Justia Tax Law Opinion Summaries

California cigarette tax regulations apply to inter-tribal sales of cigarettes by a federally chartered tribal corporation wholly owned by a federally recognized Indian tribe.The Ninth Circuit affirmed the district court's dismissal of an action brought by Big Sandy, a chartered tribal corporation wholly owned and controlled by the Big Sandy Rancheria of Western Mono Indians, seeking declaratory and injunctive relief against the Attorney General of California and the Director of the California Department of Tax and Fee Administration regarding taxes applied to inter-tribal sales of cigarettes.The panel concluded that the district court properly dismissed the Corporation's fifth cause of action on jurisdictional grounds pursuant to the Tax Injunction Act, 28 U.S.C. 1341, and properly declined to apply the Indian tribes exception to the Tax Injunction Act's jurisdictional bar. The panel also concluded that the district court properly dismissed the Corporation's remaining causes of action challenging the Directory Statute and California's licensing, reporting, and recordkeeping requirements in connection with cigarette distribution. In this case, the Corporation challenged the Directory Law on two grounds: (1) applying the challenged regulations to the Corporation's cigarette sales to tribal retailers on other reservations violates "principles of Indian tribal self-governance;" and (ii) federal regulation of "trade with Indians within Indian country" under the Indian Trader Statutes preempts the challenged regulations as applied to the Corporation's intertribal wholesale cigarette business. The panel concluded that the district court properly dismissed both theories for failure to state a claim. Accordingly, the panel affirmed the district court's dismissal for lack of subject matter jurisdiction and for failure to state a claim. View "Big Sandy Rancheria Enterprises v. Bonta" on Justia Law

An oil producer challenged an Alaska Department of Revenue advisory bulletin interpreting the oil tax code, arguing that the bulletin violated the Alaska Administrative Procedure Act (APA) and seeking a declaratory judgment that the interpretation was contrary to law. The Alaska Supreme Court determined the advisory bulletin could not be challenged under the APA because it was not a regulation, and that a declaratory judgment was not available because the tax dispute between the parties was not ripe. View "Exxon Mobil Corporation v. Alaska, Department of Revenue" on Justia Law

In this tax exemption case concerning privately owned real property in Galveston County the Supreme Court affirmed the judgment of the court of appeals affirming the district court's grant of summary judgment for the Galveston Central Appraisal District, holding that Odyssey 2020 Academy was not entitled to an exemption from the ad valorem tax.The property at issue was subleased by Odyssey, which used the property to operate a public charter school. Odyssey contractually agreed to pay the property owners' ad valorem taxes and requested that the Galveston Central Appraisal District exempt the property from taxation as "property owned by this state" under section 11.11(a) of the Tax Code. The District denied the exemption request. On review, the district court granted summary judgment for the District. The court of appeals affirmed. The Supreme Court affirmed, holding that, on these facts, the Constitution does not merit an exemption for Odyssey. View "Odyssey 2020 Academy, Inc. v. Galveston Central Appraisal District" on Justia Law

Plaintiff filed suit seeking a declaratory judgment that an IRS transfer certificate is not necessary to transfer ownership of her account with Fidelity. The district court sua sponte dismissed the action for lack of subject matter jurisdiction, concluding that such a declaration would necessarily involve a determination with respect to federal taxes.The Fifth Circuit affirmed, concluding that the Declaratory Judgment Act's federal-tax exception is a jurisdictional condition, requiring dismissal, rather than a nonjurisdictional condition, which may be waived. In this case, because the requested relief—declaring that plaintiff was not required to provide a transfer certificate to Fidelity—necessarily involves a determination with respect to federal taxes, the district court properly dismissed her action for lack of jurisdiction. View "Rivero v. Fidelity Investments, Inc." on Justia Law

The Eighth Circuit agreed with the tax court and held that taxpayers were not entitled to a new hearing because a revenue officer included notes and correspondence about a meeting with their attorney in the official file that was later made available to the settlement officer who reviewed the case. The court explained that, under the administrative-file rule, contemporaneous statements may permissibly be included in the file as long as they are pertinent to the revenue officer's consideration of the case, even if they would otherwise be prohibited. In this case, there is no dispute that the statements in the notes and letters were contemporaneous. Furthermore, the statements were not gratuitous. Therefore, taxpayers are not entitled to a new hearing. View "Stewart v. Commissioner of Internal Revenue" on Justia Law

