Justia Tax Law Opinion Summaries

The Supreme Court dismissed this petition for relief seeking to direct Nueces County and the Nueces County Appraisal District to withdraw and cease from issuing tax assessments to Corpus Christi Liquefaction, LLC (CCL), holding that under the circumstances of this case, the Texas Constitution does not permit the Court to exercise the jurisdiction conferred by Tex. Loc. Gov't Code 72.010.For several years, both Nueces County and San Patricio County have taxed structures that are built on land in San Patricio County and extend over the water into Nueces County. In 2017, the Legislature enacted section 72.010, allowing taxpayers who have paid taxes on the same property to each county to sue in the Supreme Court for relief. In this petition, CCL asserted that it was being taxed in both counties on the same property. The Nueces parties, however, argued that three disputed fact issues precluded the Supreme Court's exercise of section 72.010 jurisdiction in this case. The Supreme Court dismissed the petition without prejudice, holding that the parties' disputes over the nature of CCL's facility in relation to the counties' boundary were significant and required resolution. View "In re Corpus Christi Liquefaction, LLC" on Justia Law

The Supreme Court affirmed the decision of the Wyoming Board of Equalization affirming the determination of the Department of Revenue that Delcon Partners, LLC's purchase of a portion of Delcon, Inc's tangible and intangible assets was not exempt from sales tax, holding that the Department correctly concluded that the transaction was not excluded from the definition of "sale" under Wyo. Stat. Ann. 39-15-101(a)(vii)(N) and was subject to sales tax.Delcon Partners purchased twenty-eight percent of Delcon, Inc's assets. The Department determined that the transaction was not exempt from sales tax because Delcon Partners did not purchase at least eighty percent of the total value of the assets, including cash and accounts receivable. The Board affirmed. Delcon appealed, arguing that section 39-15-101(a)(vii)(N) should be interpreted to require only a purchase of eighty percent of a seller's tangible personal property rather than eighty percent of its total Wyoming assets. The Supreme Court affirmed, holding that the statute plainly conditions exclusion from the definition of "sale" on the purchase of at least eighty percent of the value of all of a business entity's assets located in Wyoming, which did not happen in this case. View "Delcon Partners LLC v. Wyoming Department of Revenue" on Justia Law

The Taxpayers, West Virginia non-stock, not-for-profit, 26 U.S.C. 501(c)(3) organizations, are generally exempt from federal income tax but are not exempt from taxes on “wages” from “employment” under the Federal Insurance Contributions Act (FICA). “Employment” under FICA has a broad definition but excepts service performed in the employ of a school by a student who is regularly enrolled and attending classes at the same school, 26 U.S.C. 3121(b)(10). In 2010, the IRS determined that medical residents fall within that exception, applied the determination retroactively, and issued tax refunds to the Taxpayers. The IRS paid interest on these tax refunds, applying the interest rate for corporations under 26 U.S.C. 6621(a)(1). If the IRS had used the interest rate for noncorporations, the Taxpayers would have received approximately $1.9 million in additional statutory interest. The Claims Court affirmed, reasoning that the Taxpayers are corporations under section 6621(a)(1) notwithstanding their nonprofit status. The Federal Circuit affirmed, agreeing with other circuits that an entity incorporated under state law is a corporation within the meaning of the Code. The Code addresses three basic types of corporations: nonprofit corporations covered by subchapter F; certain for-profit corporations covered by subchapter C; and certain for-profit corporations covered by subchapter S. In section 6621, Congress used the generic definition of “corporation,” which includes both for-profit and nonprofit entities. View "Charleston Area Medical Center, Inc. v. United States" on Justia Law

Petitioner Edward Shadid challenged Oklahoma City Ordinance No. 26,255 (Ordinance)1 which was passed by the City Council of Oklahoma City and signed by the Mayor on September 24, 2019. The Ordinance amended Article II of Chapter 52 of the Oklahoma City Municipal Code, 2010, by creating a new Section 52-23.7. This amendment created a temporary term (8 year) excise tax of 1% to begin April 1, 2020, if approved by a majority vote of qualified, registered voters of Oklahoma City. A special election was set for this purpose on December 10, 2019. Petitioner contends the Ordinance violates the single subject rule found in art. 5, sec. 57, Okla. Const. The Oklahoma Supreme Court assumed original jurisdiction to respond to Petitioner's challenge, and concluded the proposed ordinance did not violate the single subject rule found in the Oklahoma Constitution or the single subject rule found in state statute and City of Oklahoma City's charter. Relief was thus denied. View "Shadid v. City of Oklahoma City" on Justia Law

