Justia Tax Law Opinion Summaries

The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) that certain equipment purchased by Dreyer Electric Co. was exempt from sales tax because it was "replacement equipment" "used directly in the manufacturing process," as those terms are used in Mo. Rev. Stat. 144.030.2(5), holding that the AHC erred.Specifically, the Supreme Court held (1) the AHC correctly applied the three-factor "integrated plant doctrine" test set out in Floyd Charcoal Co. v. Director of Revenue, 599 S.W.2d 173 (Mo. banc 1980), to determine whether the subject replacement parts and equipment were "used directly in manufacturing"; but (2) the AHC erred in making specific findings as to some parts and then grouping all the parts together, including those it had not mentioned specifically in its decision, to find they were collectively integral to the electrical system that powered the machinery. The Court remanded the case for application of the integrated plant test to each type of replacement part or equipment purchased. View "Dreyer Electric Co., LLC v. Director of Revenue" on Justia Law

The Supreme Court affirmed the order of the district court affirming the administrative decision of the Montana Tax Appeal Board (MTAB) regarding Petitioner's residency status and dismissing his petition for judicial review, holding that Petitioner did not sever his Montana residency during the years 2008 to 2012 for income tax purposes.The Montana Department of Revenue determined that Petitioner was a Montana resident from 2008 to 2012 and assessed Petitioner $515,321 of Montana resident income tax, interest, and penalties. The MTAB affirmed. On review, the district court denied Petitioner's petition regarding the issue of his residency. The Supreme Court affirmed, holding that the district court did not err when it affirmed MTAB's administrative decision that Petitioner did not sever his Montana residency for income tax purposes from 2008 to 2012. View "Greenwood v. Department of Revenue" on Justia Law

The Court of Appeals affirmed the decision of the circuit court holding that the General Assembly's amendment of the Maryland tax code authorizing the State Comptroller to pay refunds to taxpayers affected by a provision held to be invalid and providing for the State to pay interest on those refunds at a certain rate did not violate the dormant Commerce Clause of the federal Constitution.This litigation arose when Appellants challenged the credit allowed by State law against a Maryland resident's income tax liability based on taxes the resident paid to other states on income derived from those states. The Court of Appeals and the Supreme Court agreed with Appellants' argument that the tax scheme violated the dormant Commerce Clause. In response, the General Assembly amended the tax code. After the Comptroller issued Appellants a refund in compliance with the new legislation, Appellants appealed, seeking a higher rate of interest on the refunds. Following an administrative ruling in Appellants' favor, the circuit court held that the interest rate did not violate the dormant Commerce Clause. The Court of Appeals affirmed, holding that Appellants failed to meet their burden of showing discrimination in effect. View "Wynne v. Comptroller of Maryland" on Justia Law

Alabama imposed a license or privilege tax on tobacco products stored or received for distribution within the State ("the tobacco tax"). Under Alabama law, the Department of Revenue could confiscate tobacco products on which the tobacco tax had not been paid. Panama City Wholesale, Inc. ("PCW") was a wholesale tobacco-products distributor located in Panama City, Florida, and owned by Ehad Ahmed. One of PCW's customers, Yafa Wholesale, LLC ("Yafa"), was an Alabama tobacco distributor owned by Sayeneddin Thiab ("Thiab"). On October 10, 2018, Hurricane Michael destroyed the roof on PCW's warehouse. Department surveillance agents observed observed one of Thiab's vehicles being unloaded at two of the recently rented storage units. The day after that, agents observed one of Thiab's delivery vehicles being loaded with tobacco products from a recently rented unit following the storm. On October 23, 2018, the Department confiscated 1,431,819 cigars from four storage units leased by persons connected to Yafa and Thiab. It is undisputed that the tobacco tax had not been paid on the cigars. Ahmed filed an action against Vernon Barnett, as Commissioner of the Department, seeking a judgment declaring that the cigars were Ahmed's and that they were not subject to confiscation. The case was transferred to the Jefferson Circuit Court, PCW was substituted for Ahmed, and the parties were realigned to make the Commissioner of the Department the plaintiff and PCW the defendant in a civil forfeiture action. On PCW's motion, the circuit court entered a summary judgment in PCW's favor, ruling that the Commissioner failed to present substantial evidence that the cigars were in the possession of a retailer or semijobber, as the court believed was required by the confiscation statute. The Commissioner appealed. A divided Alabama Supreme Court reversed, concluding the circuit court erred in interpreting the confiscation statute to apply only to untaxed tobacco products in the possession of retailers and semijobbers, and because the Commissioner presented substantial evidence that the cigars were subject to confiscation under a correct interpretation of the statute, the Court reversed summary judgment and remanded for further proceedings. View "Alabama Department of Revenue v. Panama City Wholesale, Inc." on Justia Law

