Justia Tax Law Opinion Summaries

The case revolves around a dispute between the City of Valdez and the Prince William Sound Oil Spill Response Corporation, the State of Alaska, Department of Revenue, and the State Assessment Review Board. The City of Valdez appealed the State's determination that certain property was not taxable. After nearly two decades of administrative and court proceedings, Valdez won. However, due to the length of the litigation, Valdez has not been able to collect taxes on the property that should have been taxed.The Superior Court of the State of Alaska, Third Judicial District, Anchorage, ruled that even though the State wrongly determined certain property was not taxable, the State cannot now assess taxes on this property if more than three years have passed since the taxpayer filed its tax return. According to this ruling, taxes may be assessed on this property only for the most recent tax years. Valdez appealed this decision.The Supreme Court of the State of Alaska affirmed the superior court’s decision. The court held that the statutory text is clear and does not suggest that the legislature intended something other than the plain meaning of the text. The court also disagreed with Valdez's argument that it is impossible for a municipality to challenge a taxability determination in less than three years. The court concluded that AS 43.05.260’s three-year limitations period applies to tax assessments under AS 43.56, even if Revenue’s initial decision not to tax certain property was wrong. View "City of Valdez v. Prince William Sound Oil Spill Response Corporation" on Justia Law

The case involves Salt Lake County's challenge to the constitutionality of the Aircraft Valuation Law, which provides a preferred method for determining the fair market value of aircraft for tax purposes. The County argued that the application of the law to Delta Air Lines' aircraft resulted in an assessment below fair market value, violating the Utah Constitution. The County also contended that the law, on its face, violated the Utah Constitution by divesting the Utah State Tax Commission of its power to assess airline property.The Utah State Tax Commission had previously upheld the 2017 assessment of Delta's property, which was calculated according to the Aircraft Valuation Law. The Commission found that the County did not provide clear and convincing evidence that the legislature's preferred method of valuation did not reasonably reflect fair market value.The Supreme Court of the State of Utah rejected the County's arguments. The court held that the County failed to fully utilize the statutory safety valve, which allows the Commission to use an alternative valuation method if the preferred method does not reasonably reflect fair market value. The court also rejected the County's facial challenge to the Aircraft Valuation Law, concluding that the County did not show that the law prohibits the legislature from prescribing a preferred method for valuing aircraft. Therefore, the court affirmed the Commission's decision. View "Salt Lake Co v. Tax Commission" on Justia Law

The case revolves around Ronald Lee Morgan, who filed for Chapter 7 bankruptcy in North Carolina. Morgan owned a home jointly with his wife as tenants by the entirety. He sought to exempt this home from the bankruptcy estate to the extent of his outstanding tax debt to the Internal Revenue Service (IRS). However, the bankruptcy court disallowed the exemption. Morgan's wife did not jointly owe the debt to the IRS and did not file for bankruptcy. The trustee of the bankruptcy estate objected to Morgan's claim for an exemption, arguing that under North Carolina state law, tenancy by the entireties property is generally exempt from execution by creditors of only one spouse, but this rule does not apply to tax obligations owing to the United States.The bankruptcy court sustained the trustee's objection, and on appeal, the district court affirmed this decision. Morgan then appealed to the United States Court of Appeals for the Fourth Circuit, arguing that for his IRS debt to override the entireties exemption, the IRS must have obtained a perfected tax lien on the property prior to the filing of the bankruptcy petition.The Court of Appeals for the Fourth Circuit affirmed the district court's ruling. The court concluded that Morgan's interest in his home as a tenant by the entirety is not "exempt from process" under "applicable nonbankruptcy law." The court rejected Morgan's argument that the IRS must have actually obtained a lien prior to the bankruptcy filing, stating that the absence of a judgment or lien has no bearing on the hypothetical issue of whether the debtor's interest would be exempt from process. The court also dismissed Morgan's contention that the IRS must perfect a lien against his property before he filed for bankruptcy. The court concluded that nothing in the Supreme Court's decision in United States v. Craft limits its holding to instances where the IRS has perfected a tax lien against the property. View "Morgan v. Bruton" on Justia Law

