Justia Government & Administrative Law Opinion Summaries

Respondents were four Ranch owners who, with notice of the Lake Fork Hunting and Fishing Club’s (the Club) restrictive covenants and bylaws, purchased deeds conferring record title to their respective Ranches. In 2015, the Hinsdale County Assessor conducted valuations of the Respondents’ Ranches and assessed property taxes to their parcels. Respondents protested these valuations and assessments to the Hinsdale County Board of Equalization (the BOE), which denied their petitions. Respondents then appealed the BOE’s determination to the Board of Assessment Appeals (the BAA), arguing that because of the Club’s restrictive covenants and bylaws, the Club was the true owner of those parcels and should have been held responsible for real property taxes. The BAA denied the Respondents’ appeal and affirmed the Assessor’s valuation of the Ranch parcels. The Ranch owners then appealed the BAA’s decision to the court of appeals, which reversed the BAA’s order. Given the extent of the Club’s control over the property, the court of appeals concluded that the Club was the true owner of the parcels for purposes of property taxation and viewed the Ranch owners’ interests as akin to mere licenses to conduct certain activities on the Club’s property. The Colorado Supreme Court reversed, finding Colorado’s property tax scheme reflected the legislative intent to assess property taxes to the record fee owners of real property. “Because Respondents voluntarily agreed to the restrictive covenants and bylaws that facilitate the collective use of their property for recreational purposes, we hold that they cannot rely on these same restrictive covenants and bylaws to avoid property tax liability that flows from their record title ownership.” Accordingly, the court of appeals erred in relying on the Club’s restrictive covenants and bylaws to conclude that the Club is the “owner” of the Ranch parcels and that the Ranch owners hold mere licenses to use Club grounds. The court further erred in holding that the Assessor therefore improperly valued the Respondents’ parcels. View "Hinsdale County v. HDH Partnership" on Justia Law

With issues common to three appeals consolidated for review, the Government filed suit to collect unpaid taxes. In Appeal No. 17-4083, the Government appealed a district court’s determination that its state-law contract claim was time-barred because it was subject to a Utah state six-year state statute of limitations. The Tenth Circuit concluded the state-law claim was governed by the ten-year statute of limitations set out in 26 U.S.C. 6502(a) because the Government was proceeding in its sovereign capacity. Appeal No. 17-4093 was a cross-appeal of the district court’s ruling that the Government’s transferee-liability claim, brought pursuant to 16 U.S.C. 6324(a)(2), was timely. Here, the Tenth Circuit concluded the transferee-liability claim was timely filed because the limitations period applicable to the 6324(a)(2) transferees was the same as the limitations period applicable to the estate. In Appeal No. 18-4036, the Government appealed the district court’s order awarding attorney’s fees to Appellees. The Tenth Circuit concluded Appellees were not entitled to attorney’s fees because the Government’s position in this litigation was substantially justified. View "United States v. Johnson" on Justia Law

Plaintiffs Justin and Gwen Ulrich and Raymond and Pam Alleman purchased and installed residential solar systems with the expectation of receiving an income tax credit of up to $12,500 pursuant to La. Rev. Stat. 47:6030(B)(1). In 2016, when plaintiffs filed their Louisiana income tax returns for the 2015 tax year, asserting entitlement to the solar electric system tax credits under La. Rev. Stat. 47:6030, the tax credits were denied or reduced by the Department of Revenue, citing Acts 2015, No. 131, which limited the maximum amount of solar tax credits to be granted by the Department of Revenue to $25,000,000. In letters sent by the Department of Revenue to plaintiffs in August 2016, they were informed that Act 131 of the 2015 Regular Session had amended La. Rev. Stat. 47:6030 “to establish the maximum amount of solar tax credits that may be granted;” that “[f]or fiscal years 2015-2016 and 2016- 2017, the cap limit was $10,000,000 per year;” that “[t]he credits are required to be granted based on a first-come, first served basis;” and that the “cap limits were met prior to [their] claim being filed.” This appeal challenged the district court’s judgment declaring unconstitutional 2015 La. Acts, No. 131, section 1, which amended La. Rev. Stat. 47:6030 by placing a cap on the total amount of solar electric system income tax credits available to Louisiana taxpayers, because it retroactively deprived plaintiffs of a vested property right and substantially impaired the obligations of private contracts. The district court also implicitly found the plaintiffs had standing to bring the constitutional claim and that a justiciable controversy existed because the constitutional issue was not moot. The Louisiana Supreme Court found the district court erred in overruling the Department of Revenue’s peremptory exception of mootness, and reversed. View "Ulrich v. Robinson" on Justia Law

