Justia Tax Law Opinion Summaries

Alternative Carbon claimed nearly $20 million in energy tax credits meant for taxpayers who sell alternative fuel mixtures under 26 U.S.C. 6426(e)(1). The Internal Revenue Service determined that Alternative Carbon should not have claimed these credits and demanded repayment, with interest and penalties. Alternative Carbon paid back the government, in part, and then filed a refund suit. The Claims Court decided that Alternative Carbon failed to establish that it properly claimed the credits or that it had reasonable cause to do so and granted the government summary judgment. The Federal Circuit affirmed. Although the product at issue, a feedstock/diesel mixture, was a “liquid fuel,” it was not “sold” by Alternative Carbon; the transaction was more of a transfer for disposal. Alternative Carbon cannot show it had reasonable cause for claiming the alternative fuel mixture credits. View "Alternative Carbon Resources, LLC v. United States" on Justia Law

At issue before the Colorado Supreme Court in this case was how Colorado’s Department of State (“the Department”) charged for some of its services to fund its general operations, which included overseeing elections. It was this funding scheme that the National Federation of Independent Business (“NFIB”) argued was unconstitutional under the Colorado Taxpayer’s Bill of Rights (“TABOR”). Section 24-21-104(3)(b), C.R.S. (2019), directed the Department to “adjust its fees so that the revenue generated from the fees approximates [the Department’s] direct and indirect costs.” This fluctuating scheme for self-funding had been in place for nearly thirty years, predating TABOR by nearly a decade. There had been adjustments to charges since TABOR’s enactment; NFIB contended these adjustments violated TABOR: (1) by actually being taxes, because there was no reasonable relationship between the Department’s charges and the government functions funded by the charges; and (2) any increase in the charges after TABOR’s enactment in 1992 constituted either a new tax, an increase in a tax rate, or a tax policy change - all requiring voter approval, which never occurred. Because the Supreme Court disagreed with NFIB’s second contention, it did not address its first. Based on the stipulated facts, the Supreme Court concluded there was no evidence to establish that any post-TABOR adjustments resulted in a new tax, tax rate increase, or tax policy change directly causing a net revenue gain. Thus, the trial court properly granted summary judgment. View "Griswold v. Nat'l Fed'n of Indep. Bus." on Justia Law

Section 515 of the Housing Act of 1949, 42 U.S.C. 1485, authorizes the Department of Agriculture, Farmers Home Administration to loan money to nonprofit entities to provide rental housing for elderly and low- and moderate-income individuals and families. Sonoma, a limited partnership contracted with the government to construct low-income housing in exchange for a $1,261,080 Section 515 loan. In 2010, Sonoma submitted a written request to prepay the balance of its loan. The government denied the request. Sonoma sued for breach of contract, including a claim for a “tax neutralization payment” to offset the negative tax consequences of a lumpsum damages award. The Claims Court awarded Sonoma expectancy damages of $4,223,328 and a tax gross-up award of $3,171,990. The Federal Circuit vacated. The Claims Court clearly erred in using the income from a single tax year to predict the future rates at which each partner would pay taxes. While the government’s breach created the circumstances that require consideration of future income and tax rates, Sonoma is not absolved of its burden of showing an income-tax disparity and justifying any adjustment. View "Sonoma Apartment Associates v. United States" on Justia Law

In its second appearance before the Georgia Supreme Court, the dispute between appellee Lowndes County Board of Tax Assessors (“the Board”) and eight partnerships which built and operated affordable housing apartment complexes (“Section 42 properties”) in Lowndes County (collectively, “Appellants”), with the help of federal and state Low Income Housing Tax Credits (“LIHTCs” or “Section 42 Tax Credits”), in connection with which they executed Land Use Restrictive Covenants. The dispute this time turned on the valuation of those tax credits when calculating ad valorem real property taxes. The Supreme Court determined the trial court had subject matter jurisdiction to decide this case, and that LIHTCs did not constitute “actual income” for purposes of OCGA 48-5-2 (3) (B) (vii) (II). Moreover, OCGA 48-5-2 (3) (B) (vii) (I) and (II) did not run afoul of the Georgia Constitution’s taxation uniformity provision. Accordingly, the Court reversed the judgment of the trial court. View "Heron Lake II Apartments, LP v. Lowndes County Board of Tax" on Justia Law

The Supreme Court affirmed the decision of the circuit court granting an improvement district's (District 84) request for foreclosure and entering judgment against TND Developers, LLC for the total of unpaid improvement district taxes and ordering all TND lands within the district sold with the proceeds applied against the improvement district's judgment, holding that Appellants' claims on appeal failed.On appeal, Appellants argued, inter alia, that District 84's lien for nonpayment of improvement taxes could only attach to individual tracts upon which taxes were actually delinquent and unpaid, and therefore, an in rem judgment could not be attached to certain tracts. The Supreme Court affirmed, holding (1) Ark. Code Ann. 14-94-118 makes clear that all unreleased property within the district is subject to District 84's tax lien; (2) because District 84's complaint plainly described the land it sought to foreclose, as well as the tracts excluded from the action, the circuit court did not err in allowing District 84 to proceed on the basis of a statutorily defective complaint; (3) District 84 did not improperly refuse prepayment of improvement taxes; (4) Appellants' claims for equitable estoppel or equitable subordination failed; and (5) the circuit court's order did not violate Appellants' due process rights. View "Bullock's Kentucky Fried Chicken, Inc. v. City of Bryant, Arkansas" on Justia Law