Eighteen petitioners appealed a New Hampshire Board of Tax and Land Appeals (BTLA) decision to dismiss their respective appeals of denials of applications for abatements of real estate taxes issued by respondent Town of Bartlett. he BTLA dismissed the appeals because the petitioners’ abatement applications failed to comply with the signature and certification requirement of New Hampshire Administrative Rules, Tax 203.02, and because the BTLA found that the petitioners did not demonstrate that these failures were “due to reasonable cause and not willful neglect.” There was no dispute in this case that petitioners did not personally sign or certify their abatement applications. Instead, petitioners contested the BTLA’s ruling that they did not demonstrate that the lack of signatures and certifications was due to reasonable cause and not willful neglect. "Although the question of whether reasonable cause or willful neglect exists in a particular case is one of fact for the BTLA, the questions of what elements constitute reasonable cause or willful neglect under Tax 203.02 are ones of law." Because the BTLA did not have the benefit of the construction of Tax 203.02(d) that the New Hampshire announced in its opinion of this case, BTLA's decisions were vacated, and each matter remanded for further consideration. View "Appeal of Keith R. Mader 2000 Revocable Trust et al." on Justia Law

The Mississippi Department of Revenue (Department) conducted an audit of the Mississippi corporate tax returns of The Williams Companies, Inc. (Williams), for the years 2008 through 2010. During the course of the audit, Williams filed amended returns removing the capital of its single-member limited-liability companies (SMLLCs) from its calculation of capital employed in the state, seeking a refund of franchise tax in the amount of $981,419. After the Department’s review of Williams’ records and returns, the Department issued an assessment. The calculation included the capital of Williams’ SMLLCs in Williams’ Mississippi franchise-tax base. This resulted in a refund of $231,641. Williams objected, arguing it should not have been assessed a franchise-tax on capital employed by its Mississippi subsidiaries because of ambiguous language in the Mississippi franchise tax statutes. After review, the Mississippi Supreme Court affirmed the holding of the chancery court that Williams could not exclude the capital of its SMLLCs from its franchise-tax base. View "The Williams Companies, Inc. v. Mississippi Department of Revenue" on Justia Law

The Supreme Judicial Court vacated in part and affirmed in part a summary judgment entered in the business and consumer docket that adjudicated all claims on the parties' separate, but judicially consolidated, petitions for review of two tax abatement decisions, holding that the court erred in partially abating a portion of certain penalties levied by the State Tax Assessor against Kraft.On appeal, Kraft argued that the lower court erred in determining that it was not entitled to an alternative apportionment of a portion of its 2010 taxable income, that it was not entitled to a full abatement of penalties levied by the Assessor as part of the "first assessment," and that the "second assessment" was not time barred. The Assessor cross-appealed, arguing that the lower court erred in partially abating the substantial understatement penalty levied as part of the first assessment. The Supreme Court (1) affirmed the court's conclusion that Kraft was not entitled to an alternative apportionment; (2) vacated the court's partial abatement of the substantial underpayment penalty because Kraft was not entitled to any abatement; and (3) affirmed the court's determination that the second assessment was not barred by the statute of limitations. View "State Tax Assessor v. Kraft Foods Group, Inc." on Justia Law