Municipalities sued other municipalities to recover revenue under the Use Tax Act (35 ILCS 105/1). Use tax is imposed on the privilege of using in Illinois tangible personal property purchased at retail from a retailer outside the state. Retailers who have a sufficient physical presence in Illinois and have out-of-state facilities from which Internet, telephone, and mail-order sales are made of tangible personal property to be used in Illinois must collect use tax from the purchaser and remit the tax to the Illinois Department of Revenue (IDOR) to prevent avoidance of sales tax. The general rate for both sales tax and use tax is 6.25% of the sale price with 5% allocated to the state. For sales tax, the remaining amount is distributed to the municipality and county where the sale occurred. For use tax, the remaining share is distributed to Chicago, the RTA Fund, the Madison County Mass Transit District, and the Build Illinois Fund. The balance is distributed to all other municipalities based on their proportionate share of the state population. The Illinois Supreme Court reinstated the dismissal of the suit. IDOR has been vested, for purposes of plaintiffs’ claims, with exclusive authority to audit the reported transactions that plaintiffs dispute and to redistribute the tax revenue due to an error. In addition, under Municipal Code section 8-11-21, the General Assembly must give a municipality the right to bring suit about missourcing or misreporting of use taxes. View "Chicago v. Kankakee" on Justia Law

The Supreme Court reversed a consolidated order of the Circuit Courts of Randolph, Barbour and Upshur Counties pursuant to which the Tax Commissioner’s determination was upheld that Penn Virginia Operating Company’s (Penn) forest properties were not eligible for lower valuation for tax year 2016, holding that Penn was deprived of its right to an administrative appeal of the denial of its application.Penn sought to have its timberland taxed at a lower appraised value subject to a cooperative contract with the State Division of Forestry (Forestry) pursuant to the Division’s Managed Timberland Program. The consolidated order in this case denied relief from the Commissioner’s determination that Penn’s forest properties were not eligible for lower valuation because Penn filed its application with Forestry for certification of its properties as managed timberland sixteen days after the deadline. The Supreme Court reversed and remanded this case with directions to allow Penn to appeal the denial of its application to Forestry’s Director, holding that Penn received incorrect information from Forestry and could have appealed the denial but was advised otherwise. View "Penn Virginia Operating Co., LLC v. Honorable Phyllis K. Yokum" on Justia Law

The State of Washington taxes “motor vehicle fuel importer[s]” who bring large quantities of fuel into the state by “ground transportation,” Wash. Code 82.36.010(4), (12), (16). Cougar, a wholesale fuel importer owned by a member of the Yakama Nation, imports fuel over Washington’s public highways for sale to Yakama-owned retail gas stations located within the reservation. In 2013, the state assessed Cougar $3.6 million in taxes, penalties, and licensing fees for importing motor vehicle fuel. Cougar argued that the tax, as applied to its activities, is preempted by an 1855 treaty between the United States and the Yakama Nation that reserves the Yakamas’ “right, in common with citizens of the United States, to travel upon all public highways,” 12 Stat. 953. The Washington Supreme Court and the U.S. Supreme Court agreed. The statute taxes the importation of fuel, which is the transportation of fuel, so travel on public highways is directly at issue. In previous cases involving the treaty, the Court has stressed that its language should be understood as bearing the meaning that the Yakamas understood it to have in 1855; the historical record adopted by the agency and the courts below indicates that the treaty negotiations and the government’s representatives’ statements to the Yakamas would have led the Yakamas to understand that the treaty’s protection of the right to travel on the public highways included the right to travel with goods for purposes of trade. To impose a tax upon traveling with certain goods burdens that travel. View "Washington State Department of Licensing v. Cougar Den, Inc." on Justia Law

