Justia Tax Law Opinion Summaries

Tillman filed a petition for leave to file a taxpayer action under 735 ILCS 5/11-303, to enjoin the disbursement of public funds, alleging that certain general obligation bonds issued by the state in 2003 and 2017 were unconstitutional. He claimed the bonds violated article IX, section 9(b), of the Illinois Constitution on the ground that they were not issued for qualifying “specific purposes,” which, he argued, refers exclusively to “specific projects in the nature of capital improvements, such as roads, buildings, and bridges.” The 2003 “State pension funding” law authorized $10 billion in bonds to be issued “for the purpose of making contributions to the designated retirement systems.” The 2017 law authorized “Income Tax Proceed Bonds,” ($6 billion) “for the purpose of paying vouchers incurred by the State prior to July 1, 2017.”The circuit court denied the petition. The appellate court reversed. The Illinois Supreme Court reinstated the judgment of the circuit court. the necessary elements for laches have been met in this case: “lack of due diligence by the party asserting the claim” and “prejudice to the opposing party.” There is no reasonable ground under section 11-303 of the Code for filing the petitioner’s proposed complaint View "Tillman v. Pritzker" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) upholding the tax commissioner's denial of a municipality's request for an exemption for tax years 2015, 2016, and 2017, holding that the BTA reasonably and lawfully upheld the denial of an exemption.The village of Obetz enacted an ordinance in 2017 in an effort to reinstate the tax-exempt status of real property under a tax-increment-financing (TIF) arrangement after it expired in 2014. The commissioner explained that the 2017 could not retroactively reinstate the exemption for tax years 2015, 2016, and 2017 because Ohio Rev. Code 5709.40(G) provides that an exemption may begin no earlier than a tax year that "commences after the effective date of the ordinance." The BTA affirmed, agreeing that the 2017 ordinance created a new exemption rather than extending the earlier one so that section 5708.40(G) barred the exemption from applying during the relevant tax years. The Supreme Court affirmed, holding that the BTA's decision was reasonable and lawful. View "Obetz v. McClain" on Justia Law

IRS Notice 2016–66 requires taxpayers and “material advisors” to report information about "micro-captive" insurance agreements. The consequences for non-compliance include civil tax penalties and criminal prosecution. Before the first reporting deadline, CIC challenged the Notice as invalid under the Administrative Procedure Act and sought injunctive relief. The Sixth Circuit affirmed the dismissal of the action, citing the Anti-Injunction Act, 26 U.S.C. 7421(a), which generally requires those contesting a tax’s validity to pay the tax before filing a legal challenge.A unanimous Supreme Court reversed. A suit to enjoin Notice 2016–66 does not trigger the Anti-Injunction Act even though a violation may result in a tax penalty; it is not an action to restrain the “assessment or collection” of a tax, even if the information will help the IRS collect future tax revenue. CIC seeks to set aside the Notice itself, not the tax penalty that may follow its breach. CIC stands nowhere near the cusp of tax liability. The presence of criminal penalties forces CIC to bring an action in this form, with the requested relief framed in this manner. To disobey the Notice and pay the resulting penalty before suing for a refund would risk criminal punishment. Allowing CIC’s suit to proceed will not open the floodgates to pre-enforcement tax litigation. Because the IRS chose to address its concern about micro-captive agreements by imposing a reporting requirement rather than a tax, suits to enjoin that requirement are outside the Anti-Injunction Act. View "CIC Services., LLC v. Internal Revenue Service" on Justia Law

The Supreme Court reversed the judgment of the Appellate Court insofar as it upheld the trial court's order directing Defendants to reimburse Plaintiff for property taxes and insurance premiums, holding that the ordered relief was inconsistent with the remedial scheme available to a mortgagee in a strict foreclosure.At issue was whether a trial court may order a mortgagor to reimburse a mortgagee for the mortgagee's advancements of property taxes and insurance premiums during the pendency of an appeal from a judgment of strict foreclosure. The trial court ordered Defendants to reimburse Plaintiff for such property tax and insurance premium payments, and the Appellate Court affirmed. The Supreme Court reversed in part, holding (1) the trial court abused its discretion in directing Defendants to make monetary payments to Plaintiff outside of a deficiency judgment; and (2) the Appellate Court's judgment is affirmed in all other respects. View "JPMorgan Chase Bank, National Ass'n v. Essaghof" on Justia Law

After the IRS concluded that Mayo, a tax-exempt organization under IRC 501(c)(3), owed unrelated business income tax (UBIT) on certain investment income it received from the investment pool it manages for its subsidiaries, the IRS issued a Notice of Proposed Adjustment and reaffirmed its position in a 2013 Technical Advice Memorandum. In this refund action, the parties dispute the $11,501,621 in UBIT for tax years 2003, 2005-2007, and 2010-2012. At issue is whether Mayo is a "qualified organization" exempted from paying unrelated business income tax on "unrelated debt-financed income" under section 514(c)(9)(C)(i) and whether it its a qualified organization under section 170(b)(1)(A)(ii) because it is an educational organization. The district court held that the Treasury Regulation is invalid "because it adds requirements -- the primary-function and merely-incidental tests -- Congress intended not to include in the statute."The Eighth Circuit concluded that Treasury Regulation 1.170A-9 is valid, but only in part, and that application of the statute as reasonably construed by the regulation to Mayo's tax years in question cannot be determined as a matter of law on this summary judgment record. Accordingly, the court reversed the district court's invalidation of Treasury Regulation 1.170A-9 to the extent it is not inconsistent with IRC 170(b)(1)(A)(ii) and remanded for further proceedings. View "Mayo Clinic v. United States" on Justia Law

