Justia Government & Administrative Law Opinion Summaries

Mayo Clinic, a Minnesota nonprofit corporation and tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, sought a refund of unrelated business income tax (UBIT) imposed by the IRS for tax years 2003, 2005-2007, and 2010-2012. The IRS assessed Mayo $11,501,621 in unpaid UBIT, concluding that Mayo was not a qualified educational organization under IRC § 170(b)(1)(A)(ii) because its primary function was not the presentation of formal instruction, and its noneducational activities were not merely incidental to its educational activities. Mayo paid the assessed amount and filed a refund action.The United States District Court for the District of Minnesota granted Mayo summary judgment, holding that Mayo is an educational organization as defined in § 170(b)(1)(A)(ii) and invalidating Treasury Regulation § 1.170A-9(c)(1) for adding requirements not present in the statute. The United States appealed, and the Eighth Circuit reversed the invalidation of the regulation and remanded for further proceedings. On remand, the district court concluded that Mayo had a substantial educational purpose and no substantial noneducational purpose, granting Mayo judgment for the full refund amount plus interest.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court held that "primary" in this context means "substantial" and that Mayo's substantial patient care activities are not noneducational due to the integration of education and clinical practice. The court concluded that Mayo qualifies as an educational organization under § 170(b)(1)(A)(ii) and that its patient care function does not disqualify it from this status. The judgment of the district court was affirmed. View "Mayo Clinic v. United States" on Justia Law

Several local taxing districts within Kootenai County, Idaho, including East Side Highway District, Post Falls Highway District, Worley Highway District, the City of Coeur d’Alene, and the City of Post Falls, filed claims against Kootenai County and its Treasurer, Steven Matheson. The dispute arose when Matheson decided that the County would retain all late charges and interest from delinquent property taxes to cover collection costs, rather than distributing a proportionate share to the taxing districts. The taxing districts argued that they were entitled to their share of these funds.The District Court of the First Judicial District of Idaho ruled in favor of the taxing districts, granting their motions for summary judgment and judgment on the pleadings. The court determined that Idaho Code sections 63-1015 and 63-1007(1) required the County to distribute the late charges and interest proportionately to the taxing districts. The court also awarded attorney fees to the taxing districts under Idaho Code section 12-117(4).The Supreme Court of the State of Idaho reviewed the case and affirmed the district court's judgment. The Supreme Court held that the statutory language was unambiguous and required the County to apportion late charges and interest among the taxing districts in the same manner as property taxes. The Court also upheld the award of attorney fees to the taxing districts, noting that Idaho Code section 12-117(4) mandates such an award in cases involving adverse governmental entities. The Supreme Court awarded attorney fees and costs on appeal to the taxing districts. View "East Side Hwy Dist v. Kootenai County" on Justia Law

The case involves a dispute over the interpretation and application of Idaho Code section 63-602G, which governs the homestead property tax exemption. In 2020, the Idaho Legislature amended the statute to remove the April 15 application deadline and added that the exemption "shall be effective upon the date of the application." The Idaho State Tax Commission issued guidance stating that the exemption should not be prorated based on the application date, which was supported by an Attorney General Opinion. However, Latah and Lincoln Counties disagreed and prorated the exemption based on the application date.The Counties petitioned for judicial review in their respective district courts, which were consolidated. The district court ruled in favor of the Counties, determining that the Tax Commission exceeded its authority and that the statute was ambiguous, allowing for proration based on legislative intent. The Tax Commission appealed the decision.The Supreme Court of Idaho reviewed the case and held that the plain language of Idaho Code section 63-602G requires the retroactive application of the homestead exemption to January 1 of the tax year during which the application was submitted, regardless of the application submission date. The Court found that the statute was unambiguous and that the exemption applies to the entire tax year, not prorated based on the application date.The Court also determined that the Tax Commission did not exceed its statutory authority when it issued the May 2022 Order directing the Counties to apply the full homestead exemption. The Court concluded that the Tax Commission's order was within its constitutional and statutory powers to ensure uniformity and compliance with property tax laws.The Supreme Court of Idaho reversed the district court's order, vacated the judgment, and remanded the case for entry of an order affirming the Tax Commission’s May 2022 Order. View "Latah County v. Idaho State Tax Commission" on Justia Law

