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Court Crier: Tax and Estates

In In Re: Appeal of the Coatesville Area School District Decision, the Commonwealth Court of Pennsylvania held that the preclusive doctrines of res judicata and collateral estoppel barred a tax-assessment appeal where a final decision of a similar companion case involving the same property had an identical order that was final and unappealable. In this case, a property owner was granted a partial real estate tax exemption on the basis that its property was regularly used as an institution of purely public charity. The school district challenged this assessment, as did the city in a companion case. The two cases were consolidated for certain issues and received nearly identical decisions; however, the decisions were issued under two different captions and docket numbers. The school district appealed its case, but no one appealed the city's companion case and the time for appeal was allowed to expire. Therefore, the court dismissed the school district's appeal under the doctrines of res judicata and collateral estoppel as well as the need to avoid inconsistent tax assessments for a single property. (August 7, 2019)

In Alcatel-Lucent USA Inc. v. Township of Berkeley Heights, the Superior Court of New Jersey, Appellate Division, determined whether a taxpayer’s challenge to the denial of a farmland assessment was properly dismissed due to the taxpayer’s failure to respond to a request for the property’s income and expense data. The court held the statute requiring a property owner to furnish such information upon request applied to a request for a farmland assessment, and therefore the failure to timely respond supported the township’s denial of the request. (July 18, 2019)

In Erie-Western Pennsylvania Port Authority v. Erie County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania addressed whether the Assessment Law identifies floating docks as taxable real estate. While the law does not identify floating docks as taxable real estate, chattel that is affixed to the land can become real estate for purposes of a tax assessment. The court held that floating docks are personalty not subject to real estate taxation when the docks float on the water, can be lifted out for repair, and can be reconfigured or disassembled with no damage to the property. (July 12, 2019)

In S&H Transport, Inc. v. City of York, the Supreme Court of Pennsylvania considered whether the Business Privilege and Mercantile Tax (BPT) imposed by the City of York must be paid by a freight broker on the total yearly amount of money it receives from customers for brokering freight deliveries where, after deducting its commission, it remits the money to the freight carriers as payment of their shipping fees. The Local Tax Enabling Act (LTEA), which is the authority for the BPT, forbids municipalities to tax “charges advanced by a seller for freight.” Because the LTEA’s use of the word “seller” was ambiguous and, under special rules of statutory construction provided by the Statutory Construction Act for ambiguous tax statutes, tax statutes are to be strictly construed in favor of the taxpayer, the court concluded that the money passed onto the freight carriers is excluded from the tax. (July 17, 2019)

In North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, the United States Supreme Court considered whether North Carolina could tax income of a trust based on the fact that all of the trust’s beneficiaries resided there. The court held the beneficiaries did not exercise sufficient control over the trust to allow their residence in North Carolina to provide sufficient contact with the state to comport with due process requirements and allow tax to be imposed. (June 21, 2019)

In Martel v. Allegheny County, the Commonwealth Court of Pennsylvania addressed the proper forum to hear a property owners’ appeal for relief from property assessments ordered by the County Board of Assessment Appeals and Review (Board). The court held that the Second Class County Assessment Law specifically grants the Board the power and duty to hear all cases of appeals from assessments, and all complaints as to assessments and refunds. Therefore, the trial court properly dismissed the property owners’ appeal for failure to exhaust the remedies available under the Assessment Law. (May 22, 2019)

In Freeman-Bennett v. York County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania addressed the evidentiary burden necessary to satisfy the financial need requirement to be eligible for tax exemption under the Military and Veterans Code (Act). The court held the Act requires that an actual determination has been made by the Commission, not the taxing authority, to establish financial need under this provision. A legal presumption that the Commission would likely have found in the taxpayer’s favor is insufficient to satisfy this burden as a matter of law. (May 17, 2019)

In Estate of Lillian Powell, the Superior Court of Pennsylvania held that co-executors of an estate were not required to present evidence relevant to enforcement of a forfeiture clause in a will where they had filed a motion for a compulsory nonsuit, because the forfeiture issue is a separate and distinct cause of action and only becomes ripe when the court determines the will contest is unsuccessful. Because the forfeiture issue was separate and distinct, the trial court infringed on the co-executors right to procedural due process in refusing to conduct a hearing on the forfeiture petition. (May 1, 2019)

