Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

In this appeal, both parties agree that the tax court lacked jurisdiction to consider the petition filed by taxpayers challenging the seizure of their funds by the IRS. At issue was why, and the reason the tax court lacked jurisdiction. The court concluded that the tax court’s December 2013 denial of both parties’ motions and its terse order undercut any contention that it resolved precisely why jurisdiction was lacking in this case. Therefore, the court vacated the December order and remanded to the tax court to give that court an opportunity to state its reasons for dismissing the petition. Because the costs claim will be affected by the grounds of the tax court’s jurisdictional ruling, the court vacated the tax court’s denial of taxpayers’ motion for costs and leave it to the tax court to decide taxpayers’ motion anew, in light of the jurisdictional rationale it adopts; because the tax court’s December order did not address taxpayers’ alternative ground for jurisdiction, the tax court must first determine, on remand, whether the parties have preserved their arguments concerning this issue; and the court lacked jurisdiction to consider a new argument taxpayers attempt to raise for the first time on appeal regarding a collection due process hearing. View "Edwards v. Commissioner" on Justia Law

Validus, a foreign corporation, filed suit seeking a refund of excise taxes imposed under 26 U.S.C. 4371, which taxes certain types of "reinsurance." The government contends that “the best reading of the statute” establishes its applicability to reinsurance purchased by a reinsurer because such policies (known as “retrocessions”) are “a type of reinsurance,” and also that interpretation carries out Congress’s intent “to level the playing field” between domestic (U.S.) insurance companies subject to U.S. income taxes and foreign insurance companies that are not so burdened. Validus responds, however, that the plain text, considered in the context of reinsurance, and the statutory structure make clear that the excise tax does not apply to retrocessions, and further, the presumption against extraterritoriality resolves any doubt that the tax is inapplicable to Validus’s purchases of reinsurance from a foreign reinsurer. The court concluded that the text of the statute is ambiguous with respect to its application to wholly foreign retrocessions, and the ambiguity is resolved upon applying the presumption against extraterritoriality because there is no clear indication by Congress that it intended the excise tax to apply to premiums on wholly foreign retrocessions. Therefore, the court affirmed the district court's grant of summary judgment on Validus's refund claims. View "Validus Reinsurance v. United States" on Justia Law

In 2007 Rogers, a U.S. citizen, lived in Hong Kong and worked as a flight attendant for United Airlines. She flew and worked in and over foreign countries and also in and over the United States and over international waters. She and her husband filed a tax return reporting all of her flight attendant earnings as “foreign earned income.” The IRS determined a tax deficiency of $3,428.30 on the portion of Rogers’s earnings attributable to her work outside foreign countries, as well as a 20% penalty. Rogers argued that 26 U.S.C. 911(a)(1), (b)(1)(A) authorized exclusion of Rogers’s flight attendant earnings as “foreign earned income,” because it was received “from sources within a foreign country or countries,” Rogers’s Hong Kong-based job. and that they should not be charged the negligence penalty. The Tax Court disagreed, finding that they could only exclude the portion of Rogers’s earnings that were related to her time spent working in or over foreign countries. The D.C. Circuit affirmed. View "Rogers v. Comm'r, Internal Revenue Serv." on Justia Law

Retired officers of D.C.’s Metropolitan Police Department were subsequently re-hired by the D.C. Protective Services Division, which protects government buildings and D.C.-owned property. They received pension benefits from their service with the Police Department and salaries for their jobs with Protective Services, but Section 5- 723(e) of the D.C. Code requires reduction of plaintiffs’ salaries by the amount of their pensions to prevent so-called double-dipping. Pursuant to that provision, D.C. reduced plaintiffs’ salaries by the amount of their pensions. Following a remand for consideration under the Fair Labor Standards Act, plaintiffs raised a claim under the Public Salary Tax Act of 1939, 4 U.S.C. 111(a)), which was rejected. The D.C. Circuit affirmed. The Public Salary Tax Act allows states and D.C. to impose “taxation” on compensation paid to employees of the federal government, only if the taxation does not discriminate against federal employees. The D.C. salary reduction provision at issue is not “taxation.” It does not raise revenue, but operates on the opposite side of D.C.’s financial ledger. It reduces D.C.’s total expenditures on salaries. View "Cannon v. Dist. of Columbia" on Justia Law

After taxpayers failed to pay federal income taxes for the 2007 tax year, the IRS assessed the unpaid amount plus penalties and interest, and then attempted to collect them from taxpayers by means of a levy on the couple's home. Taxpayers unsuccessfully challenged the proposed levy in the Tax Court. On appeal, taxpayers contend that the Tax Court judge may have been biased in favor of the IRS in a manner that infringed the constitutional separation of powers. The court held that 26 U.S.C. 7443(f) did not infringe the constitutional separation of powers. Even if the prospect of "interbranch" removal of a Tax Court judge would raise a constitutional concern in theory, there is no cause for concern in fact: the Tax Court exercises Executive authority as part of the Executive Branch. Presidential removal of a Tax Court judge thus would constitute an intra-branch removal. The court rejected taxpayers' remaining claims and affirmed the judgment of the district court.View "Kuretski, et al. v. Commissioner of IRS" on Justia Law

