Business Headlines

Tax Law Case Summaries

[10/10] JetSuite, Inc. v. County of Los Angeles
Affirming the trial court's denial of a writ petition by an air taxi service seeking to avoid tax liability in Los Angeles because it claimed to be based out of Utah despite spending more than 60 percent of their time in Los Angeles because there was substantial evidence supporting the finding that the company failed to prove that any other state had acquired tax situs over the jets.

[09/27] Luz Solar Partners Ltd. III v. San Bernadino County
Affirming the decision of the Assessment Appeals Board of San Bernadino County relating to the assessed value of real property improved with solar energy generating systems for tax purposes.

[09/26] Hyatt v. Yee
Affirming a district court ruling that the Tax Injunction Act prevents it from enjoining, suspending, or restraining the assessment, levy, or collection of a tax under State law where a plain, speedy, and efficient remedy may be had in state court.

[09/20] US v. Brooks
Modifying orders relating to the conviction of a man for multiple counts of securities fraud, mail and wire fraud, obstruction of justice, and tax offenses because the convict's death resulted in the abatement of the counts of conviction, forfeiture, fine, special assessment , and restitution for offenses contested at trail, but the forfeiture of a bail bond did not abate, nor did the convictions and order of restitution imposed on tax counts.

[08/31] In Re DBSI, Inc.
Affirming decisions by the bankruptcy court and district court that the Congress had unambiguously abrogated sovereign immunity as it relates to actions associated with bankruptcy, an abrogation that extends to derivative 'applicable laws' such as Idaho's Uniform Fraudulent Transfer Act and the government could not rely on sovereign immunity to prevent the avoidance of the tax payments at issue.

[08/28] California Cannabis Coalition v. City of Upland
Affirming a Court of Appeals judgment that article XIII C of the California Constitution, limiting the ability of local governments to tax, does not constrain voter constitutional powers to propose and adopt initiatives or raise taxes by such initiatives in the case of a city ordinance banning medical marijuana dispensaries and requiring an annual licensing and inspection fee of $75,000.

[08/07] Russell City Energy Company, LLC v. City of Hayward
Reversing an order sustaining a city's demurrer without leave to amend and dismissing a complaint to the extent that the order denied the plaintiff leave to amend in an action relating to an agreement between an energy company and a city whose terms may have violated the California Constitution because a quasi-contractual restitution claim would be permitted even if the Payments Clause at issue is unconstitutional.

[07/18] The Container Store v. US
Reversing and remanding the final judgment of the United States Court of International Trade case granting summary judgment to the government because the subject modular storage unit imports were improperly classified as mountings and fittings rather than as parts of unit furniture.

[07/05] Matuszak v. Commissioner of Internal Revenue
Affirming that the issue of the failure to file a petition for innocent spouse relief from IRS actions during the statutorily provided period deprives the Tax Court of jurisdiction to review such a claim.

[06/29] 926 North Ardmore v. County of L.A.
Affirming the appellate court's denial of the plaintiff's refund claim in a case where Los Angeles imposed a documentary transfer tax on a written instrument transferring beneficial ownership among parties and holding that such a tax can be imposed where there is a transfer of legal beneficial ownership made for consideration.

[06/29] DuQuesne Light Holdings, Inc. v. Commissioner of Internal Revenue
Affirming the Tax Court's application of the Ilfield doctrine in holding that the double deduction for losses incurred by the subsidiary of a company was improper and disallowing $199 million of those losses.

[06/29] Jacks v. City of Santa Barbara
In a case relating to a surcharge added to energy bills that the city claimed was a fee for the use of public services which taxpayers characterized as a tax imposed without voter approval the court affirmed the appellate decision reversing the trial court's grant of motion for judgment on the pleadings, but reversed the appellate court's order granting summary adjudication to the plaintiffs.

[06/26] Said Hassen v. Government of the Virgin Islands
The dismissal of a wrongful levy claim against the US Virgin Islands was affirmed because the appellants had failed to exhaust their administrative remedies.

[06/15] US v. Hernandez
Conviction for transportation of firearms into his state of residence in violation of 18 U.S.C. section 922(a)(3) is reversed where, although the prohibition on the transportation of guns in section 922(a)(3) is not subject to the heightened willfulness requirement used in some tax and structuring laws, there is a substantial likelihood that the defendant was convicted for the act of transporting guns with the intent to commit a later crime rather than the one with which he was charged.

