Justia Tax Law Opinion Summaries

Plaintiffs were the Plaquemines Parish Council and the St. James Parish School Board, each being designated as the single collector for sales and use taxes levied by all taxing authorities within their respective parishes. Plaintiffs filed a Petition for Declaratory Judgment and Request for Preliminary and Permanent Injunction, and supplementing and amending petitions thereto, alleging that La.R.S. 47:337.102(I) violated La.Const. art. VI, section 29 and La.Const. art. VII, section 3. In 2010, Plaquemines Parish entered into an Agreement to Collect Local Taxes Due on the Sale or Use of Motor Vehicles and Factory Built Homes (“the agreement”) with the Louisiana Department of Public Safety and Corrections (“the Department”) on behalf of the Department and the Vehicle Commissioner (“OMV”) for the collection of sales and use taxes levied in the parish. The agreement contains a provision allowing OMV to collect the identified sales and use taxes and to retain 1% of the taxes levied. St. James Parish also entered into an agreement with OMV for the collection of sales and use taxes levied in the parish. Their agreement contains the identical provision allowing OMV to collect the sales and use taxes and to retain 1% of the taxes levied as payment for its collection duties. After de novo review, the Louisiana Supreme Court concurred that La.R.S. 47:337.102(I) was unconstitutional. Consequently, the judgment of the district court declaring La.R.S. 47:337.102(I) unconstitutional and permanently enjoining the State of Louisiana, Department of Public Safety and Corrections, Office of Motor Vehicles from withholding locally levied sales and use taxes under the authority of La.R.S. 47:337.102(I) and from disbursing any funds withheld to the Louisiana Uniform Local Sales Tax Board was affirmed. View "West Feliciana Parish Government v. Louisiana" on Justia Law

The Supreme Court affirmed the ruling of the Tax Equalization and Review Commission (TERC), which reduced the county's $16.3 million valuation of commercial real estate used as an ethanol plant to $7.3 million based upon the taxpayer's appraisal, holding that there was no error appearing on the record.The original $16.3 million valuation in this case was based upon mass appraisal techniques. TERC reduced the value based upon the appraisal of the taxpayer, finding that because the appraiser performed the appraisal according to professional approved standards his appraisal report was competent evidence sufficient to rebut the presumption in favor of the Board of Equalization's determination affirming the county assessor's valuation of the property. The Supreme Court affirmed, holding that TERC's determination that the Board's valuation was unreasonable and arbitrary was supported by competent evidence and was not arbitrary, capricious, or unreasonable. View "Wheatland Industries v. Perkins County Board of Equalization" on Justia Law

The First Circuit reversed the judgment of the district court dismissing for want of jurisdiction under the Tax Injunction Act (TIA) this lawsuit asking that the district court enjoin the collection of certain Rhode Island tolls as violative of the Commerce Clause of the United States Constitution, holding that the TIA's prohibition stating that district courts shall not enjoin levy or collection of "any tax under State law" where a remedy may be had in state courts is inapplicable to the Rhode Island tolls.A Rhode Island statute authorized the Rhode Island Department of Transportation to collect from tractor-trailers certain tolls in order to pay for replacement, reconstruction, maintenance, and operation of Rhode Island bridges. Plaintiff trucking entities brought this lawsuit. The district court dismissed the lawsuit, concluding that it lacked jurisdiction under the TIA. The First Circuit reversed, holding the the tolls in this case were not a "tax" under the statute. View "American Trucking Ass'n v. Alviti" on Justia Law

The Albion Little River Fire Protection District, organized under Health and Safety Code 13800, lies within a state responsibility area. MRC, a commercial timberland operator, owns 8,269.54 acres of commercial timberland within the District’s geographical boundaries. In 2014, the District adopted an ordinance that levied a special parcel tax, at the rate of $75 per unit, for fire protection, suppression, prevention, and related services. In a special election, 82 percent of District voters approved that ordinance. MRC has paid all taxes owed under the ordinance, under protest, and filed unsuccessful claims with Mendocino County seeking refunds. MRC filed complaints, citing Revenue and Taxation Code sections 5096 and 5097, alleging that the MRC parcels “were not included in the District because they were commercial forest lands and timbered lands declared to be in a state responsibility area within the meaning of [section] 13811.” The trial court agreed and found that MRC was owed $60,870.08, with interest. The court of appeal affirmed, rejecting an argument that the refund claims were barred because they challenged the validity of the ordinance which was validated and immune from review by the time MRC filed its complaint. The action did not challenge the validity of the ordinance, but only its applicability to particular parcels. View "Mendocino Redwood Co., LLC v. County of Mendocino" on Justia Law

The DC Circuit affirmed the tax court's judgment that certain partnership currency option transactions lacked economic substance and were shams designed to look like real world trades without any of the risk or concomitant opportunity for profit. The court held that the tax court did not clearly err in concluding that the parties agreed in advance on the exact rates to be used in determining earnings and losses under the option agreements, together with a related evidentiary point. In this case, the parties fixed the forward exchange rates, ensuring that they could predict the precise amount that the winning and losing trades would pay—and ensuring that the trades had no ex ante profit potential and lacked any other legitimate nontax business purposes. The court rejected the partnerships' remaining claims and held that the tax court did not err in any material respect. View "Endeavor Partners Fund, LLC v. Commissioner" on Justia Law