When an Ohio county forecloses on a tax-delinquent, occupied property, it ordinarily sells the property at an auction, keeps proceeds to cover the outstanding taxes, and returns leftover funds to the owner. Ohio municipalities may surrender their tax interest in tax-delinquent vacant properties and transfer clear title to land banks, which may revitalize the property, sell it, or demolish the home to prepare for new neighborhoods. When counties choose the land bank route the owner's surplus equity vanishes.Harrison inherited a partial interest in her mother’s Dayton home, which had a $20,000 property tax delinquency. Montgomery County started foreclosure proceedings. The County Board of Revision transferred the home (estimated fair market value, $22,600) to the county’s land bank. Harrison never received the surplus equity; the statute offers no way to pay it.Harrison filed a purported class action under the Takings Clause. The district court dismissed, citing claim preclusion because Harrison could have raised federal takings claims at several points during the foreclosure process. The Sixth Circuit reversed, noting that federal takings law changed during the operative period. A property owner now may bring section 1983 federal takings claims in federal court “as soon as their property has been taken” without first exhausting state remedies. The Tax Injunction Act, 28 U.S.C. 1341, does not bar the suit; Harrison does not challenge Ohio’s “collection” of delinquent taxes nor seek to halt foreclosures. The court remanded for consideration of the merits. View "Harrison v. Montgomery County" on Justia Law

In 1989, Bilzerian was convicted on nine counts of securities fraud, making false statements to the Securities and Exchange Commission, and conspiracy to commit certain offenses, and defraud the SEC and the Internal Revenue Service (IRS). The Southern District of New York sentenced Bilzerian to four years in prison, imposed a $1.5 million fine, and ordered him to disgorge $62,337,599.53.In 2012, Bilzerian’s wife, Steffen, filed a pro se complaint in the Claims Court seeking an $8,243,145 tax refund under 26 U.S.C. 1341. The dispute stems from transactions that Bilzerian made in 1985-1986 related to the purchase and sale of certain common stocks, for which he was convicted of securities fraud. Steffen and Bilzerian later filed a second amended complaint as joined parties.In 2018, the court dismissed that complaint with prejudice. The Federal Circuit affirmed. The plaintiffs cannot establish a reasonable belief of having an unrestricted right to the disputed funds when the money was first reported as income. A reasonable, unrestricted-right belief cannot exist where a taxpayer knowingly acquires the disputed funds via fraud. The “taxpayer’s illicit hope that his intentional wrongdoing will go undetected cannot create the appearance of an unrestricted right.” View "Steffen v. United States" on Justia Law

Jefferson County ("the county") filed a complaint against Wilbert of Birmingham, LLC ("Wilbert"), Lisa D. Turner, and Marvin Lands ("the taxpayers") seeking an order requiring the taxpayers to pay various taxes and license fees they allegedly owed to the county. The circuit court ruled in favor of the county and ordered the taxpayers to pay to the county $112,728.96 plus accrued interest and court costs. The taxpayers appealed. The merits of the circuit court's ruling were not actually before the Alabama Supreme Court in this appeal. Instead, the issue raised in the taxpayers' brief was whether the circuit court obtained jurisdiction over the matter pursuant to the Alabama Taxpayers' Bill of Rights and Uniform Revenue Procedures Act, 40-2A-1 et seq., Ala. Code 1975 ("the TBOR"). The Supreme Court found the taxpayers demonstrated that, by failing to schedule a conference with the taxpayers concerning the preliminary assessments, the county's department of revenue did not strictly comply with the procedural requirements of the TBOR. That failure to strictly comply with the procedural requirements of the TBOR deprived the circuit court of jurisdiction over the county's action against the taxpayers, and, thus, the order entered in favor of the county was void. Therefore, the Supreme Court dismissed the taxpayers' appeal and instructed the circuit court to vacate its judgment in favor of the county and to dismiss the case. View "Wilbert of Birmingham, LLC, et al. v. Jefferson County" on Justia Law

The Court of Appeals affirmed the decision of the tax court determining that, between 2003 and 2011, Travelocity.com LP was liable for sums due under the sales and use tax pursuant to Md. Code Tax-Gen. 11-102(a), holding that Travelocity was not liable to pay the sales and use tax during the relevant audit period.The Comptroller of Maryland issued a tax assessment of almost $6.5 million. The tax court upheld the assessment, concluding that Travelocity's business of facilitating vehicle rentals and hotel room reservations was included in the sale of tangible personal property in Maryland, rendering Travelocity liable for the tax during the audit period at issue. The circuit court affirmed. The court of special appeals reversed. The court of appeals reversed, holding that Travelocity was not liable for the tax during the audit period at issue. View "Travelocity.com v. Comptroller" on Justia Law

In this ad valorem tax dispute, the Supreme Court reversed the judgment of the court of appeals and the trial court declining to dismiss a tax appeal under the Texas Citizens Participation Act (TCPA), Tex. Civ. Proc. & Rem. Code 27.001-.011, holding that the motion to dismiss was timely filed.Certain taxing units sought judicial review of a tax appraisal review board order declining to reappraise the value of mineral-interest property claimed to be undervalued on the tax rolls. The trial court and court of appeals refused to dismiss the tax appeal under the TCPA. The affected taxpayer appealed, arguing that, contrary to the rulings of the lower courts, the TCPA dismissal motion was timely and the trial court had jurisdiction over the tax appeal. The Supreme Court reversed, holding (1) there was no jurisdictional impediment to reaching the merits of this appeal; and (2) the TCPA motion to dismiss was timely filed. View "Kinder Morgan SACROC, LP v. Scurry County" on Justia Law