Justia Government & Administrative Law Opinion Summaries

The Bank Secrecy Act requires U.S. persons with financial interests in foreign accounts to file an “FBAR” annual Report of Foreign Bank and Financial Accounts; 31 U.S.C. 5314 delineates legal duties while section 5321 outlines the penalties, with a maximum $10,000 penalty for non-willful violations. Bittner—a dual citizen of Romania and the U.S.—learned of his reporting obligations in 2011 and subsequently submitted reports covering 2007-2011. The government deemed Bittner’s late reports deficient because they did not address all accounts as to which Bittner had either signatory authority or a qualifying interest. Bittner filed corrected FBARs providing information for 61 accounts in 2007, 51 in 2008, 53 in 2009 and 2010, and 54 in 2011. The government asserted that non-willful penalties apply to each account not accurately or timely reported. Bittner’s reports collectively involved 272 accounts; the government calculated a $2.72 million penalty. The Fifth Circuit affirmed.The Supreme Court reversed. The $10,000 maximum penalty for non-willful failure to file a compliant report accrues on a per-report, not a per-account, basis. Section 5314 does not address accounts or their number. An individual files a compliant report or does not. For cases involving willful violations, the statute tailors penalties to accounts. When one section of a statute includes language omitted from a neighboring section, the difference normally conveys a different meaning. The Act's implementing regulations require individuals with fewer than 25 accounts to provide details about each account while individuals with 25 or more accounts do not need to list each account or provide account-specific details unless requested by the Secretary. View "Bittner v. United States" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the district court concluding that Pleasant Grover (City) had the power to enact a three-tiered "transportation utility fee" (TUF) but reversed the court's ruling that the TUF was actually a tax, holding that remand was required.The subject TUF charged local property owners a monthly fee corresponding to the "intensity" with which they used City roads, as determined by a study of user demand on the City's roadways, and the generated funds were to be used to repair and maintain city roadways only. At issue was whether the City had the authority to enact the TUF and whether the City properly characterized the TUF as a fee or if it was in fact a tax requiring the City to follow specific enactment procedures. The district court held that the TUF was actually a tax based on its purpose. The Supreme Court reversed in part, holding (1) the City acted within its discretion in enacting the TUF; but (2) the purpose of the TUF was characteristic of a fee because it was a specific charge for a specific purpose. View "Larson v. Pleasant Grove City" on Justia Law

The Washington Department of Revenue issued instructions to Lakeside Industries Inc. regarding the valuation of Lakeside’s self-manufactured asphalt products. This valuation determined the amount of use tax that Lakeside had to pay to use its asphalt in public road construction projects. Lakeside did not follow DOR’s instructions and, instead, petitioned for judicial review pursuant to the Administrative Procedure Act (APA), ch. 34.05 RCW. The Washington Supreme Court held that the APA’s general review provisions did not apply to Lakeside’s nonconstitutional tax challenge. To obtain judicial review of DOR’s tax reporting instructions, Lakeside had to follow the specific procedures for tax challenges set forth in Title 82 RCW (Title 82). Therefore, Lakeside’s APA petition for judicial review was properly dismissed for failure to state a claim. The Court therefore affirmed the Court of Appeals. View "Lakeside Indus., Inc. v. Dep't of Revenue" on Justia Law

This case centered upon how Appellee Synthes USA HQ, Inc. should apportion its income between Pennsylvania and other states in order to calculate its Pennsylvania corporate net income tax. The two issues presented were: (1) does the Pennsylvania Office of the Attorney General (“OAG”) have the authority to represent the Commonwealth in this litigation, where it asserted an interpretation of the relevant tax provision contrary to the reading forwarded by the Pennsylvania Department of Revenue (“Department”); and (2) whether the allocation of a corporation's sales of services between Pennsylvania and other states for purposes of calculating the corporation’s income that was taxable in Pennsylvania. After review, the Pennsylvania Supreme Court concluded the Commonwealth Attorneys Act permitted the OAG to take a position on behalf of the Commonwealth that was inconsistent with the position adopted by the Department, but the Court ultimately rejected the OAG’s reading of the relevant tax provision in favor of the interpretation presented by the Department. Accordingly, the Court affirmed the order of the Commonwealth Court remanding this case to the Board of Finance and Revenue for calculation and issuance of a tax refund by the Department to Synthes for the 2011 tax year. View "Synthes USA HQ v. Pennsylvania" on Justia Law

