Justia Government & Administrative Law Opinion Summaries

The IRS conducted a civil audit of Peter Hermes, Kevin Desilet, Samantha Murphy, and John Murphy (collectively, the “Taxpayers”) to verify their tax liabilities for their medical- marijuana dispensary, Standing Akimbo, LLC. The IRS was investigating whether the Taxpayers had taken improper deductions for business expenses arising from a “trade or business” that “consists of trafficking in controlled substances.” Claiming to fear criminal prosecution, the Taxpayers declined to provide the audit information to the IRS. This left the IRS to seek the information elsewhere—it issued four summonses for plant reports, gross-sales reports and license information to the Colorado Department of Revenue’s Marijuana Enforcement Division (the “Enforcement Division”), which is the state entity responsible for regulating licensed marijuana sales. In Colorado federal district court, the Taxpayers filed a petition to quash the summonses. The government moved to dismiss the petition and to enforce the summonses. The district court granted the motion to dismiss and ordered the summonses enforced. After review, the Tenth Circuit concluded the Taxpayers failed to overcome the IRS' showing of good faith, and failed to establish that enforcing the summonses would constitute an abuse of process. View "Standing Akimbo, LLC v. United States" on Justia Law

Oakland requested proposals for franchise contracts regarding garbage and residential recycling services. Following a lawsuit, a settlement provided that WMAC would receive garbage and mixed materials and organics contracts; CWS would receive the residential recycling contract. WMAC and CWS agreed to pay franchise fees to the city, which redesignated part of WMAC’s franchise fee as a fee to compensate the city for the cost of implementing the Alameda County Waste Management Plan, under Public Resource Code 41901. Plaintiffs challenged the fees as improperly imposed taxes under the California Constitution, article XIIIC.The court of appeal affirmed the dismissal of claims concerning the Redesignated Fee as not ripe for adjudication but reversed dismissal as to the franchise fees. A franchise fee, arguably subject to an article XIIIC, section 1(e) exemption, must still be reasonably related to the value of the franchise to be exempt from the “tax” definition. The court cited Proposition 26: To qualify as a nontax ‘fee’ under article XIII C, as amended, a charge must satisfy both the requirement that it be fixed in an amount that is ‘no more than necessary to cover the reasonable costs of the governmental activity,’ and the requirement that ‘the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. View "Zolly v. City of Oakland" on Justia Law

At issue in this case was the tax status of a 9.9-acre parcel of land containing an 11,500-square-foot garage that was owned and used by Zlotoff Foundation, Inc., a nonprofit charitable organization, for the purpose of storing and maintaining a collection of classic automobiles that it displayed at its nearby museum. The trial court ruled that the garage and the land were tax-exempt because they were used for a public purpose. However, it denied the Foundation’s request for a refund of property taxes paid to the Town of South Hero from 2016 to 2018 because the Foundation did not obtain a certificate of authority allowing it to transact business in Vermont until 2019. The Foundation and the Town both appealed. Finding no reversible error, the Vermont Supreme Court affirmed judgment. View "Zlotoff Foundation, Inc. v. Town of South Hero" on Justia Law

The Supreme Court affirmed the decision of the Administrative Hearing Commission determining that DI Supply I, LLC's room furnishing sales to the Drury Hotels were not exempt from sales tax under the resale exemption in Mo. Rev. Stat. 144.010.1(11), holding that DI Supply failed to meet its burden to prove that the items it sold to Drury Hotels were resold by the hotels.An audit determined that DI Supply failed to remit sales tax on more than $11 million in taxable sales of room furnishings to Drury Hotels during the audit period. DI Supply contested the tax liability, arguing that the items of tangible personal property were purchased for resale to hotel guests and not subject to Missouri local sales or use tax. The Commission upheld $613,159 of the assessment for sales tax and interest. On appeal, DI Supply contested its sales tax liability for sales of room furnishings to Drury Hotels. The Supreme Court affirmed, holding that DI Supply failed to show that Drury Hotels transferred title or ownership of the room furnishings and, therefore, failed to show the applicability of the resale exemption by clear and unequivocal proof. View "DI Supply I, LLC v. Director of Revenue" on Justia Law

Employers Resource Management Company (“Employers”) returned to the Idaho Supreme Court in a second appeal against the Idaho Department of Commerce. In 2014, the Idaho Legislature passed the Idaho Reimbursement Incentive Act (“IRIA”). The Economic Advisory Council (“EAC”), a body created under IRIA to approve or deny tax credit applications, granted a $6.5 million tax credit to the web-based Illinois corporation Paylocity, a competitor to Employers Resource Management Company. Employers claimed Paylocity’s tax credit created an unfair economic advantage. Paylocity, however, had yet to receive the tax credit because it did not satisfy the conditions in the Tax Reimbursement Incentive agreement. Having established competitor standing in Employers Res. Mgmt. Co. v. Ronk, 405 P.3d 33 (2017), Employers argued the Idaho Reimbursement Incentive Act was unconstitutional under the separation of powers doctrine. The district court dismissed Employers’s case upon finding the Act constitutional. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Employers Resource Mgmt Co v. Kealy" on Justia Law

