Justia Civil Procedure Opinion Summaries

Respondent Paramount Pictures Corporation (Paramount) sought a refund of taxes paid on its personal property for the 2011 tax year. Paramount first appealed to the Los Angeles County Assessment Appeals Board (the Board). The property was assessed a final value of $137,397,278. Following a hearing, the Board agreed with the valuation proposed by the Assessor and found that Paramount failed to carry its burden of demonstrating additional obsolescence. Paramount appealed the Board’s decision to the trial court. The trial court found: (1) the Board committed a methodological error in excluding Paramount’s initial income approach valuation and (2) the Board issued inadequate findings regarding the significance of Paramount’s pre-lien and post-lien sales of personal property. In a separate ruling, the trial court awarded Paramount attorney fees under Revenue and Taxation Code Section 1611.6, which allows a taxpayer to recover fees for services necessary to obtain proper findings from a county board. The County timely appealed both orders.   The Second Appellate District reversed the trial court’s decision, concluding the Board committed neither methodological error nor issued findings that were less than adequate within the meaning of section 1611.5. First, Paramount did not challenge the validity of the cost approach relied upon by the Assessor and Board, and it did not otherwise identify any legal error in the Board’s rejection of its income approach valuation. Second, the hearing transcripts adequately disclose its rulings and findings on the pre-lien and post-sales data. The court remanded so the trial court may consider the question of whether substantial evidence supports the Board’s finding that Paramount failed to establish additional obsolescence. View "Paramount Pictures Corp. v. County of L.A." on Justia Law

Taxpayer Walter Woodland appealed the Oregon Department of Revenue’s assessment of $116 in interest for unpaid estimated taxes in 2019. During the pendency of that appeal, the department invalidated the assessment and agreed that taxpayer did not owe that interest. The Regular Division of the Oregon Tax Court accordingly dismissed taxpayer’s appeal as moot. The Oregon Supreme Court affirmed. View "Woodland v. Dept. of Rev." on Justia Law

Defendants appealed from a judgment of the district court awarding the United States $112,324.18, plus statutory additions and interest, in connection with an unpaid tax assessment from 2007. The district court granted summary judgment in favor of the government, notwithstanding the fact that the Internal Revenue Service (the “IRS”) referred the assessment to the Department of Justice (the “DOJ”) before formally rejecting Defendants’ proposed installment agreement. Defendants contended that this referral violated the provisions of the Internal Revenue Code and the implementing Treasury Regulations that curb the IRS’s collection activities while a proposed installment agreement remains on the table.   The Second Circuit affirmed. The court explained that as their plain terms indicate, the suspension provisions of Section 6331(i) and (k) prohibit the commencement of a collection action in court during specified periods, not the IRS’s antecedent request that the DOJ file such an action. The court wrote that the Internal Revenue Code is silent on when the IRS may refer an action to the DOJ, and a Treasury Regulation that limits the IRS’s referral power cannot read into the statute something that is not there. Further, this conclusion is not altered because authorization from the Treasury Secretary is a prerequisite to commencing an in-court proceeding.   Further, the court explained that Defendants have not claimed a violation of their constitutional rights and the regulatory limits on IRS referrals of collection actions are not statutorily derived. As a result, Defendants must demonstrate prejudice for the government’s regulatory violation to invalidate the instant collection action. The court found that Defendants have failed to do so. View "United States v. Schiller" on Justia Law

Jarrett produces Tezos tokens cryptocurrency by “staking.” Jarrett claims staking uses existing Tezos tokens and computing power to produce new tokens, so he owes tax on the tokens only when he sells or transfers them and “realizes” income, 26 U.S.C. 61(a). The IRS's position was that Jarrett realized income when he received each token. Jarrett’s 2019 staking yielded 8,876 Tezos tokens; he “did not sell, exchange, or otherwise dispose of these tokens during 2019.” He reported those tokens as income and paid tax, then asked the IRS for a refund ($3,793). After six months, Jarrett filed a refund lawsuit, 28 U.S.C. 1346(a)(1), seeking a judgment that Jarrett was entitled to a refund; costs and attorney’s fees; and an injunction preventing the IRS “from treating tokens created by the Jarretts as income.”The Attorney General approved Jarrett’s refund request. The IRS issued a $4,001.83 refund check and a “Notice of Adjustment.” Preferring to litigate the case to judgment, Jarrett has “not cashed, and [does] not intend to cash, this check.” The district court dismissed the case as moot. The Sixth Circuit affirmed. Refund lawsuits exist for a single purpose: “the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected.” The IRS satisfies its repayment obligation when it issues and mails a refund check for the full amount of the overpayment. View "Jarrett v. United States" on Justia Law

