Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

Geosyntec, a specialty consulting and engineering firm, filed suit seeking a federal income tax refund under 26 U.S.C. 41. Under section 41, a taxpayer may claim a tax credit for increased spending on qualified research. Geosyntec claimed that it was entitled to the research tax credit under section 41 for qualified research expenses that it incurred on client projects in taxable years, 2002-2005. The district court found that research conducted by Geosyntec under two particular contracts was funded by Geosyntec's clients, making Geosyntec ineligible for the research tax credit for those contracts. The court agreed, concluding that the district court was correct in its interpretation of section 41. Accordingly, the court affirmed the grant of summary judgment against Geosyntec. View "Geosyntec Consultants v. United States" on Justia Law

These six consolidated appeals arose out of a Congressional exemption from taxation granted to the federal entities. Appellants contend that the state taxes normally imposed on real estate transfers apply when the federal entities transfer real property in their respective states. The federal entities have not paid the transfer taxes based on their Congressional charter exemptions from "all taxation." The district courts found that the statutory exemptions do apply to preclude taxation and are constitutional. The district court also found that statutory exceptions for taxation of real property contained in the federal statutes did not apply to allow appellants to impose the transfer tax. The court affirmed and agreed with its sister circuits, who have held that the charter exemptions do apply in this context, and are constitutional under the Commerce, Necessary and Proper, and Supremacy Clauses. View "Montgomery Cnty. Comm'n v. FHFA" on Justia Law

During a traffic stop, police saw evidence of possible identity theft in plain view. A vehicle search revealed mail addressed to people unrelated to Earnest or his passenger, 39 debit cards, $4,000 in cash, and documents containing names, birth dates, Social Security numbers, and addresses for 1,000 individuals, plus their online tax return personal information and debit card account numbers. Hundreds of fraudulent tax returns had been filed, seeking $1.8 million in refunds; the IRS paid out $840,000. Many refunds were loaded onto debit cards. Earnest was linked to residences where the returns were filed and was photographed using the unauthorized debit cards. Tax returns were filed from Earl's IP addresses; he also was recorded using thecards. Both were convicted of conspiracy to commit fraud against the government, conspiracy to use unauthorized access devices, use of unauthorized access devices, and aggravated identity theft. Earnest also was convicted of possessing 15 or more unauthorized access devices. Earl was sentenced to 84 months’ imprisonment. Earnest was sentenced to 172 months. Belizaire recruited people to provide addresses , exchanged identification information of victims, filed fraudulent returns, and used the debit cards; he pleaded guilty to conspiracy to defraud the government and aggravated identity theft and was sentenced to 129 months’ imprisonment. The Eleventh Circuit affirmed both convictions and all sentences. View "United States v. Baldwin" on Justia Law

Petitioner sought review of the Tax Court's final order and decision for redetermination of deficiency brought under 26 U.S.C. 6213(a), arguing that the Tax Court erred by concluding that the $5.75 million petitioner received from the assignment of his position as plaintiff in a lawsuit constituted taxable ordinary income, rather than long term capital gains. The court held that the profit from the $5.75 million petitioner received in the sale of his position in the lawsuit is more appropriately characterized as capital gains. Therefore, the court reversed the Tax Court's decision as to this issue and remanded with instructions. The court rejected petitioner's argument that the Tax Court erred by not treating his $600,00 payment to Steelervest as a deductible "reduction of income" where petitioner has not met his burden of clearly establishing his entitlement to a particular deduction. Therefore, the court affirmed the Tax Court's decision as to this issue. Finally, because petitioner's evidence of unaccounted legal fees was insufficient and petitioner did not present sufficient evidence of a deductible expense, the court affirmed the Tax Court's decision on this issue. Accordingly, the court affirmed in part and reversed in part, remanding with instructions for further proceedings. View "Long v. Commissioner of IRS" on Justia Law

Plaintiff filed suit to determine her liability for $148,000 in penalties assessed by the IRS for aiding and abetting understatement of tax liability in violation of I.R.C. 6701. The court concluded that the Government must prove its case under I.R.C. 6701 by clear and convincing evidence because I.R.C. 6701 requires the Government to prove fraud. The court also concluded that insufficient evidence supported the jury's verdict on the penalties plaintiff challenged on appeal because the Government did not meet its burden of proving that plaintiff actually knew the returns she prepared understated the correct tax. Therefore, the court reversed as to this issue. In this case, the district court's instruction on a preponderance standard likely harmed plaintiff. Accordingly, the court vacated the district court's judgment on all remaining penalties and remanded for a new trial. View "Carlson v. United States" on Justia Law