[06/14] City of Big Bear Lake v. Cohen
In a dispute arising out of the Dissolution Law? (Assembly Bill 1X 26), which immediately froze redevelopment agencies and provided that only existing enforceable obligations of the former redevelopment agency could be paid from the funds held by the redevelopment agency and from future tax increment revenue, the trial court's judgment is affirmed and modified where: 1) the contested transactions did not create enforceable obligations of the former redevelopment agency; 2) the Dissolution Law's invalidation of sponsor agreements does not violate the California Constitution; 3) it is irrelevant that City of Big Bear Lake claims it no longer possesses the funds it received from the former redevelopment agency; and 4) consistent with the decision in City of Bellflower v. Cohen (2016) 245 Cal.App.4th 438, the statutory remedy of offsetting City of Big Bear Lake's sales, use, and property taxes to capture the $2.6 million is unconstitutional.

[06/07] Casiopea Bovet, LLC v. Chiang
In an action challenging the California State Controller denying its claim seeking unclaimed property held as escheated funds, the trial court's judgment on the pleadings granted in favor of the Controller is affirmed where plaintiff could not claim escheated property under the Unclaimed Property Law, Code of Civ. Proc. section 1500 et seq., as an assignee of a title company because it was a suspended corporation, Rev. & Tax. Code section 23301, which lacked legal capacity to prosecute an action.

[06/07] Twenty-Two Strategic Investment Funds v. US
In an action raising a statute of limitations challenge to the Internal Revenue Service's determination of tax liabilities in a partnership level proceeding under the Tax Equity and Fiscal Responsibility Act, the district court's judgment in favor of the IRS is affirmed where the statute of limitations extensions signed by intervenor were valid, thereby allowing the IRS to issue a Final Partnership Administration Adjustments (FPAA) after the initial limitations period expired but within the extension granted by the consents

[06/07] Seaview Trading, LLC v. Commissioner of Internal Revenue
In a petition challenging a notice of Final Partnership Administrative Adjustment, the Tax Court?s dismissal, for lack of jurisdiction, is affirmed where: 1) because plaintiff contended that his business entity was a small partnership not subject to the audit procedures under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), entities that are disregarded for federal tax purposes may nevertheless constitute pass-thru partners under 26 U.S.C. section 6231(a)(9), such that the small-partnership exception under section 6231 does not apply and the partnership is therefore subject to the TEFRA audit procedures; 2) resolution of this question iss inextricably intertwined with the contention that plaintiff had standing to file a petition for readjustment of partnership items on behalf of his purported small partnership; and 3) as to standing, because a party other than plaintiff's entity's tax matters partner filed a petition for readjustment of partnership items after the partnership had timely done the same, the Tax Court lacked jurisdiction under 26 U.S.C. section 6226.

[06/06] Williams & Fickett v. Co. of Fresno
In a property tax refund case presenting the question of whether the nullity exception applies to the exhaustion of administrative remedies principle, so that a timely assessment appeal is not required as a first step in the exhaustion process, when an assessment on nonexempt property is challenged on the ground that the taxpayer does not own the property involved, the Court of Appeal's decision is affirmed where: 1) the taxpayer must seek an assessment reduction through the assessment appeal process before the county board of equalization or a county assessment appeals board, or obtain a stipulation under section 5142(b) that such proceedings are unnecessary, in order to maintain a postpayment superior court action under section 5140 that seeks reduction of the tax; 2) the decision in Parr-Richmond Industrial Corp. v. Boyd (1954) 43 Cal.2d 157 provides otherwise and is overruled; and 3) because plaintiff and others in its position could reasonably have relied on Parr-Richmond in opting not to pursue timely assessment appeal proceedings under section 1603, this ruling has prospective effect only.

[06/05] Weatherford v. City of San Rafael
In a suit under Code of Civil Procedure section 526a, under which certain individuals and corporations have a right to pursue legal actions enjoining wasteful or illegal expenditures by government entities, the Court of Appeal's judgment that payment of a property tax was required for standing is reversed where: 1) section 526a does not require the payment of a property tax; and 2) an allegation that the plaintiff has paid an assessed tax to the defendant locality is sufficient under section 526a to confer standing.

[05/25] Leider v. Lewis
In a taxpayer action seeking injunctive and declaratory under Code of Civil Procedure section 526a alleging claims of elephant abuse at the Los Angeles Zoo in violation of Penal Code section 596.5, the Court of Appeals' judgment is reversed where: 1) the Court of Appeal's earlier decision did not establish law of the case, and did not bar defendants' new argument that the claim for equitable relief is precluded by Civil Code section 3369; and 2) the 'as otherwise provided by law' exception in section 3369 does not permit equitable relief in a taxpayer action seeking to restrain 'illegal' public expenditures under Code of Civil Procedure section 526a.

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