Petitioners challenged he post-trial rulings of the United States Tax Court regarding their tax obligations for the 2004 tax year. Petitioners argued that the Tax Court erroneously concluded that (1) they filed a valid joint return, (2) the Internal Revenue Service issued a statutory notice of deficiency before the limitations period for a tax assessment under I.R.C. Sections 6501(a) and (c)(4) expired, (3) they owed a $28,836 penalty pursuant to I.R.C. Section 6651(a)(1) for filing a late tax return, and (4) they owed a $128,526 penalty pursuant to I.R.C. Section 6662 for filing an inaccurate tax return.   The Second Circuit affirmed. The court held that the Tax Court did not clearly err in its finding that Petitioners intended to jointly file the Return. Further, the court wrote that the IRS issued the Deficiency Notice within the limitations period for the tax assessment. Moreover, the court held that Petitioners are subject to a $28,836 late-filing penalty under I.R.C. Section 6651(a)(1). Finally, the court held that Petitioners are subject to a $128,526 accuracy-related penalty under I.R.C. Section 6662. View "Soni v. Comm'r of Internal Revenue" on Justia Law

Petitioners challenged the post-trial rulings of the United States Tax Court regarding their tax obligations for the 2004 tax year. Petitioners argued that the Tax Court erroneously concluded that (1) they filed a valid joint return, (2) the Internal Revenue Service issued a statutory notice of deficiency before the limitations period for a tax assessment under I.R.C. Sections 6501(a) and (c)(4) expired, (3) they owed a $28,836 penalty pursuant to I.R.C. Section 6651(a)(1) for filing a late tax return, and (4) they owed a $128,526 penalty pursuant to I.R.C. Section 6662 for filing an inaccurate tax return.   The Second Circuit affirmed. The court held that the Tax Court did not clearly err in its finding that Petitioners intended to jointly file the Return. Further, the court concluded that the IRS issued the Deficiency Notice within the limitations period for the tax assessment. The court held that Petitioners are subject to a $28,836 late-filing penalty under I.R.C. Section 6651(a)(1). Finally, the court held that Petitioners are subject to a $128,526 accuracy-related penalty under I.R.C. Section 6662. The court explained that Petitioner’s inaccuracy was not the product of reasonable reliance upon the advice of a tax professional. As the Tax Court also found, Petitioners failed to provide their accountants “necessary and accurate information.” Moreover, the record includes evidence that Petitioner disregarded the advice of accountants who warned him that he would need proof to substantiate the claimed loss. View "Soni v. Comm'r of Internal Revenue" on Justia Law

Show Me State Premium Homes wants its purchase of a foreclosed property to be free and clear of all other interests, including those belonging to the United States. Getting what it wants would require a “judicial sale.” After removing the case the United States filed a motion to dismiss. Its position was that there could be no foreclosure without a judicial sale. The district court agreed, declined to exercise supplemental jurisdiction over what remained, and remanded to state court.   The Eighth Circuit affirmed the judgment of the district court but modified the dismissal of the ejectment and damages claims to be without prejudice. The court explained that a buyer’s interest is only “inchoate” before it gets a valid deed, not after. And here, title vested once the bond company “exercised its right to have the legal title transferred.” No “judicial sale” ever took place, and it is too late to hold one now, meaning that the interests held by the United States have never been foreclosed. View "Show Me State Premium Homes, LLC v. George McDonnell" on Justia Law