The Supreme Court reversed the decision of the Administrative Hearing Commission (AHC) holding that The Kansas City Chiefs Football Club, Inc. (the team) was the "purchaser" of certain items used in the renovation of Arrowhead Stadium and its related facilities and was, therefore, liable for sales and use tax on those items, holding that the AHC erred in determining that the team was the purchaser of the items.After the renovation was complete, the Director of Revenue conducted a sales and use tax audit and determined that the team was liable for sales and use tax on seven categories of contested items purchased from the nine vendors at issue in this appeal. The team appealed to the AHC, which found the team liable for sales tax and use tax on the items. The Supreme Court reversed, holding that the team was not the source of the consideration for the contested items and, therefore, was not the purchaser of the items, as that term is used in Missouri's sales and use tax statutes. View "Kansas City Chiefs Football Club, Inc. v. Director of Revenue" on Justia Law

After a bench trial, a district court decided that Defendants RaPower-3, LLC, International Automated Systems, Inc. (IAS), LTB1, LLC, Neldon Johnson, and R. Gregory Shepard had promoted an unlawful tax scheme. Defendants’ scheme was based on a supposed project to utilize a purportedly new, commercially viable way of converting solar radiation into electricity. There was no “third party verification of any of Johnson’s designs.” Nor did he have any “record that his system ha[d] produced energy,” and “[t]here [were] no witnesses to his production of a useful product from solar energy,” a fact that he attributed to his decision to do his testing “on the weekends when no one was around because he didn’t want people to see what he was doing.” Defendants never secured a purchase agreement for the sale of electricity to an end user. The district court found that Johnson’s purported solar energy technology was not a commercial-grade solar energy system that converts sunlight into electrical power or other useful energy. Despite this, Defendants’ project generated tens of millions of dollars between 2005 and 2018. Beginning in 2006, buyers would purchase lenses from IAS or RaPower-3 for a down payment of about one-third of the purchase price. The entity would “finance” the remaining two-thirds of the purchase price with a zero- or nominal- interest, nonrecourse loan. No further payments would be due from the customer until the system had been generating revenue from electricity sales for five years. The customer would agree to lease the lens back to LTB1 for installation at a “Power Plant”; but LTB1 would not be obligated to make any rental payments until the system had begun generating revenue. The district court found that each plastic sheet for the lenses was sold to Defendants for between $52 and $70, yet the purchase price of a lens was between $3,500 and $30,000. Although Defendants sold between 45,000 and 50,000 lenses, fewer than 5% of them were ever installed. Customers were told that buying a lens would have very favorable income-tax consequences. Johnson and Shepard sold the lenses by advertising that customers could “zero out” federal income-tax liability by taking advantage of depreciation deductions and solar-energy tax credits. To remedy Defendants' misconduct, the district court enjoined Defendants from continuing to promote their scheme and ordered disgorgement of their gross receipts from the scheme. Defendants appealed. Finding no reversible error, the Tenth Circuit affirmed the district court. View "United States v. RaPower-3" on Justia Law

The Supreme Court affirmed the order of the Public Utilities Commission (PUC) approving the interconnection tax which National Grid (NG) charged Petitioners to interconnect to NG's distribution system then paid to the Internal Revenue Service (IRS) as contributions in aid of construction, holding that the PUC did not err.In their petition for the issuance of writ of certiorari, Petitioners asked the Supreme Court to declare the PUC order illegal and unreasonable for purportedly failing to follow a specific IRS ruling and for failing to hold NG to its burden of proof. The Supreme Court affirmed the PUC's order, holding (1) NG was entirely reasonable in believing that it continued to owe the interconnection tax to the IRS and in, therefore, passing that tax on to Petitioners; and (2) the PUC order fully comported with a settlement proposal in this case. View "ACP Land, LLC v. Rhode Island Public Utilities Commission" on Justia Law