Justia Tax Law Opinion Summaries

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

Guam’s Department of Revenue concluded that Guerrero owes approximately $3.7 million in unpaid taxes because he did not pay his full tax liability for the tax years 1999, 2000, 2001, and 2002 after belatedly filing his returns for these years. The parties dispute when the Department assessed Guerrero’s taxes because the official records are missing, likely due to water, mold, and termite damage at the storage facility. Guam filed tax liens on real property that Guerrero owns with his former spouse in joint tenancy, then filed suit to collect Guerrero’s tax deficiencies through foreclosure. Guerrero argued that the Department cannot prove that it timely assessed his taxes, timely levied the tax liens, nor timely commenced its action, 26 U.S.C. 6501(a), 6502(a)(1). Guam invoked the presumption of regularity based on the Department’s standard procedure and internal documents to establish that Guam acted within the statute of limitations.The district court partially ruled in favor of Guam, on the issues of the presumption of regularity and the timeliness of the Department’s actions. The Ninth Circuit affirmed. The presumption of regularity applied and Guerrero failed to rebut it. Guam established the timeliness of its assessment of Guerrero’s unpaid taxes, its filing of the tax lien, and its commencement of this action through the internal documents and testimony from the Department’s employees. View "Government of Guam v. Guerrero" on Justia Law

The Supreme Court remanded this property valuation matter for further proceedings, holding that the use of a now-defunct tax appeal form challenging assessments to certain homeowners' association lands for the years 2001, 2002 and 2003 was proper.Petitioners, homeowners' associations located in Marion County, filed petitions for correction of an error (Form 133) alleging that property tax assessments from the years 2001 through 2003 were illegal because certain common areas of the properties were so encumbered by restrictions that the land had no value. The Marion County Property Tax Assessment Board of Appeals denied the forms. The Tax Court affirmed in part and reversed in part, holding in part that the HOAs' claim was not proper for a Form 133. The Supreme Court reversed in part and summarily affirmed in part, holding that Form 133 was a proper avenue to challenge the application of a discount to common land within the HOAs' property. View "Muir Woods Section One Ass'n Inc. v. Marion County Assessor" on Justia Law

In 2011-2013, rather than retiring many older semi-tractors and purchasing all new replacements, Schneider bought 61 new tractors, and overhauled 982 existing tractors using new and refurbished parts packaged together in “glider kits.” Schneider’s older tractors were lighter and realized better fuel economy than newer models. Schneider’s tax advisors counseled that Schneider would have to pay the 12% excise tax (26 U.S.C. 4051) if it bought new tractors but a “safe harbor” (4052) permits companies to repair or modify tractors they already own, which have already been taxed. Each glider kit contained a cab, chassis, radiator, front axle, front suspension, front wheels, front tires, front brakes, brake system, and trailer connections; 912 were “powered glider kits” and included a remanufactured engine. The transmission, driveline, rear axle, rear suspension, and rear-wheel hubs—and sometimes the fuel tank, fifth wheel, and rear brakes, were generally reused.The IRS concluded that only six tractors qualified for the safe harbor. Schneider paid $9,387,403.73 plus interest, thensought a refund, which the IRS denied. The Seventh Circuit reversed. That Schneider elected to refurbish its tractors using powered glider kits does not disqualify those tractors from the safe harbor, which does not contemplate any measurement apart from this 75% test. The court remanded for a determination of whether the cost of Schneider’s refurbishments exceeded 75% of the “retail price of a comparable new article.” View "Schneider National Leasing Inc v. United States" on Justia Law

The Supreme Court affirmed the decision of the court of appeals affirmed the orders of the district court dismissing Appellant's constitutional claims asserting discrimination in the tax assessments of its properties, holding that Appellants' claims were time-barred.Appellant, Walmart, Inc., owned real property in two counties (the Counties). In this action, Walmart claimed that for tax purposes the Counties overvalued the properties or unfairly assessed the properties' value as compared with other similarly situated properties. Appellant asserted that the Counties' international discrimination in their tax assessments violated the Equal Protection Clause and Appellant's right to uniformity in taxation. The district court dismissed the claims as time-barred, and the court of appeals affirmed. The Supreme Court affirmed, holding that Appellant's claims were subject to the limitations period of Minn. Stat. Ann. Chapter 278 and were time-barred. View "Walmart Inc. v. Winona County" on Justia Law

The Eleventh Circuit affirmed the tax court's memorandum opinion upholding adjustments contained in five notices of deficiencies (NODs) issued by the IRS against petitioner for the tax years 1999, 2000, and 2001, as well as the tax court's adoption of the Commissioner's computations under Tax Court Rule 155 and its denial of several of petitioner's post-trial motions.In regard to jurisdiction issues, the court concluded that the Commissioner did not need to comply with the requirement of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) that it issue Final Partnership Administrative Adjustment (FPAAs) to GG Capital to notify petitioner of adjustments to partnership items. The court explained that GG Capital's attempted TEFRA election on its 1997 return was not valid; GG Capital was required to attach a statement signed by all of its partners in order to elect into the TEFRA procedures under I.R.C. 6231(a)(1)(B)(ii); but GG Capital did not do so for either 2000 or 2001 and was therefore not subject to the TEFRA regime. The court also concluded that the tax court did not err in finding the 2004 NOD was timely mailed on October 15, 2004 adjustments; because the limitations period for making assessments against petitioner related to the converted items was suspended by virtue of the pendency of the AD Global case, the 2009 NOD was timely as to the 1999 tax year; and the court rejected petitioner's remaining jurisdictional claims.The court concluded that the tax court properly upheld the Commissioner's adjustments to the NODs. In this case, the court declined to look behind the 2009 NODs in assessing their validity; the tax court did not fail to impose the proper burden of proof and the tax court did not abuse its discretion in denying the motion to reopen the record to allow petitioner to introduce new evidence so late into the action; and there was no error in the tax court's post-trial rulings. View "Greenberg v. Commissioner of Internal Revenue" on Justia Law

The Supreme Court held that the direct funding provision of Proposition 208 did not fall within the constitutional definition of grants in Ariz. Const. art. IX, 21 (the Education Expenditure Clause) and was therefore unconstitutional to the extent it mandated expanding tax revenues in violation of the Education Expenditure Clause.Proposition 208 was a citizens' initiative passed in 2020 imposing an income tax purchase on high-income Arizona taxpayers to provide direct funding to schools. Petitioners brought this action challenging the constitutionality of the tax and the initiative's characterization of the direct funding as "grants" exempt from the Education Expenditure Clause and seeking to enjoin the collection of that tax pending the resolution of their challenge. The Supreme Court held (1) because Ariz. Rev. Stat. 15-1285 incorrectly characterizes the allocated monies in order to exempt Proposition 208 from the Education Expenditure Clause, it is facially unconstitutional; (2) the remaining non-revenue related provisions of Proposition 208 are not severable; (3) this Court declines to enjoin the imposition of the tax pending further proceedings; and (4) Proposition 208 does not violate the Tax Enactment Clause of the Arizona Constitution, and therefore, the bicameralism, presentment, and supermajority requirements found therein are inapplicable. View "Fann v. State" on Justia Law