The Culps each received $8,826.30 to settle a lawsuit and reported their payments as “Other income,” “PRIZES, AWARDS” in their 2015 tax return. In 2017 the IRS proposed to increase their taxes owed for 2015 to reflect a perceived underpayment, giving the Culps 30 days to respond and stating it would send a notice of deficiency if they failed to do so. The Culps did not respond. The IRS mailed a notice of deficiency, informing the Culps of their right to file a petition in the Tax Court within 90 days. In May 2018, the IRS sent the Culps another letter stating they owed only $2,087 in 2015 taxes, penalties, and interest—less than the amount previously assessed. Again they failed to respond. The IRS levied on their property, collecting approximately $1,800 from the Culps’ Social Security payments and 2018 tax refund.The Culps filed a petition in the Tax Court, which dismissed their petition for lack of jurisdiction, reasoning its “jurisdiction depends upon the issuance of a valid notice of deficiency and the timely filing of a petition,” 26 U.S.C. 6212, 6213, 6214. It found the petition untimely because the Culps did not file it within 90 days of the date the IRS sent the second notice of deficiency. The Third Circuit reversed. Congress did not clearly state that section 6213(a)’s deadline is jurisdictional; non-jurisdictional time limits are presumptively subject to equitable tolling. That presumption was not rebutted. View "Culp v. Commissioner of Internal Revenue" on Justia Law

Taxpayers did not file returns for 2007 and 2012. The Tax Court concluded that taxpayers owed no deficiencies or penalties for those years, because the partnership losses claimed for those years exceeded the IRS’s adjusted non-partnership deficiencies.   The Ninth Circuit reversed and remanded for recalculation of the deficiencies and penalties for those years. The panel held that the unsigned, unfiled tax returns on which the partnership losses were reported were legally invalid because they had not been filed and executed under penalty of perjury and, therefore, could not be used to offset non-partnership income in an individual deficiency proceeding. Accordingly, the panel reversed the Tax Court’s deficiency determinations for these years and remanded with instructions to determine taxpayers’ deficiencies without regard to any partnership losses claimed on the legally invalid tax returns. For 2009 through 2011, taxpayers reported no tax liability because of large net operating losses (NOLs) from partnerships subject to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The panel explained that when carried forward as deductions, net operating losses composed of partnership losses can offset a taxpayer’s non-partnership income or instead are part of the “net loss from partnership items” under Internal Revenue Code Section 6234(a)(3), as it was then in effect. The panel remanded for the Tax Court to assess the non-partnership items in the recomputed deficiencies for those years, accounting for the TEFRA-eligible partnership components of the net-operating-loss deductions only in the Section 6234(a)(3) calculations of “net loss from partnership items.” View "CIR V. RITCHIE STEVENS, ET AL" on Justia Law

Gulf South Pipeline Company, LLC owned an underground natural gas storage facility in Rankin County, Mississippi. It owned additional properties that ran through thirty-two Mississippi counties. As a public service corporation with property situated in more than one Mississippi county, property belonging to Gulf South was assessed centrally by the Mississippi Department of Revenue rather than by individual county tax assessors. After conducting the central assessment, MDOR apportions the tax revenues among the several counties in which the property is located. A significant amount of the natural gas stored in Gulf South’s Rankin County facility is owned by Gulf South’s customers and, therefore, it is excluded from MDOR’s central assessment. The Rankin County tax assessor requested that Gulf South disclose the volume of natural gas owned by each of its customers. Following Gulf South’s refusal to provide these data, in September 2021 the Rankin County tax assessor gave notice of its intention to assess Gulf South more than sixteen million dollars for approximately four billion cubic feet of natural gas stored by Gulf South but owned by its customers. Gulf South filed suit at the Chancery Court in Hinds County, seeking to enjoin the assessment and seeking a declaratory judgment that MDOR was the exclusive entity with the authority to assess a public service corporation with property located in more than one Mississippi county. On interlocutory appeal, the Mississippi Supreme Court was asked to determine whether venue was proper in Hinds County when Rankin County was named as a defendant and MDOR was joined as a necessary party. The Court held that, under the venue provisions of Mississippi Code Section 11-45-17 and the Court’s consistent construction of these statutory provisions as mandatory and controlling, venue was proper only in Rankin County. Therefore, the chancellor erred by denying Rankin County’s motion to transfer venue. View "Rankin County v. Boardwalk Pipeline Partners, L.P., et al." on Justia Law