Justia Civil Procedure Opinion Summaries

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

In this consolidated appeal from twenty-nine General Excise Tax (GET) assessments levied by the State Director of Taxation against five online travel companies based on car rental transactions taking place in the State between 2000 and 2013, the Supreme Court held that rental cars are tourism-related services and that the assessed transactions qualified for the reduced GET rate based only on the portion of the proceeds that the online travel companies retained.The online travel companies in this case argued (1) the majority of the assessments were barred because they already litigated their GET liability for the years 2000 through 2013 to final judgment in an earlier case; and (2) the rental car transactions should qualify for a reduced GET rate calculated based only on the portion of the proceeds that they retained because rental cars are “tourism-related services” within the meaning of a statutory income-reducing provision. The Supreme Court held (1) the assessments could be considered on the merits because the claim preclusion component of res judicata is not an available defense against the government’s sovereign power of taxation; and (2) car rentals are tourism-related services that qualify for GET apportionment under the circumstances of this case. View "In re Tax Appeal of Priceline.com, Inc." on Justia Law

In 2009, DISH Network Corporation (DISH) received an assessment order from the Oregon Department of Revenue showing that its property in Oregon for tax purposes was valued at an amount that exceeded the previous year’s valuation by nearly 100 percent. The increase came about because the department had subjected DISH’s property to central assessment and thus, also, to “unit valuation,” a method of valuing property that purported to capture the added value associated with a large, nationwide business network that, by statute, was available for central, but not local, assessments. Although DISH objected to the change from local to central assessment, the department insisted that central assessment was required because DISH was using its property in a “communication” business. When DISH was forced to concede defeat on that issue based on DIRECTV, Inc. v. Dept. of Rev., 377 P3d 568 (2016), another issue arose: whether the drastic increase in the assessed value of DISH’s property starting in the 2009-10 tax year violated Article XI, section 11 of the Oregon Constitution. The department argued that, because DISH’s property had been newly added to the central assessment rolls in 2009, the property fell into an exception to the three-percent cap on increases in assessed value - for “new property or new improvements to property.” The Tax Court rejected the department’s “new property” theory and held that the department’s assessments of DISH’s property in the tax years after 2008-09 was unconstitutional. The Oregon Supreme Court agreed with the department that the exception applied and therefore reversed the Tax Court’s decision to the contrary. View "DISH Network Corp. v. Dept. of Rev." on Justia Law

This case was brought by the North Idaho Building Contractors Association, Termac Construction, Inc., and other class members (collectively, “NIBCA”), to declare a sewer connection/capitalization fee the City of Hayden enacted in 2007 to be an impermissible tax. The action was originally dismissed on the City’s motion for summary judgment; but, on appeal the Idaho Supreme Court vacated the district court's judgment and remanded for further proceedings because the record did not contain sufficient evidence to establish that the 2007 Cap Fee complied with controlling Idaho statutes and case law. On remand, the parties filed cross motions for summary judgment and the district court found that the 2007 Cap Fee was an impermissible tax and taking of property without just compensation in violation of federal takings law. In doing so, the district court refused to consider expert evidence propounded by the City which opined that the 2007 Cap Fee complied with the applicable Idaho legal standards and was reasonable. The district court subsequently ruled on stipulated facts that NIBCA was entitled to damages in the amount paid above $774 per connection, together with interest, costs, and attorney fees. The City appealed the district court’s refusal to consider its evidence and NIBCA cross-appealed the award of damages. The Idaho Supreme Court again vacated the judgment because the district court improperly refused to consider the City’s evidence on remand. View "No ID Bldg Cont Assoc v. City of Hayden" on Justia Law

At issue before the Mississippi Supreme Court in this case was whether NRG Wholesale Generation’s proffered expert used an acceptable method to determine the “true value” of its power plant in computing ad valorem tax. The expert used a mixture of the sales-comparison approach, the income approach, and the cost approach to determine the true value of the facility. Lori Kerr, the tax assessor for Choctaw County, and Choctaw County, Mississippi (collectively, the “County”), contended that Mississippi law mandates a trended historical cost-less-depreciation approach to calculate the true value of industrial personal property. The circuit court found in favor of the County and excluded NRG’s proffered expert testimony. NRG argued the circuit court abused its discretion. In addition, NRG also argued the circuit court erred in denying its motion to change venue because because many of the jurors knew the county officials named as defendants in this case, a fair trial in Choctaw County was impossible. The Supreme Court held the Mississippi Department of Revenue (the “DOR”) regulation controlled and that NRG’s expert applied an unacceptable method to determine true value. Therefore, the circuit court did not err in excluding NRG’s proffered expert testimony. Additionally, because NRG was afforded a fair and impartial jury, the circuit court did not abuse its discretion in denying the motion to change venue. View "NRG Wholesale Generation LP v. Kerr" on Justia Law