The Supreme Court affirmed the decision of the court of appeals affirming the circuit court's determination that Southwest Airlines and AirTran Airways (collectively, Southwest) does not qualify for the "hub facility" property tax exemption, holding that Southwest was not entitled to the hub facility exemption.The hub facility provision exempts from property taxes all property of an air carrier company if the company operated at least forty-five common carrier departing flights each weekday in the prior year from a facility at a Wisconsin airport. On appeal, Southwest argued that, under a strict but reasonable interpretation of Wis. Stat. 70.11(42)(a)2.a, it was entitled to the property tax exemption for both its 2013 and 2014 tax assessments. The Supreme Court affirmed, holding that because Southwest did not operate forty-five departing flights on each weekday without exception, Southwest was not entitled to the hub facility exemption for either the 2013 or 2014 property tax assessment. View "Southwest Airlines Co. v. State Department of Revenue" on Justia Law

The Ninth Circuit joined its sister circuits in concluding that, when Congress expressly departs from substance-over-form principles, the Commissioner may not invoke those principles in a way that would directly reverse that congressional judgment.The panel reversed the tax court's decision in favor of the Commissioner on a petition for redetermination of federal excise tax deficiency where petitioners established a Foreign Sales Corporation to reduce the tax paid on income that was then distributed as dividends to Roth Individual Retirement Accounts (IRAs). The panel concluded that the unusual statutory provisions at issue here expressly elevated form over substance in the relevant respects, and thus the tax court erred by invoking substance-over-form principles to effectively reverse that congressional judgment and to disallow what the statute plainly allowed. View "Mazzei v. Commissioner of Internal Revenue" on Justia Law

The Fifth Circuit affirmed the judgment of the tax court and held that MoneyGram, a global payment services company, is not a "bank" under the tax code, 26 U.S.C. 581, because customers do not give MoneyGram money for safekeeping, which is the most basic feature of a bank. The court explained that purchasers of money orders are not placing funds with MoneyGram for safekeeping. Nor are the financial institutions that use MoneyGram to process official checks doing so for the purpose of safekeeping. In this case, examining the substance of MoneyGram's business confirms how the company has long described itself on its tax returns: as a nondepository institution. Therefore, without deposits, MoneyGram cannot be a bank. View "MoneyGram International, Inc. v. Commissioner of Internal Revenue" on Justia Law

Verizon California Inc.’s (Verizon) petitioned the California State Board of Equalization’s (Board) to reduce its assessments for the tax years 2008 through 2012. Verizon paid the taxes levied by the counties for each year based on the Board-assessed values set forth in its petitions. Verizon then joined with Board staff to seek approval from the Board of joint recommendations to lower the assessed values of its property set forth in its petitions. The Board approved the joint recommendations. Verizon then filed actions for refunds for the years 2008 through 2012 arguing that the Board should have adopted the valuations proposed in its petitions. The trial court consolidated the actions. The Board moved for summary adjudication of the claims on the ground the court lacked jurisdiction because in approving the Verizon/Board staff recommendations for reduced valuations Verizon failed to exhaust its administrative remedies with respect to the valuations it claimed in its petitions. The trial court granted the motion for summary adjudication of the consolidated actions based on the Board’s approvals of the parties’ joint recommendations for a reduction in assessed valuations. On this basis, the trial court concluded: “Because of the mutually agreed recommendation[s] on value, no disputed issues were presented to the Board for [tax years] 2008 through 2012. In each of those five years, the Board adopted the revised value that had been jointly recommended by Verizon and [the Board] staff, reducing Verizon’s tax basis by over $1.1 billion in the aggregate. [¶] . . .Verizon cannot ask the Board to adopt a jointly presented reduction in value, receive the agreed reduction, and then turn around and sue for a lower value than it asked the Board to adopt.” Verizon timely appealed the trial court’s decision, arguing again that the Board should have adopted the valuations it proposed in its petitions to the Board to reassess its property. The Court of Appeal determined the statutory ground of the actions required a “dispute” regarding the Board’s assessments of the property. Finding none, the Court affirmed the trial court’s judgment. View "Verizon California v. Board of Equalization" on Justia Law

Two commercial fishing companies caught and processed fish in the Exclusive Economic Zone off the Alaska coast, but outside Alaska’s territorial waters. Their vessels arrived at Alaska ports where they could transfer processed fish directly to foreign-bound cargo vessels or transfer processed fish to shore for storage and later loading on cargo vessels. Because the companies did not process fish in Alaska, they did not pay the taxes imposed on other processing vessels operating out of Alaskan ports, but their fisheries business activities were subject to a state “landing tax.” The fishing companies argued that this landing tax violated the Import-Export and Tonnage Clauses of the United States Constitution and 33 U.S.C. section 5(b). The Alaska Supreme Court found: (1) the tax was imposed before the fish product entered the stream of export commerce; (2) the tax did not constitute an “impost or duty;” and (3) the tax therefore did not violate the Import-Export Clause. Furthermore, the Supreme Court concluded the tax was not imposed against the companies’ vessels in violation of the Tonnage Clause or 33 U.S.C. (b). View "Alaska Dept. of Revenue v. North Pacific Fishing, Inc. et al." on Justia Law