The Fifth Circuit affirmed the district court's decision holding that a $52 million payment from taxpayer's predecessor in interest to the predecessor's subsidiary was not a bad debt under 26 U.S.C. 166 or an ordinary and necessary business expense under 26 U.S.C. 162.In this case, BJ Parent's $52 million payment to BJ Russia created no debt owed to BJ Parent, and the payment discharged no guarantor obligation of BJ Parent's. Therefore, the court held that the payment was not deductible as a bad debt under Section 166. Furthermore, the court held that the IRS correctly disallowed any deduction based on the Free Financial Aid (FFA) as an ordinary and necessary business expense under section 162. The court explained that the FFA was not an expense of BJ Parent, and it was not provided to pay any expense of BJ Russia. The court reasoned that even if BJ Parent's long-term strategy included recapitalizing its Russian subsidiary to meet Russian capitalization requirements, this did not itself make the funds deductible. View "Baker Hughes, Inc. v. United States" on Justia Law

Horsehead is a Delaware corporation, with its primary place of business in Pennsylvania, that has an Illinois manufacturing facility. Tax liability notices were issued due to Horsehead’s failure to pay Illinois use tax (35 ILCS 105/1) on its out-of-state purchases of metallurgical coke in 2007-2011. Horsehead argued that it was exempt from paying use tax on the coke under section 3-5(18) of the Use Tax Act for machinery and equipment used primarily in the manufacturing of tangible personal property, specifically citing the “chemical exemption.” The Illinois Independent Tax Tribunal affirmed the notices and the imposition of use tax, interest, late filing penalties, and late payment penalties totaling $1,521,041. The appellate court affirmed. The Illinois Supreme Court affirmed in part. Based upon the plain language of section 3-50(4), the legislature chose to limit the exemption to only those chemicals that cause a “direct and immediate change” on the final manufactured product. At no time in the described chemical processes and reactions does the coke have a direct and immediate effect on the zinc or iron being manufactured. The broad interpretation of the use tax chemical exemption urged by Horsehead would result in virtually any chemical used in the manufacturing process qualifying for the exemption. View "Horsehead Corp. v. Department of Revenue" on Justia Law

The Supreme Court affirmed the decision of the administrative hearing commission determining that certain pain treatment service items used in compounding medications do not fall under the use tax exemption in Mo. Rev. Stat. 144.054.2 for materials used or consumed in compounding a product, holding that the commission correctly determined that the Interventional Center for Pain Management (Center) did not qualify for the compounding exemption under section 144.054.2.The director of revenue assessed $69,311 in tax liability for a five-year period against Center after discovering that Center did not file a use tax return or pay use tax on certain out-of-state purchases. Center contested use tax liability for certain items used for the injection of prescription drug compounds, asserting that the devices were exempt from use tax as materials used in compounding operation under section 144.054.2. The administrative hearing petition upheld the assessment. The Supreme Court affirmed, holding that Center failed to meet its burden of proof to prove its purchases were used in the compounding of a product for sale, as required for the compounding exemption under section 144.054.2. View "Interventional Center for Pain Management v. Director of Revenue" on Justia Law

The Supreme Court dismissed this appeal from the trial court's conclusion that Plaintiff was entitled to a credit for income taxes that he paid in New York, thus reversing in part the decision of the Commissioner of Revenue Services assessing personal income tax deficiencies against Plaintiff, holding that the appeal was moot because the Commissioner failed to challenge an independent basis for the trial court's ruling.Plaintiff was a general partner who lived in Connecticut and managed intangible property owned by limited partnerships operating in New York. The Commission concluded that Plaintiff's income consisted income derived from trading intangible property for Plaintiff's own account, and thus it was taxable in this state. The trial court disagreed, concluding that Plaintiff was not trading intangible property for his own account but was trading intangible property owned by the limited partnerships and thus was entitled to a credit for the income tax that he paid in New York. The Commissioner appealed, challenging only one of the two independent bases for the trial court's decision. The Supreme Court dismissed the appeal as moot as a consequence of the Commissioner's failure to challenge both grounds for the trial court's decision. View "Sobel v. Commissioner of Revenue Services" on Justia Law

First Student, Inc., a school bus contractor, sought to reverse a Court of Appeals decision to affirm dismissal of its business and occupation ("B&O") tax refund action. At issue was whether First Student's transporting of students qualified as transporting persons "for hire" such that it made First Student subject to the public utility tax ("PUT") rather than the general B&O tax. The Washington Supreme Court found the meaning of "for hire" was ambiguous as used in the PUT, but resolved the ambiguity in favor of the long-standing interpretation that school buses were excluded from the definitions of "motor transportation business" and "urban transportation business" under RCW 82.16.010(6) and (12). The Court found that WAC 458-20-180 was a valid interpretation of the statute, and affirmed the Court of Appeals. View "First Student, Inc. v. Dep't of Revenue" on Justia Law