Justia Tax Law Opinion Summaries

Appellant A. Thomas Jones challenged the City of Atlanta's imposition of charges through two ordinances, arguing that these charges, levied on the Department of Watershed Management (DWM) customers, are unlawful taxes. The ordinances in question impose a franchise fee on DWM's gross revenue and a payment in lieu of taxes (PILOT) on DWM's real property, with the collected sums deposited into the City's General Fund. Jones contended that these charges exceed the costs they purportedly cover and are instead used to generate general revenue, violating various constitutional and statutory provisions.The trial court initially dismissed Jones's suit on procedural grounds, but the Court of Appeals reversed this decision in part. Upon remand, the City moved for judgment on the pleadings, and Jones filed motions for partial summary judgment. The trial court granted the City's motion and denied Jones's motions, leading to this appeal. Jones argued that the trial court erred in its application of the standard of review and in its conclusions regarding the nature of the charges.The Supreme Court of Georgia reviewed the case and found that the trial court erred in granting the City's motion for judgment on the pleadings. The Supreme Court held that the trial court failed to treat Jones's allegations as true, particularly his claims that he paid the disputed charges, that the revenue generated from these charges grossly exceeded the associated costs, and that these costs were covered by other transfers from DWM to the City's General Fund. Consequently, the Supreme Court vacated the trial court's judgment on the pleadings and remanded the case for further proceedings.However, the Supreme Court affirmed the trial court's denial of Jones's motions for partial summary judgment. The Court concluded that Jones failed to demonstrate the absence of genuine disputes of material fact regarding whether the charges were taxes or fees and whether the revenue generated exceeded the associated costs. The case was remanded for reconsideration of Jones's claims under the proper standard of review. View "Jones v. City of Atlanta" on Justia Law

Memorial Hermann Accountable Care Organization (MHACO), a nonprofit corporation formed under Texas law in 2012, participated in the Medicare Shared Savings Program (MSSP) as an accountable care organization (ACO). ACOs are groups of healthcare providers that manage and coordinate care for Medicare beneficiaries, potentially sharing in cost savings achieved for the Medicare program. MHACO's patient population includes those covered by MSSP, Medicare Advantage Plans, and employer-sponsored health plans, but it does not provide services for uninsured individuals. The proportion of MHACO’s revenue from MSSP activities varies annually.The Internal Revenue Service (IRS) issued a proposed adverse determination letter, concluding that MHACO did not qualify for a tax exemption under I.R.C. § 501(c)(4). The IRS Independent Office of Appeals upheld this determination, stating that MHACO was not organized and operated for promoting social welfare and providing community benefit. MHACO petitioned the United States Tax Court for a declaratory judgment, which upheld the IRS’s determination, finding that MHACO’s non-MSSP activities primarily benefited its commercial payor and healthcare provider participants rather than the public. MHACO’s motions to vacate or revise the judgment were denied, leading to this appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the tax court’s judgment, holding that MHACO did not qualify for a § 501(c)(4) tax exemption. The court applied the "substantial nonexempt purpose" test, consistent with the Supreme Court's interpretation in Better Business Bureau of Washington, D.C. v. United States, and found that MHACO’s commercial activities constituted a substantial nonexempt purpose. The court concluded that MHACO’s operations did not exclusively promote social welfare, as required by § 501(c)(4). View "Memorial Hermann Accountable Care Organization v. CIR" on Justia Law

The case involves William Phillip Jackson, who owes unpaid federal taxes to the United States. Following a jury trial and post-trial proceedings, the United States District Court for the Western District of Missouri entered a judgment against Jackson for $2,396,800.47 and ordered the foreclosure and sale of four properties owned by Jackson and his wife. Jackson filed multiple motions to amend or vacate the sale, which were denied, and his appeals to the Eighth Circuit Court of Appeals were unsuccessful. Jackson then filed for Chapter 13 bankruptcy relief, but the United States proceeded with evictions and seized personal property before being notified of the bankruptcy filing.The United States Bankruptcy Court for the Western District of Missouri heard Jackson's motion for contempt and turnover of property and the United States' motion to lift the automatic stay nunc pro tunc. The bankruptcy court denied Jackson's motion and granted the United States' motion, annulling the automatic stay retroactively to the date of Jackson's bankruptcy filing. Jackson appealed this decision but did not seek a stay of the order pending appeal. While the appeal was pending, the United States sold the properties at auction, and the district court confirmed the sales and approved the disbursement of proceeds.The United States Bankruptcy Appellate Panel for the Eighth Circuit reviewed the case and determined that the appeal was constitutionally moot. The court held that since the properties had been sold and Jackson did not obtain a stay pending appeal, there was no effective relief that could be granted. Consequently, the appeal of the bankruptcy court's order annulling the stay and denying Jackson's motion for contempt and turnover was dismissed for lack of jurisdiction. View "Jackson v. United States" on Justia Law

