Justia Massachusetts Supreme Court Opinion Summaries

Articles Posted in Tax Law

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Under Mass. Gen. Laws ch. 63, corporations that generate business income in the Commonwealth and other states must pay taxes on that income according to an apportionment formula that seeks to tax the corporation’s income generated in Massachusetts. For a “manufacturing corporation,” the statutory formula is based solely on the corporation’s sales. The Appellate Tax Board determined that Genentech, Inc., a Delaware corporation with a principal place of business in California that earns business income in the Commonwealth, qualified as a manufacturing corporation for the tax years 1998 through 2004. On appeal, Genentech appealed that determination, among other things. The Supreme Judicial Court affirmed, holding (1) Genentech qualified in each of the tax years at issue as a “manufacturing corporation” as defined in Mass. Gen. Laws ch. 63, 38(1)(1) and, under section 38(1)(2), was required to apportion its income under the single-factor formula using solely the statute’s sales factor; and (2) the Board properly rejected Genentech’s claim that application of the statute’s single-factor apportionment formula based on sales to the company violated the Commerce Clause of the federal Constitution. View "Genentech, Inc. v. Commissioner of Revenue" on Justia Law

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Two telephone companies (collectively, Taxpayers) paid personal property taxes assessed by the board of assessors of Boston for fiscal year 2012 on certain personal property each company owned. Taxpayers subsequently filed abatement applications, which were denied. The Appellate Tax Board upheld the property tax assessments. Taxpayers appealed, arguing that the tax assessments, which were based on a split tax rate structure authorized by Mass. Gen. Laws ch. 40, 56, constituted a disproportionate tax that violated the Massachusetts Constitution. The Supreme Judicial Court affirmed, holding that the split rate structure authorized by section 56 and related statutes is not unconstitutionally disproportionate. View "Verizon New England, Inc. v. Board of Assessors of Boston" on Justia Law

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Bank of America, N.A., in its capacity as a corporate trustee of several inter vivos trusts, applied for abatement of fiduciary income taxes paid by thirty-four inter vivos trusts. The Commissioner of Revenue denied the applications. The Bank appealed, arguing that, where the Bank was not domiciled in Massachusetts, these trusts did not qualify as “resident inter vivos trusts” and therefore were not subject to fiduciary income tax under Mass. Gen. Laws ch. 62, 10. The Appellate Tax Board upheld the Commissioner’s decision, concluding that the Bank, in its capacity as trustee, was an inhabitant of the Commonwealth within the meaning of Mass. Gen. Laws ch. 62, 1(f) and 10(c). The Supreme Judicial Court affirmed, holding that the Board did not err in ruling that the Bank was subject to the fiduciary income tax imposed by section 10. View "Bank of America, N.A. v. Comm’r of Revenue" on Justia Law

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Regency Transportation, Inc. is a Massachusetts S corporation that carries and delivers goods throughout the eastern United States. In 2010, the Commissioner of Revenue imposed a use tax on the full purchase price of each tractor and trailer in Regency’s fleet. The Commissioner subsequently denied Regency’s request for full abatement of the assessment. Regency appealed, arguing that the Commonwealth’s imposition of a use tax on vehicles engaged in interstate commerce violates the commerce and equal protection clauses of the Federal and State Constitutions. The Appellate Tax Board concluded that the motor vehicle use tax does not violate either the commerce or equal protection clauses. The Supreme Judicial Court affirmed, holding that an unapportioned use tax imposed on Regency’s interstate fleet of vehicles does not violate the commerce clause of the Federal Constitution. View "Regency Transp., Inc. v. Comm’r of Revenue" on Justia Law

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George and Sandra Schussel filed no tax returns between 1989 and 2007. In 2007, George was convicted of federal conspiracy and tax evasion charges. Thereafter, the Commissioner of Revenue issued the Schussels a notice of failure to file Massachusetts income tax returns for the years 1993 to 1995. The Schussels filed tax returns for those years, but the Commissioner determined that the returns were “false or fraudulent” or to have been filed with an intent to evade taxes. Consequently, the Commissioner imposed a “double assessment” against the Schussels. The Commission denied the Schussels request for abatement of the double assessment. The Appellate Tax Board and the Appeals Court affirmed the Commissioner’s decisions. The Supreme Judicial Court affirmed, holding (1) the Board’s findings of fact were supported by substantial evidence; and (2) the Schussels’ claim that they were entitled to relief from the double assessment under an amnesty program established by the Commissioner in 2009 was not properly before the Court. View "Schussel v. Comm’r of Revenue" on Justia Law

