Justia Tax Law Opinion Summaries

New York State appealed from the district court's consolidated judgments invalidating the State's Opioid Stewardship Act (OSA), which requires opioid manufacturers and distributors to make an annual payment to fund statewide opioid-related services but prohibits them from passing the costs of those payments through to their customers.The Second Circuit held that the OSA's opioid stewardship payment is a tax within the meaning of the Tax Injunction Act (TIA), and that the district court should have dismissed plaintiff's challenges to the payment under the TIA for lack of jurisdiction. After considering the factors in Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 737 F.3d 228, 232–33 (2d Cir. 2013), and San Juan Cellular Telephone Co. v. Public Service Commission, 967 F.2d 683, 685 (1st Cir. 1992), the court concluded that the primary purpose of the opioid stewardship payment is to raise revenue, not to punish or regulate plaintiffs and other licensees who are required to make the payment. Accordingly, the court reversed the judgments, except insofar as they relate to the pass-through prohibition, which is not before the court. View "Association for Accessible Medicines v. James" on Justia Law

The Eleventh Circuit affirmed the bankruptcy court's conclusion that debtors' 2001 tax liability was not dischargeable under 11 U.S.C. 523(a)(1)(C) because debtors "willfully attempted . . . to evade or defeat" that liability. The court found substantial evidence of attempted evasion and concluded that the bankruptcy court did not clearly err in finding that debtors acted willfully when they redirected their funds away from paying their debt and toward their personal luxuries. The court has held that excessive discretionary spending constitutes circumstantial evidence of willfulness. Furthermore, the bankruptcy court also inferred willfulness from debtor's exploitation of the offer-in-compromise process. View "Feshbach v. Department of Treasury Internal Revenue Service" on Justia Law

Jay Campbell, on behalf of himself and a certified class of "other persons similarly situated," appealed the grant of summary judgment on claims challenging the constitutionality of two municipal taxes adopted in 2013 by the City of Gardendale in connection with Gardendale's planned creation of a municipal school system. After review, the Alabama Supreme Court concluded Campbell did not demonstrate that the Gardendale school taxes were rendered invalid by operation of Local Amendment 14. The Court therefore pretermitted discussion of the alternate arguments for affirmance presented by Jefferson County and Smallwood. The judgment of the trial court was affirmed. View "Campbell v. City of Gardendale" on Justia Law

Appellant Don Weaver brought a declaratory judgment action to challenge the constitutionality of S.C. Code Ann. section 6-11-271 (2004), which addressed the millage levied in certain special purpose districts. Appellant owned property and was a taxpayer in the Recreation District, a special purpose district created to fund the operation and maintenance of parks and other recreational facilities in the unincorporated areas of Richland County, South Carolina. Appellant first argued section 6-11-271 was unconstitutional because it violated the South Carolina Constitution's prohibition on taxation without representation. Appellant next contended section 6-11-271 did not affect all counties equally and was, therefore, special legislation that was prohibited by the South Carolina Constitution. Appellant lastly argued section 6-11-271 was void because it violated Home Rule as set forth in the state constitution and the Home Rule Act. The circuit court found Appellant failed to meet his burden of establishing any constitutional infirmity. To this, the South Carolina Supreme Court concurred and affirmed judgment. View "Weaver v. Recreation District" on Justia Law

After plaintiffs filed suit against their accounting firm for negligence, the firm settled the case by paying plaintiffs $800,000. The Eleventh Circuit affirmed the district court's grant of summary judgment to the government as to plaintiffs' deduction of litigation expenses as a business expense, because the litigation between plaintiffs and the firm was personal in its character and origin. The court also affirmed the district court's grant of summary judgment in favor of the government as to plaintiffs' $1.4 million deduction for a purported loss, because the settlement agreement bars plaintiffs from deducting any fraction of the settlement for the covered transactions.With respect to the $800,000 settlement payment exclusion, the court reversed the district court's grant of summary judgment in favor of plaintiffs and remanded for entry of judgment in favor of the government. Assuming that Clark v. Comm'r, 40 B.T.A. 333, 335 (1939), was correctly decided, and that its rationale applies in a case like this one where the accounting malpractice related not to the preparation of a tax return but to the structuring of an underlying transaction, the court held that plaintiffs failed to sustain their burden of demonstrating that the $800,000 settlement was excludable. In this case, plaintiffs failed to meet their burdens of showing their entitlement to the exclusion and the amount of that exclusion. The court explained that the IRS' tax deficiency notice was presumed correct, and plaintiffs did not overcome that presumption. View "McKenney v. United States" on Justia Law