A challenge to the timeliness of a partnership proceeding must be raised in the partnership proceeding itself and that failure to do so results in a forfeiture of the argument. The Ninth Circuit affirmed the tax court's dismissal of taxpayers' petition challenging adjustments to a Final Partnership Administrative Adjustment (FPAA) involving taxpayers' partnership. In an earlier appeal, the panel upheld the validity of the partnership proceeding and the adjustments made therein. The panel held that taxpayer's challenges in this case essentially amounted to a collateral attack on the partnership proceeding. In this case, the taxpayers had an opportunity to challenge the FPAA during the partnership proceeding, but elected not to do so. View "Bedrosian v. Commissioner" on Justia Law

Chapter 70 of the Wisconsin Tax Code governs the taxation of manufacturing and commercial companies aside from railroads and utilities. Chapter 76 governs the taxation of railroads and utilities, including air carriers, pipeline companies, and water conservation and regulation companies. The Code contains exemptions from the general property tax, including an exemption for “all intangible personal property,” which covers custom computer software. Manufacturing and commercial taxpayers generally qualify for the intangible personal property exemption; railroads and utilities do not and are the only taxpayers that Wisconsin requires to pay taxes on intangible property, including custom software. Union Pacific claimed the value of its custom software as exempt. The Department of Revenue audited Union Pacific and concluded that for the years 2014 and 2015, it owed $2,631,104.77 in back taxes and interest after disallowing that deduction. Union Pacific filed suit, arguing that the tax singles out railroads as part of an isolated and targeted group in violation of the Railroad Revitalization and Regulatory Reform Act of 1976, 49 U.S.C. 11501(b)(4). The Seventh Circuit affirmed summary judgment in favor of Union Pacific. The intangible property tax exempts everyone except for an isolated and targeted group of which railroads are a part. View "Union Pacific Railroad Co. v. Wisconsin Department of Revenue" on Justia Law

In the November 2014 election, a majority of the City of Rialto’s (the City) voters approved Measure U, a ballot measure adopted by the City which imposed an “annual business license tax” of “up to One Dollar [($1.00)] per year for each One (1) cubic foot of liquid storage capacity” on “[a]ny person engaged in the business of owning[,] operating, leasing, supplying[,] or providing a wholesale liquid fuel storage facility” in the City. The four plaintiffs-appellants in these actions, Tesoro Logistic Operations, LLC (Tesoro), Equilon Enterprises, LLC (Equilon), SFPP, L.P. (SFPP), and Phillips 66 Company (P66), owned all of the wholesale liquid fuel storage facilities, also known as tank farms or terminals, in the City. Plaintiffs were engaged in the business of “refining and marketing fuel nationwide.” Gasoline and other fuels were transported from refineries to plaintiffs’ facilities in the City, where the fuels were placed in large storage tanks and mixed with additives before they were are transported to gasoline stations or other purchasers for retail sale. Beginning in 2015, the City assessed Measure U taxes on plaintiffs based on the liquid fuel storage capacity of plaintiffs’ wholesale liquid fuel storage tanks in the City. Plaintiffs paid the taxes under protest and filed these actions challenging Measure U’s validity on statutory and constitutional grounds. Plaintiffs moved for judgments on the pleadings, and for summary judgment or summary adjudication, then the City filed its own motions for judgments on the pleadings. Following a hearing, the trial court concluded there were no disputed issues of fact, that all of the motions presented the same questions of law, and that the Measure U tax was a valid business license tax. The court thus denied plaintiffs’ motions, granted the City’s motions, and entered judgments in favor of the City. In these appeals, plaintiffs renewed their legal challenges to Measure U. After review, the Court of Appeal concluded the Measure U tax was an invalid real property tax. Thus, the Court reversed judgments in favor of the City, and remanded to the trial court with directions to grant plaintiffs’ motions for judgments on the pleadings and to enter judgments in favor of plaintiffs on plaintiffs’ complaints. View "Tesoro Logistic Operations, LLC v. City of Rialto" on Justia Law

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