In this tax dispute, the Supreme Court reversed the final decision of the Office of Administrative Hearings (OAH) entering summary judgment in favor of Graybar Electric Company, Inc., holding that dividends deducted on a corporation's federal corporate income tax return under the dividends-received deduction (DRD) of section 243 of the Internal Revenue Code do constitute "income not taxable" for purposes of calculating the corporation's net economic loss (NEL) deduction under N.C. Gen. Stat. 105-130.8(a) for North Carolina corporate income tax purposes.The Department found that the dividends received constituted "income not taxable" and that, therefore, Graybar was required to reduce its NEL deductions by the amount of the dividends apportioned to North Carolina. On appeal, (OAH) entered summary judgment for Graybar, holding that the dividends were taxable as a matter of law and were not "income not taxable." The Supreme Court reversed, holding (1) the dividends deducted pursuant too I.R.C. 243(a)(3) were "income not taxable" under section 105-130.8(a)(3); and (2) therefore, Graybar failed to bring itself within the statutory provisions authorizing the NEL deduction calculation it sought. View "North Carolina Department of Revenue v. Graybar Electric Co." on Justia Law

The Mississippi Department of Revenue (MDOR) and the Office of the Attorney General of the State of Mississippi filed suit against Wine Express, Inc., Gold Medal Wine Club, and Bottle Deals, Inc., in Mississippi Chancery Court. In early 2017, the Alcohol Beverage Control (ABC) Division of the Mississippi Department of Revenue and the Alcohol and Tobacco Enforcement Division of the Mississippi Attorney General’s Office investigated the shipment of wine and other alcoholic beverages into the state. The investigation revealed that most Internet retailers made it “impossible” to place an order for alcoholic beverages once it was disclosed that the shipment would be to a location in Mississippi. This, however, was not so for the Defendants’ websites. In December 2017, the State sued the Defendants for injunctive relief to enforce the provisions of the “Local Option Alcoholic Beverage Control Law.” The State sought injunctive relief, disgorgement, monetary relief, attorneys’ fees, and punitive damages. Defendants moved for dismissal claiming that Mississippi courts lack personal jurisdiction over Defendants. After a hearing on the matter, the trial court granted Defendants’ motion. The State appealed. The Mississippi Supreme Court found that the trial court erred by finding that it lacked personal jurisdiction over the Defendants. View "Fitch v. Wine Express Inc." on Justia Law

The Town of Ludlow appealed a Property Valuation & Review Division (PVR) hearing officer’s decision lowering the fair market value of two quartertime-share condominium properties, Jackson Gore Inn and Adams House, located at the base of Okemo Ski Resort. On appeal, the Town argued that the time-share owners in Jackson Gore Inn and Adams House failed to overcome the presumption of validity of the Town’s appraisal. The Town also argued that hearing officer incorrectly interpreted 32 V.S.A. 3619(b) and failed to properly weigh the evidence and make factual findings. After review of the PVR hearing officer’s decision, the Vermont Supreme Court first held that the hearing officer correctly determined that the time-share owners met their initial burden of producing evidence to overcome the presumption of validity by presenting the testimony of their expert appraiser. Second, the Supreme Court conclude that the hearing officer correctly determined that section 3619 addressed who receives a tax bill when time-share owners were taxed but said nothing about how to value the common elements in condominiums. Finally, the Supreme Court concluded the hearing officer made clear findings and, in general, provided a well-reasoned and detailed decision. Accordingly, the decision was affirmed. View "Jackson Gore Inn, Adams House v. Town of Ludlow" on Justia Law

After plaintiff successfully challenged in bankruptcy court a tax penalty assessed against him by the IRS that exceeded $40 million, plaintiff filed suit against the IRS and three IRS agents, in their individual capacities, pleading a claim for damages against the individual defendants under Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388 (1971), for allegedly violating his Fifth Amendment right to procedural due process. Plaintiff also sought attorney's fees he incurred litigating the penalty issue in his Chapter 11 bankruptcy case under 26 U.S.C. 7430 and the Equal Access to Justice Act.The Fifth Circuit affirmed the district court's grant of defendants' Federal Rule of Civil Procedure 12(b)(6) motion and dismissal of the action with prejudice. The court held that the district court properly concluded that this case was a new Bivens context and that special factors existed under Ziglar v. Abbasi, 137 S. Ct. 1843 (2017). The court also held that plaintiff was not entitled to recover attorney's fees because his request was untimely under 28 U.S.C. 2412(d)(1)(B) and he was not a "prevailing party" under 26 U.S.C. 7430(c)(4)(A)(ii). View "Canada, Jr. v. United States (Internal Revenue Service)" on Justia Law

The Supreme Court reversed the decision of the district court reversing the decision of the State Board of Equalization affirming the ruling of the County Board of Equalization against the Town of Pine Bluffs in its appeal from the Laramie County Assessor's denial of a request for exemption from taxation for a daycare facility operated by the Town, holding that the County Board's order was in accordance with law, was not arbitrary, capricious or an abuse of discretion, and was supported by substantial evidence in the record.In 201y, the Town filed requests for exemption from the assessment of its daycare facility. The County Assessor denied the requests, and the County Board and State Board affirmed. The district court ruled in favor of the Town and reversed the decision of the State Board. The Supreme Court reversed and reinstated the order of the County Board, holding that the County Board's decision did not constitute reversible error. View "Eisele v. Town of Pine Bluffs" on Justia Law