The case involves the United States government's action to reduce federal tax liens to judgment and foreclose on real property. The government sought to foreclose on tax liens against a property owned by Komron Allahyari. Shaun Allahyari, Komron's father, was named as an additional defendant due to his interest in the property through two deeds of trust. The district court found that the government was entitled to foreclose on the tax liens and sell the property. However, the court did not have sufficient information to enter an order for judicial sale and ordered the parties to submit a Joint Status Report. Shaun Allahyari filed an appeal before the parties submitted the Joint Status Report and stipulated to the value of the property to be sold.The United States Court of Appeals for the Ninth Circuit dismissed the appeal for lack of jurisdiction. The court explained that the district court's order was not final because it did not have sufficient information to enter an order for judicial sale. The court also clarified that for a decree of sale in a foreclosure suit to be considered a final decree for purposes of an appeal, it must settle all of the rights of the parties and leave nothing to be done but to make the sale and pay out the proceeds. Because that standard was not met in this case, there still was no final judgment. The court therefore dismissed the appeal for lack of jurisdiction. View "USA V. ALLAHYARI" on Justia Law

The case involves God's Storehouse Topeka Church (GSH), which appealed a district court order denying its petition to quash a third-party summons issued by the Internal Revenue Service (IRS) to Kaw Valley Bank. The IRS sought bank records for accounts in GSH's name. GSH claimed the summons was invalid because the IRS failed to satisfy requirements applicable to church tax inquiries and examinations before issuing the summons. The district court denied GSH's petition, concluding that the provisions of § 7611, which govern church tax inquiries and examinations, do not apply to § 7609 third-party summonses.The case was initially referred to a magistrate judge who concluded that the third-party summons issued to Kaw Valley was not subject to the heightened requirements set out in § 7611. The district court adopted the magistrate judge's report and recommendation. It ruled that the Tax Exempt and Government Entities Commissioner, who had approved the inquiry, was an appropriate high-level Treasury official for purposes of §7611(h)(7). However, it also concluded that the provisions of § 7611 do not apply to § 7609 third-party summonses.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court's decision. The court held that the plain language of § 7611 makes clear it does not apply to § 7609 third-party summonses. Therefore, it was unnecessary to decide whether the Tax Exempt and Government Entities Commissioner is an appropriate high-level Treasury official. View "God's Storehouse Topeka Church v. United States" on Justia Law

The case involves Eduardo Castillo, the record owner of a property, and Libert Land Holdings 4 LLC (LLH4), which purchased a tax certificate for the property after Castillo failed to pay delinquent taxes. After the tax deed was issued, Castillo attempted to redeem the property, but the county treasurer refunded his payment because the tax deed had already been issued. Castillo then filed a declaratory judgment action, alleging that the tax deed was void due to a failure to comply with statutory notice requirements and sought to quiet title to the property in his name.The District Court for Douglas County found in favor of Castillo, declaring the tax deed void due to LLH4's failure to comply with the notice requirements under section 77-1801 et seq. of the Nebraska Revised Statutes. The court also ordered Castillo to pay taxes on the property and interest.LLH4 appealed the decision to the Nebraska Supreme Court, arguing that it had complied with all statutory requirements for notice and proof of notice required for the issuance of a treasurer’s tax deed. The Supreme Court affirmed the lower court's decision, concluding that LLH4’s application for the tax deed was deficient and that the deficiencies could not be cured by evidence adduced at trial. The court also noted plain error in the lower court's failure to determine the precise payment due from Castillo and remanded the case to the district court with directions to specify the precise amount of taxes and accrued interest to be paid by Castillo. View "Castillo v. Libert Land Holdings 4" on Justia Law

The case involves a group of appellants who allegedly purchased luxury vehicles with funds provided by Dilmurod Akramov, the owner of CBC and D&O Group. The appellants would then transfer the vehicle titles back to Akramov's D&O Group without receiving cash or equivalent in exchange. They would then claim a "trade-in credit" against the sales tax due on the purchase of a vehicle. The Arkansas Department of Finance and Administration (DFA) argued that these were not valid sales as required by Arkansas law and denied the sales-tax-refund claims.The appellants challenged the DFA's decision through the administrative review process, which affirmed the DFA's decision. The appellants then appealed to the Pulaski County Circuit Court for further review. The circuit court found that the appellants' attorney, Jason Stuart, was a necessary witness and therefore disqualified him from further representing the appellants. The court also held the appellants in contempt for failing to provide discovery per the court's order.The Supreme Court of Arkansas affirmed the circuit court's decision. The court held that the circuit court did not abuse its discretion in disqualifying Stuart. The court applied the three-prong test from Weigel v. Farmers Ins. Co., which requires that the attorney's testimony is material to the determination of the issues being litigated, the evidence is unobtainable elsewhere, and the testimony is or may be prejudicial to the testifying attorney’s client. The court found that all three prongs were satisfied in this case. The court also affirmed the circuit court's decision to strike the third amended and supplemental complaint filed by Stuart after his disqualification. View "STUART v. WALTHER" on Justia Law