Jim Walsh, a member of the Washington State House of Representatives, along with other appellants, submitted six initiatives to the legislature. Three of these initiatives were enacted, while the remaining three—repealing the Washington Climate Commitment Act, repealing the state’s capital gains tax, and making participation in the state’s long-term care insurance program optional—were set to appear on the November 2024 ballot. The appellants sought to prevent public investment impact disclosures from appearing on the ballot, arguing that these disclosures were not warranted.The Thurston County Superior Court denied the appellants' request for writs of mandamus and prohibition, dismissing their complaint. The court found that the capital gains tax was not impliedly repealed by another initiative and that the other two initiatives did indeed modify a "tax or fee," thus requiring public investment impact disclosures. The appellants then appealed directly to the Supreme Court of the State of Washington.The Supreme Court of the State of Washington affirmed the lower court's decision. The court held that the writs of prohibition and mandamus were not appropriate in this case. The attorney general and the secretary of state were acting within their jurisdiction and statutory obligations. The court also noted that the appellants had not demonstrated the absence of a plain, speedy, and adequate remedy in the ordinary course of legal proceedings. Therefore, the trial court's denial of relief and dismissal of the case were upheld. View "Walsh v. Hobbs" on Justia Law

A group of 16 related LLCs, which generate all their income from investments in distressed debt instruments, sought a refund for business and occupation (B&O) taxes paid, claiming their income was deductible as "investment income" under RCW 82.04.4281. The statute allows deductions for "amounts derived from investments," but does not define "investments." The LLCs argued that their income qualified for this deduction.The Washington State Department of Revenue audited the LLCs and denied their refund claim. The LLCs challenged this decision in superior court. The superior court granted summary judgment for the Department, ruling that the legislature did not change the definition of "investments" when it amended the statute in 2002. The court relied on the precedent set in O’Leary v. Department of Revenue, which defined "investments" as "incidental investments of surplus funds." The LLCs' motion for reconsideration was denied.The LLCs appealed, and the Court of Appeals affirmed the superior court's decision. The appellate court found that the legislature did not intend to abrogate the O’Leary definition when it amended the statute. The LLCs then petitioned for review by the Washington Supreme Court.The Washington Supreme Court held that the legislature did not abrogate the O’Leary definition of "investments" when it amended RCW 82.04.4281. The court found no clear legislative intent to change the definition, noting that the amendments were primarily aimed at addressing issues raised by the Simpson decision and the ambiguous phrase "other financial businesses." Consequently, the court affirmed that "investments" continues to mean "incidental investment of surplus funds," and the LLCs could not deduct income earned from their primary business activities. The trial court and the Court of Appeals' decisions were affirmed. View "Antio, LLC v. Dep't of Revenue" on Justia Law

The case involves debtors Jason and Leah Wylie, who faced financial difficulties in 2018 due to Mr. Wylie's health issues. As they prepared to file for bankruptcy, they delayed filing their 2018 and 2019 tax returns. Their accountant prepared the 2018 returns, showing significant overpayments, which the Wylies elected to apply to their 2019 tax liabilities instead of receiving refunds. This decision was repeated for their 2019 returns, which were filed shortly after they submitted their Chapter 7 bankruptcy petition.The United States Bankruptcy Court for the Eastern District of Michigan found that the Wylies transferred their anticipated 2019 tax refunds with the intent to hinder the trustee and denied them a discharge under 11 U.S.C. § 727(a)(2)(B). However, the court dismissed other counts alleging similar intent for their 2018 tax overpayments and false statements in their bankruptcy filings. The Wylies appealed the decision on Count II to the United States District Court for the Eastern District of Michigan, which reversed the bankruptcy court’s decision, holding that the finding of intent was clearly erroneous.The United States Court of Appeals for the Sixth Circuit reviewed the case and agreed with the district court. The appellate court found that the bankruptcy court’s intent findings were inconsistent and unsupported by the evidence. Specifically, the bankruptcy court had found that the Wylies’ intent in both the 2018 and 2019 tax elections was to ensure their taxes were paid, not to hinder the trustee. The appellate court emphasized that § 727(a)(2) requires specific intent to hinder the trustee, which was not demonstrated in this case. Consequently, the Sixth Circuit affirmed the district court’s decision and remanded the case to the bankruptcy court to enter a discharge for the Wylies. View "Miller v. Wylie" on Justia Law

The case involves two grand jury subpoenas issued to an accounting firm and an investment company in connection with an alleged illegal tax-shelter scheme. The investment company claimed that the documents sought were protected by attorney-client privilege. The government moved to compel the production of these documents, arguing that the crime-fraud exception applied, which would negate the privilege claims.The United States District Court for the Northern District of Georgia denied the investment company’s motion to intervene and ordered the accounting firm to comply with the subpoena. The court also ruled that the crime-fraud exception applied, compelling the investment company, the accounting firm, and other third parties to produce the requested documents. The investment company appealed these orders.The United States Court of Appeals for the Eleventh Circuit reviewed whether it had jurisdiction to hear the appeals. The court noted that typically, orders related to grand jury subpoenas are not appealable unless the party stands in contempt. The investment company had not stood in contempt before appealing, which generally precludes appellate review. The court also considered the Perlman exception, which allows immediate appeal if the subpoenaed party is unlikely to risk contempt to protect another’s privilege. However, the court found that this exception did not apply because the investment company could have raised its privilege arguments on appeal by standing in contempt.The Eleventh Circuit dismissed the appeals for lack of jurisdiction, emphasizing that the investment company’s failure to stand in contempt foreclosed its ability to seek immediate appellate review. The court held that the investment company must comply with the district court’s orders or stand in contempt to preserve its right to appeal. View "In Re: Grand Jury Investigation" on Justia Law