In McIlwain v. Saber Healthcare Group, Inc., the Superior Court of Pennsylvania addressed whether a nursing home resident was bound by his daughter’s acceptance of an arbitration agreement. The court held that, although the daughter was granted temporary conservatorship of her father by a California court, she had no authority as conservator to bind her father to an arbitration agreement because she did not comply with the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act when she failed to register the conservatorship in Pennsylvania or petition a Pennsylvania court to have it recognized. The court reasoned The Full Faith and Credit Clause of the United States Constitution did not compel the contrary result because the underlying California judgment of the father’s incapacity is not affected by the Pennsylvania statutory requirements. (April 22, 2019)

In In re Trust Under Agreement of Pauline O. Walker, the Superior Court of Pennsylvania addressed whether beneficiaries of a revocable trust, daughters of the decedent who set it up, had standing to complain of the trustee’s alternative trust investments. The court held that the decedent’s inter vivos consent to and approval of the investments were binding upon the daughters as trust beneficiaries and relieved the trustee of liability to the daughters. (April 22, 2019)

In In re Estate of Anna Marie Leipold, the Superior Court of Pennsylvania addressed whether a judicial estate sale under 20 Pa. C. S. A. § 3353 is permissible over the objection of a secured mortgagee. The court held that the broad power afforded to the orphan’s court under Section 3353 permits a judicial sale even where the mortgagee objects, if the court determines that such a sale is desirable for the proper administration and distribution of the estate. The court held, however, that such a sale does not, by itself, extinguish the lien, as the lien would attach to the proceeds of the sale. (April 23, 2019)

In Pruent-Stevens v. Tom Rivers Township, the Superior Court of New Jersey, Appellate Division, addressed whether the surviving spouse of a decorated Vietnam veteran, who contracted disease from Agent Orange, qualified for the New Jersey military veteran’s property tax exemption. The court held that the surviving spouse did not qualify because she had remarried after the death of the veteran. (April 1, 2019)

In Gavin v. Loeffelbein, the Supreme Court of Pennsylvania addressed the meaning and effect of Section 5513 of Pennsylvania’s Probate Estates and Fiduciaries Code and whether an individual subject to an emergency guardianship under the code is incapacitated and precluded from making decisions about his own property when a guardian has been appointed to do so on his behalf. The court held that an individual under the protection of an emergency guardianship order has been determined to lack sufficient capacity to make certain decisions and that the extent of his decision-making capacity depends on the specific powers, duties and liabilities afforded the guardian by court order. (March 26, 2019)

In Veolia Energy Boston, Inc. v. Board of Assessors of Boston, the Massachusetts Appeals Court addressed whether the tax board had jurisdiction over a taxpayer’s appeal from the denial of its application for abatement of an assessment of personal property tax. The court explained that the taxpayer must file its application for abatement with the assessors before a certain date and on a specific, commissioner-approved form. Concluding that jurisdiction did not exist because the taxpayer did not timely file a valid abatement application with the board of assessors, the court explained that letters that accompanied the taxpayer’s first three quarterly tax payments were not submitted to the assessor and were not on a commissioner-approved form. (March 13, 2019)

In Mid-Atlantic Systems of WPA, Inc. v. The Tax Office of the Municipality of Monroeville, the Commonwealth Court of Pennsylvania addressed whether a municipality’s Business Privilege Tax (BPT) was invalid under the Home Improvement Consumer Protection Act (HICPA) and the Local Tax Enabling Act (LTEA). The court found that the BPT did not violate the HICPA because it was a tax on businesses for the privilege of operating within the municipality, not a licensing or registration fee. The court also held that, as the BPT was not a licensing or registration fee, it did not violate the LTEA. (March 5, 2019)

