Justia Tax Law Opinion Summaries

Proposition 218, the Right to Vote on Taxes Act, generally required local governments obtain voter approval prior to imposing taxes. Plaintiffs Jess Willard Mahon, Jr. and Allan Randall brought this certified class action against the City of San Diego (City) claiming that the City violated Proposition 218 by imposing an illegal tax to fund the City’s undergrounding program. Specifically, plaintiffs contended the City violated Proposition 218 through the adoption of an ordinance that amended a franchise agreement between the City and the San Diego Gas & Electric Company (SDG&E). The ordinance, together with a related memorandum of understanding, further specifies that part of the money to fund the undergrounding budget will be collected by SDG&E through a 3.53 percent surcharge on ratepayers in the City that will be remitted to the City for use on undergrounding (Undergrounding Surcharge). Plaintiffs claim that the surcharge is a tax. Plaintiffs further claim that the surcharge violates Proposition 218 because it was never approved by the electorate. Plaintiffs note that the City has imposed more than 200 million dollars in charges pursuant to the Undergrounding Surcharge during the class period. Through this action, plaintiffs seek a refund of those amounts, among other forms of relief. The City moved for summary judgment, which the trial court granted on two grounds: (1) the Undergrounding Surcharge constituted compensation for franchise rights and thus was not a tax; alternatively, (2) the Undergrounding Surcharge was a valid regulatory fee and not a tax. After review, the Court of Appeal concluded the trial court properly granted the City’s motion for summary on the ground that the Undergrounding Surcharge was compensation validly given in exchange for franchise rights and thus, was not a tax subject to voter approval. View "Mahon v. City of San Diego" on Justia Law

In this tax appeal, the Supreme Court affirmed in part and reversed in part the final order of the circuit court determining that certain purchases of tangible personal property and services made by Antero Resources Corporation did not qualify for the direct use exemption under W. Va. Code 9(b)(2) and 11-15A-3(a)(2) (the direct use exemption), holding that Antero was entitled to the direct use exemption for certain purchases and services.The office of tax appeals reimposed a sale and use tax assessment against Antero for purchases and rentals of certain personal property and services. The circuit court reversed, determining that because certain purchases of tangible personal property and services made by Antero were not directly used in its natural resource production, they did not qualify for the direct use exemption. The Supreme Court reversed in part, holding that Antero (1) was entitled to the direct use exemption for crew quarters and related equipment, portable toils, sewage systems, related water systems, and septic cleaning charges; and (2) was not entitled to the exemption for the rentals of trash trailers and waste receptacles. View "Antero Resources Corp. v. Steager" on Justia Law

The Ninth Circuit reversed the district court's determination that Shaun Allahyari's alleged security interest in property owned by his son, Komron Allahyari, a tax delinquent, was not entitled to priority over later-recorded federal tax liens. First, the panel concluded that the district court erred: (1) by holding that the deed of trust between Shaun and Komron recorded on July 26, 2005 was not entitled to priority over the later-recorded federal tax liens under local law; the 2005 Deed of Trust is protected under Washington law; and (2) by failing to consider whether past consideration is sufficient to support an agreement giving rise to a security interest under Washington law.The panel also concluded that the district court applied the incorrect standard of proof to its finding under Washington's Fraudulent Transfer Act. Finally, the panel concluded that, because 26 U.S.C. 7403(a) authorizes the United States to "subject any property, of whatever nature, of the delinquent, or in which [the delinquent] has any right, title, or interest, to the payment of such tax or liability," the United States may assert any affirmative defenses that would be available to the delinquent—including that the statute of limitations has run on payments due to senior liens. Accordingly, the panel reversed and remanded for reconsideration. View "United States v. Allahyari" on Justia Law

Appellants, a medical doctor and the subchapter S Corporation for which he works, filed suit against the IRS due to penalties it assessed against them for their failure to inform the IRS about questionable deductions the Corporation took for contributions it made for life insurance benefits. The district court granted summary judgment to the IRS.The Eleventh Circuit affirmed the district court's decision determining that the IRS was correct to issue penalties based on the ground that appellants did not file the required notice. In this case, the multi-employer welfare benefit plan is at least substantially similar to the type of plans that the IRS has indicated do not qualify for the exemption from IRC 419 and the corresponding IRC 419A(f)(6) deduction. Therefore, the district court correctly decided to grant summary judgment to the IRS. View "Turnham v. Commissioner" on Justia Law

The Supreme Court affirmed the decision of the court of appeals affirming the district court's grant of summary judgment to Respondent on Appellant's adverse possession claim, holding that a claim of adverse possession to a portion of a separately assessed parcel requires the adverse claimant to pay taxes for at least five consecutive years unless a statutory exemption under Minn. Stat. 541.02 paragraph 3 applies.Appellant asserted adverse possession over a portion of two separately assessed parcels owned by Respondent. The district court ruled against Appellant's claim for both parcels. The court of appeals affirmed the court's grant of summary judgment to Defendant on Appellant's adverse possession claim for the west parcel but reversed the grant of summary judgment to Respondent as to the east parcel on the grounds that the percentage claimed did not trigger the tax payment requirement in section 541.02. Appellant appealed the court of appeals' decision that his adverse possession claim to fifty-two percent of the west parcel failed, arguing that the statute requires tax payment only for a claim to an entire separately assessed parcel. The Supreme Court affirmed, holding that the plain language of section 541.02 requires tax payment on a portion of a parcel. View "St. Paul Park Refining Co. LLC v. Domeier" on Justia Law

