Justia Massachusetts Supreme Court Opinion Summaries

Articles Posted in Tax Law
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The Supreme Judicial Court affirmed the decision of the Land Court judge ruling that the statutory scheme set forth in Mass. Gen. Laws ch. 60, 52 did not permit assignees of tax title accounts to include their own subsequent tax payments in the amount required for redemption, holding that the judge did not err.In 2011, City took tax title to Owners' property. Owners did not pay their real estate taxes in 2012 through 2015. In 2016, City assigned Appellant its tax title to the property. Appellant initiated proceedings to foreclose Owners' right to redeem the property. Owners exercised their right of redemption. In 2018, Appellant asked the Land Court to find that the redemption amount include the taxes owed to City at the time Appellant was assigned the tax title account, the taxes that Appellant had paid on the property from 2016 through 2018, and statutory interest on the unpaid real estate taxes and the taxes paid by Appellant. The judge concluded that tax payments made by section 52 assignees subsequent to the assignment of the tax title account could not be included in the redemption amount. The Supreme Judicial Court affirmed, holding that section 52 assignees of tax title accounts may not include their own subsequent tax payments, and interest thereon, in their redemption demands. View "Tallage Lincoln, LLC v. Williams" on Justia Law

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The Supreme Judicial Court affirmed the decision of the appellate tax board (board) upholding the Commissioner of Revenue's assessment of an additional Massachusetts estate tax based on the value of a qualified terminable interest property (QTIP) trust in computing a decedent's Massachusetts estate tax return, holding that there was not a constitutional or a statutory barrier to the assessment.Robert Chuckrow created a QTIP trust in New York. Adelaid Chuckrow (decedent) was the lifetime income beneficiary of the QTIP trust and deed domiciled in Massachusetts. The decedent's estate (estate) did not include the value of the QTIP trust assets in computing her Massachusetts estate tax return. After an audit, the Commission assessed an additional Massachusetts estate tax of almost $2 million based on the value of the QTIP assets. The board upheld the assessment. At issue before the Supreme Judicial Court was whether the intangible assets in the QTIP trust were includable in the gross estate of the decedent for purposes of calculating the Massachusetts estate tax under Mass. Gen. Laws ch. 65C, 2A(a). The Supreme Judicial Court affirmed, holding that the QTIP assets were includable in the estate for purposes of the Massachusetts estate tax. View "Shaffer v. Commissioner of Revenue" on Justia Law

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The Supreme Judicial Court affirmed the decision of the Appellate Tax Board (the Board) upholding sales tax assessments for fees charged for subscriptions to use online software products, holding that the subscription fees were subject to sales tax.Appellant sold subscriptions for three online software products. The Commissioner of Revenue determined that Appellant's subscription fees constituted sales of software subject to sales tax and assessed sales tax against Appellant for the taxable periods April 2007 through June 2009 and October 2009 through December 2011. The Board upheld the sales tax assessments. The Supreme Judicial Court affirmed, holding that receipts from sales of subscriptions for the online software products were subject to Massachusetts sales tax. View "Citrix Systems, Inc. v. Commissioner of Revenue" on Justia Law

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The Supreme Judicial Court affirmed the decision of the board of assessors of Boston, holding that taxed personal property owned by and assessed to Veolia Energy Boston, Inc. consisting principally of pipes that Veolia used to produce, store, and distribute steam is exempt from local taxation and that the great integral machine doctrine remains an appropriate means by which to determine whether certain property constitutes machinery.At issue was whether the pipes were exempt from local taxation in accordance with Mass. Gen. Laws ch. 59, 5, clause 16 (3), which provides that property owned by a manufacturing corporation "other than...pipes" is exempt from local taxation. The board found that Veolia's networks of pipes and appurtenant equipment operate in concert as a single, integrated machine and, as a result, concluded that the pipes constituted machinery exempt from local taxation in accordance with clause 16 (3). The Supreme Judicial Court affirmed, holding that the board's reasoning in all material aspects was sound and that there was no basis for disturbing the board's decision. View "Veolia Energy Boston, Inc. v. Board of Assessors of Boston" on Justia Law