In Dawson v. Steager, West Virginia State Tax Commissioner, the Supreme Court of the United States addressed whether West Virginia’s state tax-exemption law violated the intergovernmental tax immunity doctrine by discriminating between retired state and federal employees. The Court held that because the West Virginia statute treated retired state employees more favorably than retired federal employees, where there was no significant difference between the two classes, it was unlawful discrimination. (February 20, 2019)

In In Re Estate of Tschernoff, the Superior Court of Pennsylvania considered whether gifts made while the decedent was still living (inter vivos gifts) should be charged against the recipient’s share of the estate. In this case, the will had clear terms that the executor was to divide the residuary estate equally among his four children. Since the will did not refer to the inter vivos gifts as advancements of the recipient’s residuary share, those gifts should not be charged against the recipient’s share of the residuary estate. (February 1, 2019)

In In re Nadzam, the Superior Court of Pennsylvania addressed a challenge to a decedent’s agent’s inter vivos transfer of the decedent’s assets into her own name. The petitioner, one of the decedent’s daughters, sought to determine whether the agent, another of the decedent’s daughters, misappropriated funds. Because the agent was the sole heir under the decedent’s will and only the estate would be entitled to a surcharge for misappropriation, the court held that the sister lacked standing to request a statutory accounting. The court reasoned that, under the prudential doctrine of standing, the petitioning sister was not an aggrieved party in interest. (January 14, 2019)

In In Re: Consolidated Appeals of Chester-Upland School District & Chichester School District from the Decisions of the Board of Assessment Appeals of Delaware County, the Commonwealth Court of Pennsylvania addressed whether the trial court correctly ruled that the presence of an outdoor advertising sign on a property may not be considered when determining the property’s fair market value for purposes of a real estate tax assessment. The court vacated the trial court’s order and remanded for further proceedings because, pursuant to the applicable case law, the income derived from the lease of a portion of real property to a billboard operator for advertising purposes must be considered in the property’s valuation. The trial court misinterpreted the Consolidated County Assessment Law, 53 Pa. C.S. 8811(b)(4), to exempt both the advertising sign and the income derived from the lease of the portion of property upon which it sits from a property’s fair market value for tax assessment purposes. The court determined that section 8811(b)(4) only exempts the sign itself, not the income generated by it. (December 27, 2018)

In In Re Adams County Tax Claim Bureau, the Commonwealth Court of Pennsylvania reversed the denial of a petition to set aside a judicial tax sale of a tract of land. The court held that the tax bureau did not properly “readvertise” the judicial sale to the public, because it did not include a reference to the prior advertisement. The court emphasized that the notice obligations must be strictly complied with and that failure to do so will result in the judicial sale being set aside. (December 13, 2018)

In Marshall. v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed the tax benefit rule and its application to the foreclosure of property that imposed personal income tax (PIT) liability on nonresident investors of a limited partnership that owned the property. The tax benefit rule provides that the amount of an expense that is recovered must be included in income in the year the taxpayer recovers it to the extent the original expense resulted in a tax benefit in a prior year. The court found that Pennsylvania has not adopted the tax benefit rule; therefore, it does not apply. (November 2, 2018)

In Andrews v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed the assessment of a Pennsylvania personal income tax (PIT) liability on nonresident investors in regard to a 2005 foreclosure of a commercial property. The court determined whether to adopt and apply the federal common law tax benefit rule to the disposition of property in the case and whether under the Commerce Clause, Pennsylvania may impose PIT on a nonresident limited partner of a foreign limited partnership where the primary purpose was to own and manage a commercial property within Pennsylvania for profit. The court did not adopt and apply the federal common law tax benefit rule and determined that the tax involved in the case withstood a dormant Commerce Clause challenge. (November 2, 2018)

In Downs Racing, LP v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania considered whether a payment for a license to use intellectual property was subject to sales or use tax. The court held that, because the intellectual property license was a transaction separate and apart from the purchase of the software in question itself, it was not subject to sales or use tax. (October 25, 2018)