This direct appeal to the Pennsylvania Supreme Court centered on the efforts of Appellee John Myers to obtain a refund of 38 cents in sales tax he paid on purchases he made with redeemed coupons at BJ’s Wholesale Club, Inc. (BJ’s). The parties petitioned the Pennsylvania Supreme Court to interpret Section 33.2(b) of the Pennsylvania Department of Revenue Code, which excluded “from the taxable portion of the purchase price, if separately stated and identified." A vendor owes the state sales tax on the full price of the item unless it can establish a “new purchase price” of the item, which may be established where “both the item and the coupon are described on the invoice or cash register tape.” The Pennsylvania Department of Revenue Board of Appeals (BOA) relied on Section 33.2, which permitted amounts represented by coupons to establish a new purchase price “if both the item and the coupon are described on the invoice or cash register tape.” The BOA concluded that the coupons were not adequately described on the receipts, and nothing indicated which items the coupons were related. A unanimous three-judge panel of the Commonwealth Court reversed the Board’s order and found Appellee was entitled to a refund of overpaid sales tax. The Supreme Court reversed the Commonwealth Court, finding none of the receipts at issue here satisfied subsection 33.2(b)(2)’s description requirement. Because it was Appellee’s burden to prove that he was entitled to a refund of sales tax, he did not meet his burden. View "Myers v. Pennsylvania" on Justia Law

The Supreme Court affirmed the judgment of the superior court in favor of Defendant, in her capacity as the Town of Lincoln's tax assessor, holding that Plaintiff was not entitled to relief on its claims of error.Plaintiff brought this action arguing that Defendant (1) illegally increased the value of Plaintiff's property in light of a solar energy development on a portion of Plaintiff's property for tax years 2019 and 2020, and (2) improperly created a new tax classification not recognized by R.I. Gen. Laws 44-5-11.8(b). The superior court granted judgment in favor of Defendant. The Supreme Court affirmed, holding (1) there was no error in including the presence of a solar energy development as an element of value assessed to real property; and (2) Plaintiff's claim that the tax assessor effectively created a new tax classification for property upon which a solar energy development is located, in contravention of R.I. Gen. Laws 44-5-11.8(b), was unpersuasive. View "Polseno Properties Management, LLC v. Keeble" on Justia Law

The Office of Professional Responsibility (“OPR”) investigates allegations of practitioner misconduct before the Internal Revenue Service (“IRS”). Appellant sued the IRS under the Freedom of Information Act (“FOIA”), seeking disclosure of documents relating to the OPR’s investigation of a misconduct report on him. The district court ruled that the four documents were protected from disclosure by FOIA Exemption 5’s deliberative process privilege and granted summary judgment to the IRS. Appellant contends that the withheld documents are nondeliberative and, therefore, unprotected by Exemption 5.   The DC Circuit affirmed in part the district court’s grant of summary judgment to the IRS and reversed in part as to the Marchetti Memo and the Kelly Memo. The court explained that withholding the contested documents, with the exception of the Kelly Memo and the unprotected portion of the Marchetti Memo, is consonant with Exemption 5’s purposes. At least some of the recommendations in the contested documents were not adopted in the OPR’s ultimate determination, so disclosure of the authors’ potentially mistaken recommendations might have a chilling effect on their willingness to make such recommendations. Further, the court wrote that insofar as the OPR’s ultimate determination departs from the course of action proposed by at least some of the contested documents or from their reasoning, the release of those predecisional documents might well mislead the public about the OPR’s view of Appellant’s conduct. View "Bradley Waterman v. IRS" on Justia Law

Congress passed the American Recovery and Reinvestment Act ARRA) to stabilize the U.S. economy following the 2008 financial crisis, 123 Stat. 115, creating two types of government-subsidized Build America Bonds (BABs). “Direct Payment BABs,” entitled bond issuers to a tax refund from the Treasury Department equal to 35 percent of the interest paid on their BABs. Treasury pays issuers of BABs annually. The payments are funded by the permanent, indefinite appropriation for refunds of internal revenue collections. 31 U.S.C. 1324. Local power agencies (Appellants) collectively issued over four billion dollars in qualifying Direct Payment BABs before 2011. Through 2012, Treasury paid the full 35 percent.In 2011 and 2013, Congress passed legislation reviving sequestration: “[T]he cancellation of budgetary resources provided by discretionary appropriations or direct spending law,” 2 U.S.C. 900(c)(2), 901(a). Treasury stopped making payments to Appellants at 35 percent. Since 2013, Appellants have been paid reduced rates as determined by the Office of Management and Budget’s calculations; for example, 2013 payments were reduced to 8.7 percent.Appellants sued, arguing a statutory theory that the government violates ARRA section 1531 by not making the full 35 percent payments and that the government breached a contract that arises out of section 1531. The Federal Circuit affirmed the Claims Court’s dismissal of the suit. No statutory claim existed because sequestration applied to these payments. No contractual claim existed because the ARRA did not create a contract between the government and Appellants. View "Indiana Municipal Power Agency v. United States" on Justia Law