This appeal arose from a consolidated cases filed by plaintiff Northern New England Telephone Operations, LLC d/b/a FairPoint Communications-NNE (FairPoint), against several New Hampshire towns and cities, asserting claims of ultra vires taxation and disproportionate taxation. As “representative municipalities” in the “test cases” established for this litigation, defendants, the Town of Durham and the Town of Hanover (Towns), appealed two superior court orders challenging: (1) the grant of summary judgment on the ultra vires ruling because they contended the agreements authorizing such use or occupation did not satisfy the requirements of RSA 72:23, I(b) (2012) (amended 2017, 2018, 2020); and (2) the superior court’s decision after trial, arguing that the court committed several errors in concluding that FairPoint was entitled to abatements of its tax assessments from the Town of Durham and the Town of Hanover for tax years 2013 and 2011 respectively. The New Hampshire Supreme Court agreed with the Towns that the superior court erred with respect to the tax on the value of FairPoint's use or occupation of municipal rights-of-way was ultra vires. FairPoint’s use or occupation of municipal rights-of-way was not pursuant to a perpetual lease that gave rise to an independently taxable property interest; FairPoint met its burden to prove it was taxed disproportionately by the Towns. Judgment was affirmed in part, reversed in part and consequently abating the two tax assessments at issue. View "Northern New England Telephone Operations, LLC d/b/a FairPoint Communications - NNE v. Town of Acworth" on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment in favor of TriNet in an action brought by TriNet, as the successor-in-interest of Gevity, a professional employer organization (PEO). Gevity claimed tax credits from 2004 to 2009 based on its payment of FICA taxes on the tip income of its client companies' employees. The IRS asserts that such credits were not allowed because Gevity was not the "employer" entitled to claim the credits as that term is defined in 26 U.S.C. 3401(d). The court concluded that, under the statutes applicable to the period at issue, Gevity was the statutory employer entitled to claim the FICA tip credit because it—not its client companies—controlled the payment of the wages subject to withholding. View "TriNet Group, Inc. v. United States" on Justia Law

In this tax refund case centering on Arkansas's excise tax on tobacco products other than cigarettes the Supreme Court affirmed the judgment of the circuit court granting summary judgment for the Director of the Arkansas Department of Finance and Administration (DF&A) and dismissing Plaintiffs' claims for refund, holding that the circuit court did not err in denying Plaintiffs' motion for summary judgment and granting DF&A's cross-motion for summary judgment.Plaintiff, seven companies that alleged that they overpaid Other Tobacco Products (OTP) taxes from 2011 through 2013, filed suit under the Arkansas Tax Procedure Act, Ark. Code Ann. 27-18-406, seeking declaratory relief in the form of a judgment that they overpaid OTP taxes. The circuit court dismissed Plaintiffs' claims for refund. The Supreme Court affirmed, holding that Plaintiffs were not entitled to a full or partial refund of the $3,223,200 they paid in excise taxes to the state during the time period in question. View "Douglas Companies, Inc. v. Walther" on Justia Law

The Supreme Court affirmed the portion of the court of appeals' judgment upholding the General Assembly's enactment of laws that centralize the collection and administration of net-profits taxes but reversed the portion of the judgment upholding the portion of the legislation allowing the state to retain .5 percent of the collected taxes, holding that the retention provision exceeds the General Assembly's authority.Appellants, several cities and villages, all impose a net-profits tax, which is a tax on income earned within their boundaries. After the General Assembly passed laws imposing centralized administration of those taxes Appellants brought this lawsuit arguing that the legislation violates their home-rule authority and exceeds the General Assembly's constitutional power to limit the power of municipalities to levy taxes. The Supreme Court held (1) the laws imposing centralized administration constitute an act of limitation within the General Assembly's explicit constitutional authority; and (2) the law providing for the state's retention of .5 percent of municipal net-profits taxes a fee or a tax for the state's centralized administration is unconstitutional. View "Athens v. McClain" on Justia Law

The Supreme Court affirmed the judgment of the district court dismissing K&J Investments, LLC's petition and complaint for judicial review, rescission, and unjust enrichment against the Flathead County Board of Commissioners and Flathead County Treasurer, holding that the district court properly dismissed all claims for want of jurisdiction.K&J, an investment company, purchased a tax sale certificate from Flathead County for the property at issue for $1,512. K&J later filed an application for refund and abatement due to alleged erroneous property assessments. The Flathead County Board of Commissioners denied the application. K&J filed a petition for judicial review seeking to reverse the Commissioners' denial of tax refund and abatement and including a complaint for rescission of the tax sale certificate and seeking relief for all taxes paid under a theory of unjust enrichment. The district court dismissed the petition and complaint, ruling that it lacked subject matter jurisdiction because K&J did not follow the required process for seeking reassessment and exhausting administrative remedies. The Supreme Court affirmed, holding that Mont. Code Ann. 15-16-604 did not grant the district court authority to consider K&J's claims. View "K & J Investments, LLC v. Flathead County" on Justia Law