Justia Tax Law Opinion Summaries

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

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