The Commissioner appealed the Tax Court's grant of summary judgment to petitioner on his pro se petition for review of a tax deficiency determination. At issue was whether the Tax Court erred as a matter of law in holding that petitioner and his wife were entitled to the first-time homebuyers tax credit even though, when considered as a single marital unit, they did not qualify for the credit under 26 U.S.C. 36(c) of the Internal Revenue Code. Section 36(c) requires that for a married couple to qualify for the first-time homebuyer tax credit, both spouses collectively must meet the same statutory requirements, either as first-time homebuyers under section 36(c)(1) or as long-time residents under section 36(c)(6). The court held that the Tax Court's decision was directly contrary to the plain language of the statute and should be reversed. View "Packard v. Commissioner of IRS" on Justia Law

Plaintiff, trustee for the estate of debtor, attempted to avoid eight transfers made by debtor to the IRS as payment for the income tax liability of debtor's principal. The bankruptcy court ruled in favor of the United States as to the first seven transfers. The bankruptcy court concluded that plaintiff succeeded in proving constructive fraud and ruled that the IRS was an initial transferee from whom plaintiff could seek recovery. The district court affirmed with regard to the first seven transfers but reversed as to the eighth. The district court concluded that the IRS could not be held liable as an initial transferee because it qualified for the mere conduit exception. The court affirmed, viewing the transaction as sufficiently similar to the deposit of funds into a bank account to conclude that the IRS acted as a mere conduit. View "Menotte v. United States" on Justia Law

Taxpayers, United States citizens claiming to be bona fide residents of the Virgin Islands, petitioned the Tax Court, challenging the IRS's deficiency notices. In consolidated appeals, the court reviewed the Tax Court's denial of the Virgin Islands' motion to intervene in Taxpayers' proceedings in the Tax Court. The court concluded that the Virgin Islands qualified for intervention of right under Federal Rule of Civil Procedure 24(a)(2) and held that Rule 24(a)(2) applied in this instance. Because the court concluded that the Tax Court should have allowed the Virgin Islands to intervene as a matter of right under Rule 24(a)(2), the court did not reach the question of whether the Tax Court abused its discretion in denying permissive intervention under Rule 24(b)(2). Accordingly, the court remanded with instruction to grant the Virgin Islands intervention. View "Huff v. Commissioner of IRS, et al." on Justia Law

This case involved the allocation of tax refunds pursuant to a Tax Sharing Agreement (TSA) between two members of a Consolidated Group, the parent corporation (the Holding Company), and one of its subsidiaries (the Bank), the principal operating entity for the Consolidated Group. At issue on appeal was whether the Bankruptcy Court erred in declaring the tax refunds an asset of the bankruptcy estate. The court concluded that the relationship between the Holding Company and the Bank is not a debtor-creditor relationship; when the Holding Company received the tax refunds it held the funds intact - as if in escrow - for the benefit of the Bank and thus the remaining members of the Consolidated Group; the parties intended that the Holding Company would promptly forward the refunds to the Bank so that the Bank could, in turn, forward them on to the Group's members; and in the Bank's hands, the tax refunds occupied the same status as they did in the Holding Company's hands - they were tax refunds for distribution in accordance with the TSA. Accordingly, the court reversed the Bankruptcy Court's judgment and directed that court to vacate it decision declaring the tax refunds the property of the bankruptcy estate and to instruct the Holding Company to forward the funds held in escrow to the FDIC, as receiver, for distribution to the members of the Group in accordance with the TSA. View "Zucker, et al. v. FDIC" on Justia Law

CSX, an interstate rail carrier, filed suit challenging Alabama's sales and use taxes. At issue was whether exempting CSX's main competitors from Alabama's sales tax was discriminatory as to rail carriers in violation of the Railroad Revitalization and Regulation Reform Act of 1976 (4-R Act), 49 U.S.C. 11501(b)(4). After establishing a comparison class of competitors and showing that its competitors did not pay the sales tax on diesel fuel purchases, CSX made a prima facie showing of discrimination under section 11501(b)(4). Alabama then failed to meet its burden by showing a "sufficient justification" for the exemptions. Accordingly, the court reversed the judgment of the district court, holding that Alabama's sales tax violated the 4-R Act, and remanded to the district court with instructions to enter declaratory and injunctive relief in favor of CSX. View "CSX Transp., Inc. v. AL Dept. of Revenue, et al." on Justia Law