The Ninth Circuit affirmed the district court's dismissal of a securities fraud action because it was barred by the act of state doctrine. Plaintiffs alleged that defendants knowingly failed to disclose legal deficiencies under Mexican tax law in the 2012 APA Ruling and sold shares knowing these legal deficiencies existed.The panel held that plaintiffs' claims under the Securities Exchange Act of 1934 would require a United States court to pass judgment on the validity of a 2012 ruling by Mexico's tax authority. In this case, the mandatory elements of applying the act of state doctrine were satisfied and the policies underlying the doctrine weighed in favor of applying it to bar plaintiffs' claims. Agreeing with its sister circuits, the panel held that the district court was not required to consider the Sabbatino factors. The panel declined to reconsider whether a tax ruling by the Mexican government, that remains valid in Mexico, complied with Mexico's tax laws. View "Royal Wulff Ventures LLC v. Primero Mining Corp." on Justia Law

The Second Circuit vacated the district court's dismissal of Pfizer's claim against the United States for overpayment interest on its delayed tax refund. The court held that jurisdiction of Pfizer's claim for overpayment lies exclusively with the United States Court of Federal Claims. The court explained that overpayment interest is a straightforward claim against the federal government that was covered by the Tucker Act. Accordingly, the court transferred the case to the Court of Federal Claims. View "Pfizer Inc. v. United States" on Justia Law

In March 2009 Truitt joined the Moorish Science Temple of America, which calls itself a sovereign “ecclesiastical government” and teaches that neither the states nor the federal government have authority over its members. Members purport to hold something akin to diplomatic immunity. In late 2009, Truitt filed seven nearly identical tax returns, each falsely claiming that she was entitled to a $300,000 refund. The IRS identified six returns as fraudulent, but for unknown reasons, approved one and sent her a check for the full amount. Within weeks the IRS demanded that she return the funds. She did not respond but spent the money on jewelry, a condominium, tickets to sporting events, and an investment. Truitt was convicted of making false claims against the United States, 18 U.S.C. 287 and theft of government funds, 18 U.S.C. 641. The Seventh Circuit affirmed, rejecting Truitt’s challenge the exclusion of her expert witness, psychologist Dr. Fogel, who proposed to testify that Truitt was a member of a “charismatic group”—a cult-like organization that indoctrinates its members. Truitt argued that she lacked the requisite mens rea for the crimes. The judge properly excluded the testimony under “Daubert” and Federal Rules of Evidence 702 and 704(b), reasonably concluding that Fogel lacked the relevant expertise and his methods were not reliable. View "United States v. Truitt" on Justia Law

The Supreme Judicial Court affirmed the decision of the board of assessors of Boston, holding that taxed personal property owned by and assessed to Veolia Energy Boston, Inc. consisting principally of pipes that Veolia used to produce, store, and distribute steam is exempt from local taxation and that the great integral machine doctrine remains an appropriate means by which to determine whether certain property constitutes machinery.At issue was whether the pipes were exempt from local taxation in accordance with Mass. Gen. Laws ch. 59, 5, clause 16 (3), which provides that property owned by a manufacturing corporation "other than...pipes" is exempt from local taxation. The board found that Veolia's networks of pipes and appurtenant equipment operate in concert as a single, integrated machine and, as a result, concluded that the pipes constituted machinery exempt from local taxation in accordance with clause 16 (3). The Supreme Judicial Court affirmed, holding that the board's reasoning in all material aspects was sound and that there was no basis for disturbing the board's decision. View "Veolia Energy Boston, Inc. v. Board of Assessors of Boston" on Justia Law

In considering whether online travel companies (OTCs) are subject to municipal privilege taxes under Model City Tax Code (the Code) 444 and 447 the Supreme Court held that the OTCs in this case were subject to taxation under section 444 but not under section 447.In 2013, the City of Phoenix and other cities (the Cities) issued privilege tax assessments against the OTCs based on the Cities' belief that the OTCs owed unpaid privilege taxes under sections 444 and 447 for engaging in the business of operating hotels or, alternatively, for acting as brokers for hotels. The tax court concluded that the OTCs were liable for the taxes. The court of appeals concluded that the OTCS were subject to taxation under section 444 but not under section 447 and that the Cities could assess the taxes, penalties, and interest under section 444 retroactively. The Supreme Court vacated in part the court of appeals' decision, holding (1) the OTCs are subject to taxation under section 444 because they are brokers engaging in the business of operating a hotel; and (2) the OTCs are not subject to taxation under section 447 because they are not hotels. View "City of Phoenix v. Orbitz Worldwide Inc." on Justia Law