The Supreme Court affirmed the order of the district court finding that the production of aggregate by Ash Grove Cement Company qualified as "processing" under the Nebraska Advantage Act (NAA), Neb. Rev. Stat. 77-5701 to 77-5735, and finding that Ash Grove's aggregate production did not qualify as "manufacturing" under the NAA, holding that the appeals in this case were without merit.Because Lyman-Richey, which sold aggregate products used for things like manufacturing concrete, was wholly owned by Ash Grove, Ash Grove was eligible to include Lyman-Richey in its application for NAA tax incentives. At issue in this case was whether the district court erred in (1) finding that aggregate production locations were not engaged in "manufacturing" under the NAA; (2) denying Lyman-Richey's claims for overpayment of sales and use tax based on the manufacturing machinery or equipment exemption; and (3) finding the aggregate production locations were engaged in "processing" under the NAA. The Supreme Court affirmed, holding (1) although Ash Grove did not engage in "manufacturing" when it produced aggregate without crushing, it did engage in the qualified business of "processing" under the NAA; and (2) Lyman-Richey failed to prove entitlement to overpayment of sales and use tax based on the manufacturing machinery and equipment exemption. View "Ash Grove Cement Co. v. Nebraska Department of Revenue" on Justia Law

The Court of Appeal affirmed the trial court's issuance of a writ of administrative mandamus allowing the Assessor to levy more than four years' worth of escape assessments under Revenue and Taxation Code section 532, subdivision (b)(3). The court held that every single one of the prerequisites for the escape assessments challenged by Downey SPE is not only satisfied, but is undisputedly so. The court also held that the filing requirement set forth in section 480.1 is not satisfied when the taxpayer acquiring the legal entity recorded a document with less than all the information required by section 480.1. Therefore, taxpayers must strictly comply with those aspects of the notice requirements of section 480.1. In this case, it is undisputed that Downey SPE's act of recording the Certificate with the County Recorder's Office did not strictly comply with section 480.1's informational requirements (because it lacked several categories of information) or with section 480.1's requirement that the information be provided to the State Board. View "Prang v. L.A. County Assessment Appeals Board No. 2" on Justia Law

The Ninth Circuit affirmed the district court's dismissal of an action brought by plaintiffs, customers of the DWP, claiming that DWP overcharged for electric power and then transferred the surplus funds to the City, thereby allowing the City to receive what amounts to an unlawful tax under California law. Plaintiffs alleged claims under the Hobbs Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), and 42 U.S.C. 1983, as well as claims under state law.The panel agreed with its sister circuits that the Hobbs Act does not support a private civil right of action; held that municipal entities are not subject to liability under RICO when sued in their official capacities, but the RICO claims in this case were asserted against the defendant City and DWP officials in their personal capacities; held that the RICO claim was nonetheless properly dismissed because it failed as a matter of law because it did not adequately allege a predicate act in extortion under California law or the Hobbs Act, mail and wire fraud, or obstruction of justice; and held that, under the Johnson Act, the district court lacked jurisdiction over the the section 1983 claims. Because plaintiffs have provided no basis for concluding that any of these deficiencies could be cured by an amendment of the complaint, and based upon the panel's own thorough review of the record, the panel held that amendment would be futile. View "Abcarian v. Levine" on Justia Law

The Fifth Circuit affirmed the tax court's denial of petitioners' motion for costs under 26 U.S.C. 7630. Petitioners moved for costs after a dispute over an IRS notice of deficiency assessing them about $51,000 in taxes, penalties, and interest that resulted in their favor. The court held that, given the available facts, the tax court did not abuse its discretion by concluding that the IRS's position was substantially justified. In this case, the record plainly reflects a discrepancy between petitioners' return and the IRS's third-party material. Furthermore, when the Commissioner answered, the IRS had not received any substantiating documents from petitioners. Therefore, the tax court did not abuse its discretion. View "Johnson v. Commissioner" on Justia Law

The Supreme Judicial Court affirmed the decision of the Land Court judge ruling that the statutory scheme set forth in Mass. Gen. Laws ch. 60, 52 did not permit assignees of tax title accounts to include their own subsequent tax payments in the amount required for redemption, holding that the judge did not err.In 2011, City took tax title to Owners' property. Owners did not pay their real estate taxes in 2012 through 2015. In 2016, City assigned Appellant its tax title to the property. Appellant initiated proceedings to foreclose Owners' right to redeem the property. Owners exercised their right of redemption. In 2018, Appellant asked the Land Court to find that the redemption amount include the taxes owed to City at the time Appellant was assigned the tax title account, the taxes that Appellant had paid on the property from 2016 through 2018, and statutory interest on the unpaid real estate taxes and the taxes paid by Appellant. The judge concluded that tax payments made by section 52 assignees subsequent to the assignment of the tax title account could not be included in the redemption amount. The Supreme Judicial Court affirmed, holding that section 52 assignees of tax title accounts may not include their own subsequent tax payments, and interest thereon, in their redemption demands. View "Tallage Lincoln, LLC v. Williams" on Justia Law