The plaintiff, a company that constructs and operates fuel cells, sought municipal property tax exemptions for its fuel cell modules and related equipment installed on the Pfizer campus. The property primarily provided electricity and converted waste heat into thermal energy. The plaintiff applied for tax exemptions under Connecticut General Statutes § 12-81 (57), which exempts class I renewable energy sources from taxation. The defendant, the town of Groton, denied the applications, classifying the property as a cogeneration system under § 12-81 (63), which allows but does not require municipalities to exempt such systems from taxation.The Superior Court granted partial summary judgment to the plaintiff, ruling that the property was exempt from taxation for the years 2017 through 2019 under § 12-81 (57). The court found that the property, which included fuel cells with a heat recovery steam generator (HRSG), fell within the definition of a class I renewable energy source. For the 2016 tax year, the court held a trial and determined that the property was not completely manufactured by October 1, 2016, and thus was exempt under § 12-81 (50) as "goods in the process of manufacture." The court also ruled that the plaintiff was not required to file a personal property declaration for the exempt property, and the penalties imposed by the defendant for failing to file such a declaration were improper.The Connecticut Supreme Court upheld the trial court's rulings. It agreed that the property was exempt from taxation under § 12-81 (57) for the years 2017 through 2019, as the statute specifically exempts class I renewable energy sources, including fuel cells. The court also affirmed that the property was exempt for the 2016 tax year under § 12-81 (50) as it was still in the process of manufacture. Finally, the court held that the plaintiff was not required to file a personal property declaration for the exempt property, and the penalties for failing to do so were not permitted. View "FuelCell Energy, Inc. v. Groton" on Justia Law

The State of Wyoming owns a 3.37-acre parcel in Uinta County, leased to Pilot Corporation for operating a truck stop. The property, held for the benefit of the Wyoming State Hospital, generates revenue for the hospital through the lease. In 2022, the Uinta County Assessor assessed the property for taxation, which the State contested, claiming the property was used primarily for a governmental purpose and thus exempt from taxation.The County Board of Equalization initially ruled in favor of the State, stating the property was used for a governmental purpose because the Board of Land Commissioners had a fiduciary duty to generate revenue for the hospital. However, the State Board of Equalization reversed this decision, holding that the Department of Revenue’s rules, which state that governmental property used by a lessee for non-governmental purposes is not tax-exempt, were binding. The district court affirmed the State Board’s decision, agreeing that the lessee’s use of the property for a truck stop did not constitute a governmental purpose.The Wyoming Supreme Court reviewed the case and affirmed the district court’s ruling. The Court held that the property was not exempt from taxation because it was used by the lessee, Pilot Corporation, for a non-governmental purpose. The Court emphasized that the end use of the property by the lessee determines its tax status, not the purpose of the lease. Additionally, the Court found that the legislature had not provided an exemption for such properties, as required by the Wyoming Constitution. Therefore, the property was subject to taxation. View "State of Wyoming v. Uinta County Assessor" on Justia Law

Texas Truck Parts & Tire, Incorporated, a wholesaler and retailer of truck parts and tires, purchased tires from Chinese manufacturers between 2012 and 2017. These manufacturers shipped the tires to Texas Truck in Houston, Texas. Texas Truck did not file quarterly excise tax returns or pay excise taxes on the tires, believing the Chinese manufacturers were the importers responsible for the tax. Following an IRS audit, Texas Truck was assessed approximately $1.9 million in taxes. Texas Truck paid a portion of the taxes and filed for a refund, which the IRS did not act upon, leading Texas Truck to file a lawsuit seeking a refund. The Government counterclaimed for the remaining taxes owed.The United States District Court for the Southern District of Texas granted summary judgment in favor of Texas Truck, determining that the Chinese manufacturers were the importers and thus liable for the excise tax. The court based its decision on the interpretation that Texas Truck did not "bring" the tires into the United States under the applicable Treasury regulation, and did not consider whether Texas Truck was the beneficial owner of the tires.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that Texas Truck was the beneficial owner of the tires and therefore liable for the excise tax. The court found that the district court erred by not considering whether Texas Truck was the beneficial owner under the Treasury regulation. The Fifth Circuit concluded that the Chinese manufacturers were nominal importers and that Texas Truck, as the beneficial owner, was responsible for the excise tax. Consequently, the court reversed the district court's summary judgment in favor of Texas Truck, rendered judgment for the Government, and remanded the case to the district court to determine the damages. View "Texas Truck Parts & Tire v. United States" on Justia Law