Here’s an interesting case about tax fraud and the admissibility of evidence.
The Third Circuit Court of Appeals recently dealt with a case involving over half a million dollars in unpaid taxes. When the taxpayers alleged that they had made a willful attempt at paying the tax and that the non-payment was not, in fact, willful, the government threw in damning evidence that hurt the taxpayers’ case.
Last week, the U.S. Court of Appeals of the Third Circuit ruled on a tax case that stemmed from the Virgin Islands district court.
While this is a tax case, don't worry -- we won't get into the heavy tax jargon in this post. But the U.S. Virgin Islands are U.S. territories which means that there is a little more U.S. oversight on the taxation of income there.
Tax-Exempt Bonds: The Third Circuit Court of Appeals held, in IRS v. DeNaples, that Internal Revenue Code Section 103 provided an exemption from federal income tax to interest payments paid under an installment agreement by the State to Taxpayers.
Taxpayers Dominick and Louis DeNaples were both partners in several entities that owned an interest in parcels of real property in Pennsylvania. The land was acquired by the State to build the Lackawana Valley Industrial Highway through condemnation and in 2001, the Taxpayers entered into an agreement whereby the state would pay them $40.9 million ($24.6 million in principal and $16.3 million in "settlement" interest) in exchange for the ownership interest in the land.
The Third Circuit Court of Appeals ruled against Merck & Co earlier this week on a transfer pricing tax case involving a refund of $473 million.
The three-judge panel ruled against the drug giant and upheld the lower court ruling from 2010, where the district court found that the drugmaker was not entitled to the refund.
The case is complex, even for tax lawyers as transfer pricing and Subpart F are some of the most complicated parts of tax law. It involves complicated corporate tax schemes, tax havens and a suit for refund. Let’s try to put this into plain English:
The 3rd Circuit Court of Appeals ruled on an interesting question last month in a tax case. Never fear, all you non-tax lawyers, as this case deals with issues of civil procedure and not archaic tax concepts.
The question: Can a claim for wrongful tax levy be summarily dismissed as time-barred if the whole Notice of Levy is at issue? In other words, if the I.R.S. contents that it never issued a Notice of Levy to the taxpayer prior to taking money from her account, is it even appropriate for the court to dismiss the merits of the case on a statute of limitations ground? After all, when was "notice" received?
In a case involving the founder of Adelphia and his son, denial of defendants' motion to dismiss conspiracy charges in a Pennsylvania indictment, claiming that their conviction for conspiracy and substantive fraud counts in the Southern District of New York violated their right to be free from double jeopardy, is remanded as 18 U.S.C section 371 creates a single statutory offense and defendants established a prima facie case that there was only one conspiratorial agreement. However, denial of defendants' motion to dismiss tax evasion charges in the Pennsylvania Indictment is affirmed.
Appellate Information
On Appeal from the United States District Court for the Middle District of Pennsylvania
(No. 05-cr-00402)
District Judge: Honorable John E. Jones III.
Opinion Filed October 21, 2009
Judges
Before: Rendell, Fuentes, and Roth, Circuit Judges
Opinion by Fuentes, Circuit Judge
Counsel
Counsel for Appellant: Lawrence G. McMichael, Matthew P. Faranda-Diedrich, Patrick M. Northern, Joseph U. Metz, Dilworth Paxson
Counsel for Appellee: George J. Rocktashel, Martin C. Carlson, Office of the United States Attorney, Lorna N. Graham, Office of the United States Attorney
A municipality's petition for review of the Department of Transportation's (DOT) order declaring its ordinance imposing tax on airlines every time one of their flights lands within the municipality's borders invalid is denied as the Anti-Head Tax Act, 49 U.S.C. section 40116 text unambiguously demonstrates that subsection (c) is not a savings clause for flight-related taxes.
Read Township of Tinicum, Delaware County, Pennsylvania v. DOT, No. 08-1830
Appellate Information
On Petition for Review of an Order of the United States Department of Transportation
Opinion Filed September 14, 2009
Judges
Before: Chagares and Hardiman, Circuit Judges and Garbis, District Judge
Opinion by Chagares, Circuit Judge
Counsel
Counsel for Appellant: Francis G.X. Pilleggi, Sheldon K. Rennie, Sophia Siddiqui
Counsel for Appellee: Dale C. Andrews, Paul M. Geier, Mary F. Withum, Robert B. Nicholson, Robert J. Wiggers
Convictions for conspiracy to defraud the IRS are affirmed where: 1) materiality is an essential element of the charged 18 U.S.C. section 286 offense, but is not required to show a section 287 violation; 2) despite the fact that the indictment did not use the term material, it sufficiently alleged facts that warrant an inference of materiality and 3) the deficiency in the jury instructions as to materiality was harmless error.
Read US v. Saybolt, No. 07-4392
Appellate Information
On Appeal from the District Court for the Eastern District of Pennsylvania (Nos. 05-CR-00618-2 & 05-CR-00618-1))
District Judge: Honorable Gene E.K. Pratter
Argued January 28, 2009
Opinion Filed August 18, 2009
Judges
Before: Scirica, Chief Judge, Ambro and Smith, Circuit Judges
Opinion by Smith, Circuit Judge
Counsel
Counsel for Appellants: Daniel I. Siegel, Esq. and Andrew F. Erba, Esq.
Counsel for Appellees: Pamela Foa
In a dispute involving a federal income tax refund, summary judgment in favor of the government is affirmed where the court properly held that that 26 U.S.C. sec. 162(k)(1) disallows plaintiff from claiming the deduction available under 26 U.S.C. sec. 404(k)(1) for payments to an Employee Stock Ownership Plan trust in redemption of the preferred stock, as it inevitably involves an amount paid or incurred by a corporation in connection with the reacquisition of its stock.
Read Conopco, Inc. v. US, No. 07-3564
Appellate Information
Appeal from the United States District Court for the District of New Jersey.
Argued January 6, 2009
Filed July 13, 2009
Judges
Before: FUENTES and FISHER, Circuit Judges, and PADOVA, District Judge.
Opinion by FISHER, Circuit Judge.
Counsel
For Appellant: Ronald S. Rolfe, Cravath, Swaine & Moore.
For Appellee: Ellen P. DelSole, United States Department of Justice.