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Plaintiffs in this case were two companies subject to the five percent excise tax on video programming delivered by direct broadcast satellite. Plaintiffs brought a complaint for declaratory and injunctive relief alleging that the tax violates the Commerce Clause of the federal Constitution because it disfavors satellite companies as compared with those companies that provide video programming via cable. A superior court judge granted summary judgment in favor of Defendant, the Department of Revenue. The Supreme Judicial Court affirmed, holding that the cable and satellite companies are not similarly situated, and therefore, Plaintiffs failed to carry their burden of establishing that the excise tax statute was motivated by a discriminatory purpose. View "DIRECTV, LLC v. Dep’t of Revenue" on Justia Law

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At issue in this case was the financial institution excise tax (FIET) liability of GATE Holdings, Inc., a wholly owned subsidiary of The First Marblehead Corporation (FMC). The Appellate Tax Board concluded (1) Gate qualified as a “financial institution” within the meaning of Mass. Gen. Laws ch. 63, 1 and was entitled to apportion its income pursuant to Mass. Gen. Laws ch. 63, 2A; but (2) in applying the apportionment rules of section 2A, all of Gate’s taxable property, which consisted of securitized student loans, was properly assigned to Massachusetts, rather than States outside the Commonwealth, which resulted in a greater FIET liability than anticipated by Gate. The Supreme Judicial Court affirmed, holding (1) the Board properly concluded that section 2A(e)(vi)(B) creates a rebuttable presumption that where a taxpayer seeks to assign loans to a location that is not a regular place of that taxpayer’s business, the loans should be assigned to its commercial domicile; (2) all of the student loans were properly located at Gate’s commercial domicile in Massachusetts; and (3) the Board’s decisions did not violate the due process or commerce clause. View "First Marblehead Corp. v. Comm’r of Revenue" on Justia Law

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New England Forestry Foundation, Inc. (NEFF) was a nonprofit corporation organized under Mass. Gen. Laws ch. 180 and the record owner of a parcel of forest land in the town of Hawley. The Board of Assessors for Hawley denied NEFF’s application for a charitable tax exemption on the parcel. The Appellate Tax Board (Board) also denied the application on the grounds that NEFF did not show that it occupied the land for a charitable purpose within the meaning of Mass. Gen. Laws ch. 59, 5, Third (Clause Third). The Supreme Judicial Court reversed the Board’s opinion, holding that the Board erred in concluding that NEFF did not meet its burden to show that it occupied the property within the meaning of Clause Third.View "New England Forestry Found., Inc. v. Bd. of Assessors of Hawley" on Justia Law

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The Bridgewater State University Foundation owns three buildings and three undeveloped parcels. One building is occupied by foundation offices and the university's alumni office; another houses the university's political science department; and the third is used by the university and the foundation for receptions and fundraising. The undeveloped parcels are used by students for recreation. None of the properties is used exclusively by the foundation. The foundation permits the university to use all the properties free of charge. The Appellate Tax Board decided that the foundation was entitled to the charitable exemption from local property taxes, G.L. c. 59, Sect. 5; the Appeals Court reversed. The Massachusetts Supreme Court concluded that the foundation is entitled to the exemption. The foundation is a public charitable trust, and it is "organized and operate[s] exclusively for the benefit of" Bridgewater State University under G.L. c. 15A, sect. 37. The foundation has qualified as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. The university is an institution of public higher education and certifies that the foundation is operating "in a manner consistent with" the university's goals and policies and uses its money and assets solely for the benefit of the university. View "Bridgewater State Univ. Found. v. Bd. of Assessors of Bridgewater" on Justia Law

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Since at least 1986, the town had a deteriorating sewer system. Defects allowed inflow and infiltration (I/I). Wet weather caused overflow, contaminating the ocean, rivers, and wetlands. To avoid overflow into housing, the town installed, without approval, a bypass pump that discharged raw sewage into the Saugus River. In 2005, the town entered into a consent order with the Department of Environmental Protection, acknowledging violations of the Clean Water Act and state law; the town was required to implement plans to eliminate I/I. There was a moratorium on new connections until the problem was addressed. The town embarked on a 10-year, $27 million dollar plan. Ratepayers were to finance the majority of the plan. In the interim, the town required new connections to pay an I/I reduction contribution, calculated by multiplying, by a factor that decreased as repairs were completed, the number of gallons of new flow to be generated. Plaintiff, developers, paid $670,460 to accommodate new flow from the single-family houses and multifamily housing. The trial court concluded that the charge provided no particularized benefit to the developers; that the amount was excessive compared to regulatory costs involved; and that the charge was an impermissible tax. The Massachusetts Supreme Court vacated, finding that the charge is a fee. View "Denver St. LLC v. Town of Saugus" on Justia Law