The Supreme Court of Arkansas ruled in favor of the county assessor and other similarly positioned defendants, affirming the lower court's dismissal of a lawsuit brought by Ronald and Mitzi Kimbrough. The plaintiffs, representing themselves and other similarly situated taxpayers, had argued that the county assessor's method of calculating property tax assessments for homeowners over 65 or who are disabled violated the Arkansas Constitution's Amendment 79. In their view, the amendment should freeze the assessment on a homeowner's principal residence at the time of purchase. However, the defendants argued that the plaintiffs had failed to exhaust their administrative remedies, as required by law, before taking the case to court.The Supreme Court agreed with the defendants, noting that the plaintiffs' complaint must be handled by the County Court according to the Arkansas Constitution due to its relation to county taxes. The Court held that the plaintiffs had failed to exhaust the necessary administrative remedies before bringing the case to court, which deprived the court of subject-matter jurisdiction. The Court dismissed the plaintiffs' arguments about the potential policy implications of its ruling, noting that public policy is declared by the General Assembly, not the courts. Thus, the Court affirmed the lower court's dismissal of the case and dismissed the defendants' cross-appeal as moot. View "KIMBROUGH V. GRIEVE" on Justia Law

The Supreme Court of Arkansas reversed a lower court's ruling in a dispute involving the Arkansas Department of Finance and Administration (ADFA) and two car dealerships, Trotter Ford and Trotter Auto. The case centered on whether the dealerships' assignment of vehicles to certain employees and family members, for personal use, constituted a "withdrawal from stock" subject to sales tax under Arkansas law.The ADFA audited Trotter Ford and Trotter Auto and found that several individuals not qualified as authorized users for dealer tags under Motor Vehicle Rule 2005-7 were using dealer-tagged vehicles. The ADFA considered this a "withdrawal from stock" which required the payment of sales tax and issued notices of proposed assessment to the dealerships. Trotter paid the assessed taxes and interest, but subsequently protested the assessments. After a consolidated administrative hearing and subsequent legal challenges, the Jefferson County Circuit Court granted summary judgment in favor of Trotter, reversing ADFA’s assessments.On appeal, the Supreme Court of Arkansas disagreed with the circuit court. The court held that the use of vehicles from the dealerships' inventory, assigned to unauthorized individuals for personal use, constituted a withdrawal from stock under Arkansas law and was therefore subject to sales tax. The court further held that ADFA met its burden of proving by a preponderance of the evidence that Trotter was subject to sales tax based on the plain language of Arkansas Code Annotated section 26-52-322. Consequently, the court reversed the lower court's decision and remanded the case. View "ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION V. TROTTER FORD, INC." on Justia Law

This case involves Alliance Housing Incorporated and North Penn Supportive Housing LLC, collectively known as Alliance, Minnesota nonprofits operating to create, own, and operate affordable housing for low and very low-income people. Alliance owns several properties in Minneapolis, which are used exclusively as private residences for tenants whose incomes are 30–50 percent of the area median income. Alliance provides some supplies and cleaning services to various units but does not occupy the properties. In late 2018, Alliance applied for tax exemption for all its properties in assessment year 2020. The Minneapolis City Assessor denied the applications. Alliance then filed a property tax petition for the assessment year 2020, payable in 2021, claiming that its properties were tax-exempt. The tax court concluded that the properties owned by Alliance were exempt from property taxes.The State of Minnesota in Supreme Court held that for purposes of qualifying for tax exemption under Article X, Section 1, of the Minnesota Constitution, an institution of purely public charity with a purpose of providing housing for low-income individuals uses its real property in furtherance of its charitable purpose when it leases its property to its intended beneficiaries for personal residence. The court found that when the very purpose of an Institution of Purely Public Charity (IPPC) is to own and operate real property in a charitable manner for private residence, the exclusive residential occupancy of the property by the clients of the IPPC does not defeat the constitutional requirement that property be used to further a charitable purpose. Therefore, the tax court did not err in finding that Alliance’s properties are used for the tax-exempt purpose of providing affordable housing to low-income tenants. The decision of the tax court granting property tax exemptions to Alliance’s properties was affirmed. View "Alliance Housing Incorporated vs. County of Hennepin" on Justia Law