The Board of County Commissioners of Kay County appealed the district court's dismissal of its complaint seeking a declaratory judgment that Fannie Mae and Freddie Mac, along with the FHFA as their conservator, violated state law by failing to pay Oklahoma's documentary stamp tax (the Transfer Tax). The court held that 12 U.S.C. 1452(e), 1723a(c)(2), 4617(j)(1)-(2) exempt the entities from all state and local taxation, including Oklahoma's Transfer Tax, and that the Transfer Tax did not constitute a tax on real property such that it fell into the real property exceptions from the exemptions. The court also held that Kay County has forfeited its argument that the exemptions represent an invalid exercise of the Commerce power. Accordingly, the court affirmed the judgment of the district court.View "Bd. of Cty. Comm'rs v. FHFA, et al." on Justia Law

Appellants challenged the IRS's interpretation of 26 U.S.C. 36B, enacted as part of the Patient Protection and Affordable Care Act, under the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A). The district court held that the ACA's text, structure, purpose, and legislative history make "clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges." The district court held that even if the ACA were ambiguous, the IRS's regulation would represent a permissible construction entitled to Chevron deference. The court concluded, however, that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges "established by the State." Accordingly, the court reversed the judgment of the district court and vacated the IRS's regulation. View "Halbig v. Burwell" on Justia Law

26 U.S.C. 4251 imposes an excise tax on amounts paid for toll telephone service. Technological advances changed cost structures and, as a result, telephone companies began charging only by elapsed transmission time. The IRS, however, continued to collect the tax. Five courts of appeals, including this court, held that section 4251 did not permit the Service to tax telephone service with distance-invariant pricing. Around the same time, plaintiffs (Cohen, Sloan, and Gurrola) filed separate putative class-action suits challenging the tax. After Cohen and Sloan filed their complaint, the Service issued without notice and comment Notice 2006-50, declaring that the Service would no longer tax telephone service priced without regard to distance and established a procedure to refund illegally collected excise taxes. On appeal, plaintiffs challenged the district court's refusal to direct the Service on remand to issue a refund rule and from its denial of their interim request for fees. The court rejected plaintiffs' contention that the district court erred in vacating Notice 2006-50 and remanding, without specifically instructing the Service to promulgate a new refund procedure. Here, the only statutory failure was of notice and comment. Absent a statutory duty to promulgate a new rule, a court cannot order it. The court also concluded that the district court did not abuse its discretion in denying fees. The district court found the government's position to be substantially justified because several circuit judges agreed with the government and dissented from the Cohen I and Cohen II opinions. Accordingly, the court affirmed the judgment of the district court. View "In re: Long-distance Telephone Service Federal Excise Tax Refund" on Justia Law

Plaintiffs, three independent tax-return preparers, filed suit contending that the IRS's new regulations exceeded the agency's authority under the statute. At issue was whether the IRS's statutory authority to "regulate the practice of representatives of persons before the Department of the Treasury" encompassed authority to regulate tax-return preparers. In the court's judgment, the traditional tools of statutory interpretation - including the statute's text, history, structure, and context - foreclosed and rendered unreasonable the IRS's interpretation of 31 U.S.C. 330. Therefore, the court affirmed the judgment of the district court, agreeing that the IRS's statutory authority under Section 3303 could not be stretched so broadly as to encompass authority to regulate tax-return preparers. View "Loving, et al. v. IRS, et al." on Justia Law

Appellant sought review of orders and decisions issued by the Tax Court affirming the IRS's decision to impose a levy on his property to collect overdue income taxes. Appellant raised several challenges emanating from an IRS Office of Appeals Collection Due Process (CDP) hearing which resulted in the contested levy. The court denied the IRS's motion to transfer this case to the Eighth Circuit; the court had no occasion to decide in this case whether a taxpayer who is seeking review of a CDP decision on a collection method may file in a court of appeals other than the D.C. Circuit if the parties have not stipulated to venue in another circuit; nothing in the record indicated that the CDP hearing was tainted by ex parte communications between the Settlement Officer and other IRS employees; appellant failed to timely raise his claim regarding the senior Tax Court judge's recusal; the Tax Court's dismissal of appellant's tax liability for the year 2003 was moot; and appellant's challenge to the notice of determination imposing the levy was rejected where the court had no grounds to overturn the IRS's levy determination in this case. Accordingly, the court affirmed the decisions of the Tax Court. View "Byers v. Commissioner of IRS" on Justia Law