When the ACA’s mandate and SRP were still in effect, a husband and wife (“Taxpayers”) did not maintain the minimum insurance coverage required by the ACA. The taxpayers did not include their $2409 SRP when they filed their 2018 federal tax return. The Taxpayers filed for Chapter 13 bankruptcy protection in the Eastern District of North Carolina. The IRS filed a proof of claim for the unpaid SRP and asserted that its claim was entitled to priority as an income or excise tax under Section 507 of the Bankruptcy Code. The Taxpayers objected to the government’s claim of priority. The bankruptcy court granted the objection, concluding that, for purposes of the Bankruptcy Code, the SRP is a penalty, not a tax, and therefore is not entitled to priority under Section 507(a)(8). The government appealed to the district court, which affirmed the bankruptcy court’s decision. The district court held that even if the SRP was generally a tax, it did not qualify as a tax measured by income or an excise tax and thus was not entitled to priority. The government thereafter appealed.   The Fourth Circuit reversed and remanded. The court concluded that that the SRP qualifies as a tax under the functional approach that has consistently been applied in bankruptcy cases and that nothing in the Supreme Court’s decision in NFIB requires the court to abandon that functional approach. Because the SRP is a tax that is measured by income, the government’s claim is entitled to priority under 11 U.S.C. Section 507(a)(8)(A). View "US v. Fabio Alicea" on Justia Law

Plaintiffs Gulf Shores City Board of Education and Kelly Walker appealed a circuit court's dismissal of their complaint seeking certain declaratory and mandamus relief against the Superintendent of the Alabama State Board of Education; the Revenue Commissioner of Baldwin County; certain Baldwin County Commissioners; the Baldwin County Board of Education; a Baldwin County Circuit Judge; the Baldwin County District Attorney; and Coastal Alabama Community College ("CACC"). This case involved the interplay among § 16-13-31(b), § 40-12-4, and § 45-2-244.077, Ala. Code 1975, a part of § 45-2-244.071 et seq., Ala. Code 1975 ("the local-tax act"), which authorized the Baldwin County Commission to levy a 1% sales tax in Baldwin County paralleling the state sales tax found in § 40-23-1 through § 40-23-4, Ala. Code 1975. In 2017, the Gulf Shores Board was created to oversee an independent city school district pursuant to a resolution adopted by the City of Gulf Shores. The Gulf Shores Board and the Baldwin County Board entered into negotiations that resulted in a separation agreement pursuant to which the Gulf Shores Board obtained certain assets and assumed certain liabilities of the Baldwin County Board. Additionally, the separation agreement provided that taxes collected specifically to fund public schools in Baldwin County would be apportioned according to the apportionment provisions in § 16-13-31(b) and § 40-12-4(b) so as to include the Gulf Shores Board as a recipient. However, the separation agreement did not address apportionment of the proceeds of the local tax. The president of the Gulf Shores Board stated in his affidavit that the "parties specifically agreed to disagree [as to] whether the [local] tax was required to be apportioned." The Gulf Shores Board demanded but did not receive a share of the local-tax proceeds. Plaintiffs filed their initial complaint against the superintendent, the revenue commissioner, and the county commissioners, seeking mandamus relief requiring that the local-tax proceeds be apportioned to include the Gulf Shores Board as a recipient and/or a judgment declaring that the local-tax act was unconstitutional. The Alabama Supreme Court concluded the Gulf Shores Board lacked standing to bring its constitutional claim, and Walker could not show that the local tax was a levy of special taxes on her as a citizen of a definite locality expended in some other locality. Accordingly, dismissal was affirmed. View "Gulf Shores City Board of Education, et al. v. Mackey, et al." on Justia Law