In In Re Estate of Huber, the Superior Court of Pennsylvania considered whether the Register of Wills or the Orphans’ Court has authority to issue Letters of Administration C.T.A. when the estate’s executrix lacked mental capacity to serve. Generally, the Register of Wills must initially issue the Letters of Administration. In doing so, the court determined that it was unclear whether the Register of Wills ever issued letters testamentary to the sole beneficiary and, additionally, the Orphans’ Court never removed the sole beneficiary as Executrix due to her lack of mental capacity, prior to issuing Letters of Administration C.T.A. to her attorney-in-fact. Thus, according to the court, the Register of Wills, rather than the Orphans’ Court, “had jurisdiction to grant letters of administration in this matter,” and, as such, vacated the Orphans’ Court Decree. (October 5, 2018)

In UBS Financial Services, Inc. v. Aliberti, the Appeals Court of Massachusetts addressed whether a fiduciary relationship existed between the beneficiary of an IRA and UBS, which held the IRA pursuant to an IRA agreement with the individual who had funded the IRA. That agreement obligated UBS to distribute the IRA funds to the designated beneficiaries upon his death. Concluding that a fiduciary relationship existed under New York law, as provided for in the IRA agreement, the court reasoned that UBS exercised complete control over the IRAs following the individual’s death and the beneficiary was entirely reliant on UBS for access to the funds and any information about them. (October 4, 2018)

In Gregory v. Greguras, the Superior Court of Pennsylvania addressed waiver of the attorney-client privilege in a cause of action for intentional interference with expectation of inheritance filed by the decedent’s children against their father’s attorney. During opening statements of the trial, the counsel for the defendant-attorney told the jury that the defendant attorney would testify that he had fully advised the decedent as to the consequences of his estate-planning decisions. The court held that the last minute waiver of the attorney client privilege in opening statements resulted in prejudice and unfair surprise to the decedent’s children. (September 20, 2018)

In Barile v. GF-Passaic Foods, LLC, the Superior Court of New Jersey, Appellate Division, addressed whether the trial court had subject matter jurisdiction over a cause of action which alleged violations of the Truth-in-Consumer Contract, Warranty and Notice Act. The court dismissed the complaint holding that exclusive jurisdiction over sales tax disputes resides with the Director of the Division of Taxation. (August 17, 2018)

In In Re Estate of Isabel Carrasquillo Rivera, the Superior Court of Pennsylvania considered whether properties, or the value of the properties, could be excluded from the elective estate when the properties were conveyed by the intestate decedent within a year of her death without the consent of her spouse. The court held that the spouse failed to establish any right by law or equity to the share of real estate transferred during the decedent’s lifetime. (August 8, 2018)

In Matter of Long Island Power Authority v. Assessor of the Town of Huntington, the New York Supreme Court, Appellate Division, 2d Department, considered whether the plaintiff had standing to challenge a tax assessment levied against a facility for which it was contractually obligated to pay taxes but did not own. The court concluded that because the challenger was contractually liable for the levied taxes against the property, its pecuniary interest would be directly affected and, thus, it had standing to challenge the assessment. (August 8, 2018)

In Williams v. City of Philadelphia, the Supreme Court of Pennsylvania addressed whether the Philadelphia City Council exceeded the scope of its taxing power when it enacted the Sugar-Sweetened Beverage Tax. The tax is assessed at 1.5 cents per ounce of sugary beverages sold within the city. A group of consumers, retailers, distributors and trade associations challenged the constitutionality of the tax, claiming that it is expressly preempted by the Sterling Act. While the Act affords the city broad authority to impose taxes, it expressly prohibits duplicative taxesi.e., any tax on a transaction/subject which is already subject to a state tax. The court rejected the preemption argument and upheld the beverage tax. The court reasoned that it is not duplicative of the state sales tax which applies at the retail level whereas the beverage tax is levied on distributors. (June 18, 2018)

In East Coast Vapor, LLC v. Pennsylvania Department of Revenue, the Commonwealth Court of Pennsylvania considered whether the Department of Revenue’s determination that electronic cigarettes are “tobacco products” under the Tobacco Products Tax Act violates the Due Process Clauses of the United States and Pennsylvania Constitutions. East Coast Vapor argued that it did because electronic cigarettes can be used to deliver nicotine-free e-liquid and e-liquid containing nicotine derived from a source other than tobacco. The Commonwealth Court upheld the Department of Revenue’s interpretation that led to the taxation of e-cigarettes as tobacco products because they could also be used to deliver e-liquid containing nicotine derived from tobacco. (June 22, 2018)

