districts” and remanded to the Court of Appeals for its reconsideration of this issue. The Supreme Court vacated the panel’s grant of mandamus in Part III(E), and directed the Court of Appeals to provide further explanation of its decision to grant this extraordinary remedy. View "Taxpayers for Michigan Constitutional Govt. v. Michigan" on Justia Law

Joseph Wilson, the sole owner and beneficiary of a foreign trust, filed his returns for tax year 2007 late, the IRS assessed a 35% penalty that applies to beneficiaries of foreign trusts, and Wilson paid the penalty. After his death, plaintiffs filed suit on behalf of Wilson's estate for a refund, arguing that the IRS should have imposed only a 5% penalty that applies to owners of foreign trusts. The district court granted partial summary judgment in favor of plaintiffs.The Second Circuit vacated the district court's judgment, holding that when an individual is both the sole owner and beneficiary of a foreign trust and fails to timely report distributions she received from the trust, the government has the authority under the Internal Revenue Code to impose a 35% penalty. Accordingly, the court remanded for further proceedings. The court denied motions for leave to file a supplemental appendix that includes documents outside the record on appeal and for leave to file a sur-reply brief as moot. View "Wilson v. United States" on Justia Law

Proposition 13 and Proposition 218 amended the California Constitution to require that any special tax adopted by a local government entity take effect only if approved by a two-thirds vote of the electorate. The court of appeal recently interpreted these constitutional provisions “as coexisting with, not displacing, the people’s power to enact initiatives by majority vote” and held that a measure placed on the ballot as a local citizens’ initiative requires a majority, not a supermajority, vote to pass.Sixty percent of San Franciscans voting on Proposition G— an initiative entitled “Parcel Tax for San Francisco Unified School District”—approved the measure. San Francisco filed suit to establish that Proposition G was valid. The complaint against “All Persons Interested” was answered by Nowak, who argued that Proposition G is invalid because it failed to garner the two-thirds vote required by Proposition 13 and Proposition 218. Nowak also contended that a provision of Proposition 218 unique to parcel taxes, (art. XIII D, 3(a)), requires a two-thirds vote of the electorate to enact Proposition G. Nowak sought to distinguish the earlier decisions on the grounds that Proposition G was conceived and promoted by local government officials and was not a valid citizens’ initiative. The court of appeal rejected all of Nowak’s arguments, standing by its earlier decisions. View "City & County of San Francisco v. All Persons Interested in Matter of Prop. G" on Justia Law

The federal government sought to encourage delinquent taxpayers to pay up: by threatening to withhold or revoke their passports until their tax delinquency was resolved. No nexus between international travel and the tax delinquency needed to be shown; the passport revocation served only to incentivize repayment of the tax debt. A challenge to the constitutionality of this approach was a matter of first impression; appellant Jeffrey Maehr was one such taxpayer whose passport was revoked for non-payment of taxes. He argued the revocation violated substantive due process, ran afoul of principles announced in the Privileges and Immunities clauses, and contradicted caselaw concerning the common law principle of ne exeat republica. The district court rejected these challenges. Finding no reversible error, the Tenth Circuit affirmed the district court on each of these arguments. View "Maehr v. U.S. Department of State" on Justia Law

The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) dismissing these appeals of final determinations of the tax commissioner on the grounds that they were untimely, holding that Am.Sub.H.B. No. 197 tolled the time limitation for filing the appeals, and Appellant filed the notices of appeal with both the tax commissioner and the BTA during the tolling period.On April 29, 2020, the tax commissioner journalized his final determinations upholding the tax assessments in each case. Service was completed by certified mail on May 4, 2020. Appellant delivered a notice of appeal to the tax department on June 26, 2020. The next day Appellant filed the notices of appeal with the BTA. The BTA dismissed both appeals as untimely. The Supreme Court reversed, holding that section 22(A)(1)(c) of H.B. 197 tolled Appellant's appeal period and that Appellant's appeals were timely filed. View "Chapman Enterprises, Inc. v. McClain" on Justia Law