Justia Tax Law Opinion Summaries

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

Adkins sought a federal income tax refund, based on financial losses sustained as the victim of a fraudulent investment scheme. The IRS was unable to formalize the parties’ settlement before the statute of limitations on the refund request was set to expire. Adkins filed suit. Following a remand, the Claims Court ruled against Adkins.The Federal Circuit reversed. The court noted its previous holding that the Claims Court misconstrued the regulation concerning the timing of a theft loss deduction by reading Treasury Regulation 1.165- 1(d)(3) as imposing a higher burden on taxpayers who attempt to recover their losses after discovering a fraud than on taxpayers who claim the same loss immediately upon discovery and by holding that, where a taxpayer has filed a claim for reimbursement from those who defrauded her, the taxpayer may not claim a loss until that claim is fully resolved or abandoned. What a taxpayer must prove by reasonable certainty is that, as of the time the loss was claimed, there was no reasonable “prospect of recovery”; she is not required to prove that it was certain no recovery could be had. While one could establish the absence of any reasonable prospect of recovery by the abandonment of a claim, abandonment is not a prerequisite to such a showing. On remand, the Claims Court again required too much with respect to the showing required. View "Adkins v. United States" on Justia Law

HWCC-Tunica, LLC, and BSLO, LLC, had casino members’ rewards programs that allowed members to earn entries into random computerized drawings to win prizes. In 2014, after recalculating their gross revenue and deducting the costs of prizes from their rewards programs’ drawings, HWCC and BSLO filed individual refund claims for the tax period of October 1, 2011, through August 31, 2014. The Mississippi Department of Revenue (MDOR) denied the refund claims in 2015. HWCC and BSLO appealed, and MDOR and the Mississippi Gaming Commission (MGC) filed a joint motion for summary judgment, arguing the plain language of Mississippi Code Section 75-76-193 (Rev. 2016) does not allow a casino to deduct the cost of prizes purchased for a rewards program’s drawings because “these promotional giveaways are not the result of ‘a legitimate wager’ as used in [Mississippi Code Section] 75-76-193.” After a hearing on the motion, the chancellor determined that Section 75-76-193 does not allow HWCC and BSLO to deduct the cost of the prizes and that there were no genuine issues of material fact. After review, the Mississippi Supreme Court found the chancellor erred by giving deference to the MDOR’s and the MGC’s interpretations of Code Section 75-76-193. That error notwithstanding, the Supreme Court found the chancellor reached the right conclusion: that no genuine issues of material fact existed. Accordingly, the Supreme Court affirmed the chancellor’s grant of summary judgment. View "HWCC-Tunica, Inc. v. Mississippi Dept. of Revenue" on Justia Law

In 2010, Noell Industries, Inc. sold its interest in a limited liability company for a net gain of $120 million. Noell Industries reported the income to Idaho, but paid all of the resulting tax on the gain to the Commonwealth of Virginia, its commercial domicile. Following an audit, the Idaho Tax Commission concluded the net gain was “business income” pursuant to Idaho Code section 63-3027(a)(1) and, thus, apportionable to Idaho. Noell Industries sought judicial review before the Ada County District Court pursuant to Idaho Code section 63-3049(a). The district court ruled that the Commission erred when it: (1) determined that Noell Industries paid insufficient taxes in 2010; and (2) assessed additional tax and interest against it. The Commission appealed. Finding no reversible error in the trial court's judgment, the Idaho Supreme Court affirmed. View "Noell Industries v. Idaho Tax Commission" on Justia Law