In 2010, the Internal Revenue Service issued a refund to the Wichita Center of Graduate Medical Education (a federally qualified charitable organization) on overpaid taxes along with incorrectly calculated interest on the refund. The IRS then sought repayment of part of the interest. Under the Internal Revenue Code, corporate taxpayers received a lower refund interest rate than other taxpayers such as individuals or partnerships. The Center claimed it was not a corporation for purposes of this section and was be entitled to the higher interest rate applicable to non-corporations. The Tenth Circuit affirmed the district court’s finding that the Center was a corporation and subject to the lower interest rate: the statutory text compelled the conclusion that the Center, even though it did not issue stock or generate profit, had to be treated as an ordinary corporation for purposes of the refund statute. View "Wichita Ctr for Grad Med. Ed. v. United States" on Justia Law

This case arose out of the efforts the IRS made to investigate the tax liability of High Desert Relief, Inc. (“HDR”), a medical marijuana dispensary in New Mexico. The IRS began an investigation into whether HDR had improperly paid its taxes, and specifically whether it had improperly taken deductions for business expenses that arose from a “trade or business” that “consists of trafficking in controlled substances.” Because HDR refused to furnish the IRS with requested audit information, the IRS issued four summonses to third parties in an attempt to obtain the relevant materials by other means. HDR filed separate petitions to quash these third-party summonses in federal district court in the District of New Mexico, and the government filed corresponding counterclaims seeking enforcement of the summonses. HDR argued that the summonses were issued for an improper purpose—specifically, that the IRS, in seeking to determine the applicability of 26 U.S.C. 280E, was mounting a de facto criminal investigation pursuant to the Controlled Substances Act. HDR also asserted that enforcement of section 280E was improper because an "official [federal] policy of non-enforcement” of the CSA against medical marijuana dispensaries had rendered that statute’s proscription on marijuana trafficking a “dead letter” incapable of engendering adverse tax consequences for HDR. The petitions were resolved in proceedings before two different district court judges; both judges ruled in favor of the United States on the petitions to quash, and separately granted the United States’ motions to enforce the summonses. HDR challenged these rulings on appeal. The Tenth Circuit determined HDR was unable to overcome the government’s demonstration of good faith under United States v. Powell, 379 U.S. 48 (1964), and its alternative “dead letter” argument was without merit. View "High Desert Relief v. United States" on Justia Law

Plaintiffs, a group of tax return preparers, filed a class action challenging the IRS's requirement that preparers pay a fee to obtain and renew their Preparer Tax Identification Number (PTIN). The DC Circuit held that the IRS acted within its authority under the Independent Offices Appropriations Act in charging tax return preparers a fee to obtain and renew PTINs. The court also held that the IRS's decision to charge the fee was not arbitrary and capricious, because the IRS sufficiently rooted its decision to assess a PTIN fee in justifications independent of those rejected in Loving v. IRS, 742 F.3d 1013 (D.C. Cir. 2014). In this case, the IRS explained that the fee was based on direct costs of the PTIN program. Therefore, the court vacated the judgment of the district court and remanded for further proceedings. View "Montrois v. United States" on Justia Law

Taxpayers Neil Feinberg, Andrea Feinberg, and Kellie McDonald were shareholders in Total Health Concepts, LLC (THC), a Colorado company allegedly engaged in selling medical marijuana. After the Taxpayers claimed THC’s income and losses on their tax returns, the IRS conducted an audit and disallowed certain deductions under 26 U.S.C. 280E, which prohibited deductions for businesses engaged in unlawful trafficking of controlled substances. The IRS then recalculated the Taxpayers’ tax liability and issued a notice of deficiency for the unpaid balance. The Taxpayers challenged that determination in tax court, which affirmed on the basis that the Taxpayers had failed to substantiate the business expenses. Both parties agreed the tax court erred by injecting a substantiation issue into this case not raised in the notice of deficiency, and then placed the burden for refuting that claim on the Taxpayers. But the Commissioner argued the Tenth Circuit should affirm on the alternative ground that the Taxpayers did not meet their burden of proving the IRS’s determination that THC was unlawfully trafficking in a controlled substance was erroneous. The Taxpayers disagreed and contended placing the burden on them would violate their Fifth Amendment privilege. Because the Tenth Circuit concluded allocation of the burden of proof did not constitute “compulsion” under the Fifth Amendment, and because the Taxpayers made no attempt to meet their evidentiary burden, the Court affirmed the tax court on the alternative ground that section 280E prohibited the deductions. View "Feinberg v. CIR" on Justia Law