In May 2016 Walsh County, North Dakota notified Jann Thompson she failed to pay her 2013 property taxes. The notice stated the County would foreclose on the property unless Thompson paid the taxes by October 1, 2016. Thompson previously attempted to pay the taxes with promissory notes and other instruments; however, they were not accepted by the County. On October 6, 2016, the County recorded a tax deed for the property due to Thompson's failure to pay the 2013 taxes. The County informed Thompson she had the right to repurchase the property before the tax sale by paying all outstanding taxes and costs against the property. On November 2, 2016, Thompson paid the 2013, 2014 and 2015 taxes and redeemed the property. Before paying the outstanding property taxes, Daniel and Jann Thompson sued Defendants the County auditor, the State Attorney, and the County Board of Commissioners, claiming the State had no authority to tax their property, and county officials improperly refused payment by not accepting the Thompsons' promissory notes. The Thompsons also alleged fraud, inverse condemnation and slander of title. The Thompsons subsequently filed a number of other documents and motions relating to their complaint. Defendants denied the Thompsons' allegations, and requested dismissal of the complaint and denial of the additional civil filings and motions. The district court granted summary judgment in favor of Defendants, dismissing the claims. Finding the trial court did not err by dismissing the Thompsons’ claims, the North Dakota Supreme Court affirmed. View "Thompson v. Molde" on Justia Law

In 2009, Seneca Sustainable Energy LLC (Seneca) began construction of a biomass cogeneration facility on property that it owned outside of Eugene, Oregon. In this direct appeal of the Regular Division of the Tax Court, the Department of Revenue argued the Tax Court erred in concluding that it had jurisdiction to consider a challenge brought by Seneca to the department’s determination of the real market value of Seneca’s electric cogeneration facility and the notation of the real market value on the assessment roll for two tax years, 2012-13 and 2013-14. The department also argued that the Tax Court erred in concluding that the department’s determinations of the property’s real market values for the 2012-13 and 2013-14 tax years were incorrect and in setting the values at significantly lower amounts. Finding no reversible error, the Oregon Supreme Court affirmed the Tax Court’s rulings. View "Seneca Sustainable Energy, LLC v. Dept. of Rev." on Justia Law

A magistrate court granted a taxpayer part of the relief requested. The magistrate accepted the property values that taxpayer requested for the two most recent tax years but did not accept the values that taxpayer requested for the first four tax years. Taxpayer appealed the magistrate’s decision by filing a timely complaint in the regular division of the tax court. The Department of Revenue (the department) did not appeal or seek any affirmative relief from the magistrate’s decision. Instead, the department moved to dismiss the complaint that taxpayer had filed in the tax court. The tax court granted the department’s motion, dismissed taxpayer’s complaint, and entered a judgment that gave effect to the magistrate’s decision. Taxpayer appealed from the tax court’s judgment to the Oregon Supreme Court, and the department has cross-appealed. The primary question presented for the Supreme Court’s review was whether the tax court erred in giving effect to the magistrate’s decision granting taxpayer’s requested relief for the two most recent tax years. Finding no reversible error, the Supreme Court affirmed the tax court. View "Work v. Dept. of Rev." on Justia Law

Plaintiff Omega Forex Group LC (Omega), appearing by and through partner Robert Flath (Flath), appealed a district court decision affirming two Notices of Final Partnership Administrative Adjustment (FPAA) issued by the Internal Revenue Service to Omega. The two FPAAs, on the basis of fraud at the partnership level, eliminated large losses reported by Omega on its tax returns for years 1998 and 1999, and imposed penalties on Omega. Flath was an endodontist in private practice in Utah. At some point in 1997 or 1998, one of the endodontists in Flath’s practice suggested that Flath meet with Dennis Evanson, an “expert in options trading and general business organization and planning, tax planning and asset protection.” Evanston was Omega’s managing partner. Through their business arrangement, Flath would make contributions or investments in Omega or other entities controlled by Evanston. Evanson, in exchange for Flath’s agreed payments, “manufactured fictitious transactions to conceal income [for Flath] and create apparent [tax] deductions [for Flath].” For the years at issue here, Flath or his endodontist practice would claim pass-through losses from Omega. Flath was not completely forthcoming with his tax accountant. In 2005, a grand jury indicted Evanson and other individuals related to Omega. In February 2008, Evanson was convicted of conspiracy to commit mail and wire fraud, tax evasion, and assisting in the filing of false tax returns. Omega’s FPAAs were upheld. Flath, on behalf of Omega, raised three issues on appeal: (1) whether the district court erred in holding that the FPAAs issued by the IRS to Omega were not barred by the applicable statute of limitations; (2) even assuming the district court applied the proper statute of limitations, whether it incorrectly applied the legal standards for determining whether Flath had fraudulent intent as to his personal tax returns; and (3) whether the district court erred in determining the asserted fraud penalty at the partnership level. The Tenth Circuit rejected all of these arguments and affirmed the district court’s decision. View "Omega Forex Group v. United States" on Justia Law

BTH Quitman Hickory, LLC, challenged the amount of the ad valorem taxes assessed by the Clarke County Board of Supervisors by appealing the assessments to circuit court. However, BTH Quitman did not submit a bond with its appeals; therefore, the Board of Supervisors moved to dismiss the appeals. The circuit court found in favor of BTH Quitman, and the Board filed this interlocutory appeal. Because the Mississippi Supreme Court addressed a similar issue in its opinion in Natchez Hospital Co., LLC v. Adams County Board of Supervisors, 238 So. 3d 1162 (Miss. 2018), it reversed the circuit court’s judgment and remanded the case for the circuit court to dismiss BTH Quitman’s case for lack of subject matter jurisdiction. View "Board of Supervisors of Clarke County, Mississippi v. BTH Quitman Hickory, LLC" on Justia Law