Patrick Kennedy and Roy J. Meidinger, Sr. filed whistleblower claims with the IRS, alleging significant tax violations by various entities. Kennedy's claims involved three corporations, while Meidinger's claim was based on a theory that healthcare provider discounts to insurance companies constituted untaxed debt relief. Both claims were initially reviewed by the IRS Whistleblower Office (WBO) and forwarded to IRS operating divisions for further action.The IRS operating divisions did not take substantive action on Meidinger's claim or on two of Kennedy's claims. Meidinger's claim was deemed speculative, and Kennedy's first two claims were either outside the operating division's jurisdiction or involved a defunct entity. Kennedy's third claim led to an audit of the targeted taxpayer, but the IRS found no tax violations and collected no proceeds.The United States Tax Court dismissed Meidinger's case for lack of jurisdiction, as the IRS had not proceeded with any administrative or judicial action based on his information. The Tax Court also dismissed Kennedy's first two claims for the same reason but reviewed his third claim on the merits, ultimately denying it because the IRS collected no proceeds.The United States Court of Appeals for the District of Columbia Circuit reviewed the consolidated appeals. The court held that the Tax Court lacked jurisdiction over Meidinger's claim and Kennedy's first two claims, as the IRS had not taken any substantive action against the taxpayers based on their information. However, the court affirmed the Tax Court's decision on Kennedy's third claim, agreeing that no proceeds were collected, and thus, no award was warranted. The court dismissed Meidinger's appeal and Kennedy's first two claims for lack of jurisdiction and affirmed the denial of Kennedy's third claim on the merits. View "Kennedy v. Cmsnr. IRS" on Justia Law

Plaintiff Steve Rogers filed a lawsuit against the City of Redlands, alleging that the rates for the City’s solid waste collection included a surcharge for a City program to repair roads, which he claimed violated Vehicle Code section 9400.8. The trial was bifurcated into two phases. In phase one, the trial court determined that section 9400.8 was violated. In phase two, the court ruled that refunds were limited to those who paid under protest pursuant to Health and Safety Code section 5472. Both the City and Rogers appealed these rulings.The Superior Court of San Bernardino County initially reviewed the case. In phase one, the court found that the surcharge for the City’s pavement accelerated repair implementation strategy (PARIS) program constituted a charge for the privilege of using the City’s streets, thus violating section 9400.8. In phase two, the court concluded that Health and Safety Code section 5472 limited refunds to those who paid under protest, denying Rogers the retrospective remedies he sought.The Court of Appeal of the State of California, Fourth Appellate District, Division Three, reviewed the case. The appellate court affirmed the trial court’s rulings. It agreed that the surcharge for the PARIS program was indeed a charge for the privilege of using the City’s streets, prohibited by section 9400.8. The court also upheld the trial court’s application of Health and Safety Code section 5472, which limited refunds to those who paid under protest. The appellate court found no error in the trial court’s decisions and affirmed the judgment in its entirety. View "Rogers v. City of Redlands" on Justia Law

T-Mobile sought a refund for statutory service fees paid to the Kentucky Commercial Mobile Radio Service Emergency Telecommunications Board, arguing that the fees did not apply to prepaid cellular customers based on a prior court decision. The Board denied the refund request, leading T-Mobile to file a lawsuit in Franklin Circuit Court. The trial court ruled against T-Mobile, stating that it did not meet the common law refund requirements as outlined in Inland Container Corporation v. Mason County, which necessitates that payments be involuntary or made under misrepresentation.The Court of Appeals affirmed the trial court's decision, agreeing that T-Mobile's payments were voluntary and not subject to refund. T-Mobile then sought discretionary review from the Supreme Court of Kentucky. The Supreme Court granted review, heard oral arguments, and examined the record.The Supreme Court of Kentucky affirmed the Court of Appeals' decision. The court held that T-Mobile was not entitled to a common law refund because the payments were voluntary and not made under misrepresentation. The court emphasized that the payments were not collectible by summary process or fine and imprisonment, and T-Mobile had the opportunity to challenge the fees in court before paying them. Additionally, the court found no evidence of actual misrepresentation by the Board. Therefore, T-Mobile's claim for a common law refund was denied. View "Powertel Memphis, Inc. v. Commercial Mobile Radio Service Emergency Telecommunications Board" on Justia Law

Great Oaks Water Company, a private water retailer, sued the Santa Clara Valley Water District, alleging that the district’s groundwater pumping charges were unlawful taxes levied without voter approval, violating Proposition 26. Great Oaks argued that the charges exceeded the reasonable costs of the governmental activity and were unfairly allocated, benefiting other water users to which Great Oaks had no access. Additionally, Great Oaks contended that the district’s use of ad valorem property taxes to subsidize agricultural groundwater pumping charges was unconstitutional.The trial court ruled in favor of the water district, finding that the groundwater charges did not exceed the costs of the district’s overall water management program. The court held that it was reasonable to use these charges to pay for the program because non-agricultural groundwater pumpers, like Great Oaks, received significant benefits from it. The charges were deemed reasonably allocated on a volumetric basis, and the agricultural discount was found constitutionally valid as it was funded by ad valorem property taxes, not by non-agricultural pumpers.The California Court of Appeal for the Sixth Appellate District affirmed the trial court’s decision. The appellate court concluded that the groundwater charges were not “taxes” under Proposition 26 because they fell under exceptions for specific benefits conferred or government services provided directly to the payor. The court found that the water district proved by a preponderance of the evidence that the charges were no more than necessary to cover the reasonable costs of the governmental activity and that the costs were fairly allocated to Great Oaks. The court also upheld the use of ad valorem taxes to fund the agricultural discount, finding no violation of the California Constitution or the Water Code. View "Great Oaks Water Co. v. Santa Clara Valley Water Dist." on Justia Law