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“Covered persons” as used in Mass. Gen. Laws ch. 176I, 11 refers solely to natural persons who, as employees, receive insurance coverage for health care services under a group insurance plan, rather than employer entities.At issue in this case was whether, when an employer purchases insurance on behalf of its employees, the insurer owes tax on premiums paid by on or behalf of only those individuals who live in Massachusetts or whether the insurer owes tax on all premiums received from the Massachusetts-based employer regardless of where its individual employees reside. The Supreme Judicial Court affirmed the judgment of the Appellate Tax Board, holding that the term “covered persons” in section 11 refers to the natural person receiving health care coverage under a preferred provider arrangement policy, including his or her spouse and additional dependents, not the employer-organization with whom the insurer contracts. View "Dental Service of Massachusetts, Inc. v. Commissioner of Revenue" on Justia Law

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This litigation began when purchasers of computer service contracts filed a putative class action against the sellers. The sellers successfully moved to compel arbitration pursuant to the terms of the computer services contracts. The sellers, in the meantime, had applied for tax abatements from the Commissioner of Revenue. The Commissioner denied the applications, and the sellers petitioned the Appellate Tax Board. Appellant, one of the consumers who purchased these service contracts, moved to intervene in the proceedings, which petition the Board allowed. The Board reversed the Commissioner’s decision and allowed the abatements. Taxes were imposed on the service contracts purchased by Appellant. After final judgment was entered in the sellers’ favor in the class action litigation, the sellers withdrew their tax abatement petitions with prejudice. The Board denied Appellant’s motion to strike the withdrawals and terminated the proceedings. The Supreme Judicial Court reversed, holding (1) the Board did not err as a matter of law in allowing the Sellers’ withdrawals; but (2) the Board’s termination of the proceedings in their entirety, after permitting Appellant to intervene and allowing the abatements, was an error of law. Rather, Appellant should have been allowed to proceed as an intervener on its claim to recover the taxes imposed on the service contracts it purchased. View "WorldWide TechServices, LLC v. Commissioner of Revenue" on Justia Law

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The Supreme Judicial Court affirmed the decision of the Appellate Tax Board, which concluded that, under a provision of the Massachusetts sales tax statute known as the “drop shipment rule,” Taxpayer was responsible for collective and remitting sales tax due on products it sold to out-of-state retailers and then delivered to consumers. Taxpayer sold goods to retailers at wholesale and delivered the goods to Massachusetts consumers and others on behalf of those retailers. The Supreme Judicial Court held (1) the Commissioner of Revenue and the Board did not err in determining that Taxpayer was responsible as the vendor for collecting and remitting the sales tax due on products it sold to the out-of-state retailers and then delivered to consumers where it failed to meet its burden of proving that the retailers were engaged in business in Massachusetts; and (2) the statutory drop shipment rule does not violate the dormant commerce clause of the federal Constitution. View "D & H Distributing Co. v. Commissioner of Revenue" on Justia Law

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In 2012, the assessor for the city of Attleboro determined that Shrine of Our Lady of La Salette Inc. (Shrine) owed property taxes in the amount of $92,292.98. The Shrine filed an application for abatement, which the city’s board of assessors denied. The Shrine appealed, arguing its property was exempt under Mass. Gen. Laws ch. 59, 5, Eleventh (Clause Eleventh), the exemption for “houses of religious worship.” The Appellate Tax Board divided the Shrine’s property into eight distinct portions, determined that the first four portions of the property were exempt under Clause Eleventh, that the fifth portion was only partially exempt, and that the last three were fully taxable. The Shrine appealed these latter four determinations. The Supreme Judicial Court affirmed in part and reversed in part, holding (1) the board erred when it found that the Shrine’s welcome center and maintenance building were not exempt under Clause Eleventh; and (2) the former convent that the Shrine leased to a nonprofit organization for use as a safe house for battered women and the wildlife sanctuary that was exclusively managed by the Massachusetts Audubon Society in accordance with a conservation easement were not exempt under Clause Eleventh. View "Shrine of Our Lady of La Salette Inc. v. Board of Assessors of Attleboro" on Justia 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