Praxis Packaging Solutions, operating a manufacturing facility, applied for a tax exemption for its manufacturing equipment under Michigan law. The Township of Byron's assessor denied the application, stating the equipment did not meet the statutory definition of eligible manufacturing personal property (EMPP). The denial notice informed Praxis of its right to appeal to the March Board of Review but did not provide specific deadlines or meeting dates. Praxis's agents contacted the assessor for appeal details but were not informed of the deadlines. Praxis submitted an appeal letter after the Board had adjourned, and the Board did not consider the appeal.The Michigan Tax Tribunal dismissed Praxis's petition for lack of jurisdiction, as Praxis had not first appealed to the Board. The Court of Appeals reversed, holding that the Township's notice did not meet statutory requirements and deprived Praxis of due process, thus vesting the Tribunal with jurisdiction.The Michigan Supreme Court reviewed the case and held that the Township's notice did not violate due process. The Court found that the notice, combined with the separate notice of assessment, provided sufficient information about the appeal process. The Court emphasized that due process requires notice reasonably calculated to inform the taxpayer and provide an opportunity to be heard. Since Praxis received actual notice of the Board's meeting dates and the appeal process, the Court concluded that there was no due process violation.The Supreme Court reversed the Court of Appeals judgment and reinstated the Tax Tribunal's dismissal of Praxis's petition for lack of jurisdiction, as Praxis failed to timely protest the exemption denial before the Board. View "Sixarp LLC v. Township Of Byron" on Justia Law

A Utah-based transportation business, All Resort Group, became insolvent in 2013 due to poor management and financial malfeasance. Two shareholders misappropriated $145,000 in company funds to pay their personal federal tax liabilities. In 2017, the company filed for bankruptcy, and the trustee sought to recover the misappropriated funds under §544(b) of the Bankruptcy Code, invoking Utah’s fraudulent-transfer statute as the applicable law.The Bankruptcy Court ruled in favor of the trustee, holding that §106(a) of the Bankruptcy Code waived the Government’s sovereign immunity for the state-law cause of action nested within the §544(b) claim. The District Court adopted this decision, and the Tenth Circuit affirmed, concluding that §106(a) abolished the Government’s sovereign immunity in an avoidance proceeding under §544(b)(1).The Supreme Court of the United States reviewed the case and reversed the Tenth Circuit’s decision. The Court held that §106(a)’s sovereign-immunity waiver applies only to the §544(b) claim itself and not to the state-law claims nested within that federal claim. The Court emphasized that waivers of sovereign immunity are jurisdictional and do not create new substantive rights or alter pre-existing ones. The Court concluded that §106(a) does not modify the substantive requirements of §544(b) and that the trustee must still identify an actual creditor who could have voided the transaction under applicable law outside of bankruptcy proceedings. View "United States v. Miller" on Justia Law

Two companies, Dine Brands Global, Inc. and The Walt Disney Company, filed separate lawsuits against the Michigan State Treasurer, Rachael Eubanks, seeking declaratory and injunctive relief under the Uniform Unclaimed Property Act (UUPA). The Treasurer had initiated multistate examinations of the companies' records to check compliance with the UUPA's reporting and remittance requirements. The examinations, conducted by Kelmar Associates, LLC, identified unclaimed property dating back to 2002. The companies disputed the findings and argued that the statute of limitations barred the Treasurer from collecting the identified property.The Oakland Circuit Court granted summary disposition in favor of the companies, ruling that the examinations were not "actions or proceedings" under the UUPA and did not toll the statute of limitations. The court enjoined the Treasurer from enforcing the collection of the disputed property. The Michigan Court of Appeals affirmed the circuit court's judgments, agreeing that the examinations did not toll the statute of limitations.The Michigan Supreme Court reviewed the case and held that the phrase "action or proceeding" in the UUPA includes both formal lawsuits and administrative procedures like examinations. However, the Court also held that the commencement of an examination does not toll the statute of limitations. The Court noted that the statute of limitations continues to run during an examination and that the Treasurer must initiate an examination within the applicable time frame.The Supreme Court reversed the Court of Appeals' decisions that excluded examinations from the definition of "action or proceeding." The Court remanded the cases to the Court of Appeals to determine whether a holder's duty to comply with the results of an examination is distinct from the annual duty to report and remit unclaimed property, which would affect the statute of limitations for post-examination enforcement actions. View "Dine Brands Global Inc v. Eubanks" on Justia Law