In In re Estate of Walter, the Superior Court of Pennsylvania considered whether the executrix of an estate was entitled to raise the “advice of counsel” defense in response to an accounting issue that revealed embezzlement from the estate. Had the executrix exercised due diligence, the attorney’s pattern of embezzlement would have been discovered. Because she failed to exercise any oversight of the attorney’s actions, the executrix was not entitled to the “advice of counsel” defense. (June 22, 2018)

In Wisconsin Central Ltd. v. United States, the United States Supreme Court, addressed whether railroad employees are exempt from federal employment taxes on stock options. The Railroad Retirement Tax Act of 1967 (RRTA) levies a tax on compensation, which is defined as “any form of money remuneration.” The Court held that “money” is a “medium of exchange” and that stock options are not used as a “medium of exchange.” Therefore, these options are not taxable under the RRTA. (June 21, 2018)

In South Dakota v. Wayfair, the United States Supreme Court addressed whether South Dakota can charge sales tax to internet retailers who have no physical presence in South Dakota but who sell to consumers in the state. The Court overturned its prior rulings and held that there was “nothing unfair about requiring companies that avail themselves of the states’ benefits to bear an equal share of the burden of tax collection.” (June 21, 2018)

In Spireas v. Commissioner of Internal Review, the United States Court of Appeals for the Third Circuit addressed the issue of whether royalties paid on a technology license agreement should have been taxed as ordinary income under the general rule, or whether they should have been taxed as capital gains under the exception to this rule pursuant to Section 1235 of the Internal Revenue Code, which affords special treatment to payments earned from certain technology transfers. To qualify for automatic capital-gains treatment under Section 1235, income must be paid in exchange for a “transfer of property” that consists of “all substantial rights” to a “patent.” The court held that the appellant inventor only transferred the rights to use the technology at issue, and to make and sell products containing the technology, and therefore did not transfer “all substantial rights” to the property. As such, the royalty payment he received did not satisfy the requirements of Section 1235 and thus were taxable as ordinary income. (June 1, 2018)

In Lehighton Area School District v. Carbon County Tax Claim Bureau, the Commonwealth Court of Pennsylvania held that delinquent taxes collected by a school district were entitled to priority status under the Tax Sale Law and, therefore, should be distributed to the “respective taxing districts in proportion to the taxes due to them.” Under the Law, the school district was a “taxing district” and the delinquent taxes and associated penalties and interest were “taxes.” (May 18, 2018)

In In Re Estate of Sophia M. Krasinski, the Pennsylvania Superior Court addressed whether the executor of the state had properly reported to the IRS as taxable the gain of a devisee the profit from the sale of real property held by the estate. The court held the executor should not have done so, because the true seller of the property was the executor, not the devisee, and the estate was responsible for the taxable gain. (May 15, 2018)

In Spireas v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit addressed whether royalties paid on a technology license agreement should have been treated as ordinary income or as capital gains. The court determined that the taxpayer should have treated the royalties as ordinary income according to Section 1235 of the Internal Revenue Code, which affords special treatment to payments earned from technology transfer, grants capital gains treatment only to transfers of property. The taxpayer’s argument hinged on a post-invention transfer of rights, not actual possession of a property right. (March 26, 2018)

In In re Nelson, the Superior Court of New Jersey, Appellate Division, considered whether a court is permitted to look beyond the plain language of a trust in giving meaning to its terms. The court noted that the primary goal in interpreting a trust agreement is to fulfill the settlor’s intent. Therefore, the court held that it must consider extrinsic evidence twice: (i) to determine if the terms of the trust are ambiguous, and (ii) to resolve the ambiguity. (March 28, 2018)

In EQT Production Company v. Department of Environmental Protection, the Supreme Court of Pennsylvania considered the scope of the civil penalty for release of industrial waste under the Clean Streams Law. The court held that the Clean Streams Law only authorized civil penalties for each day on which waste was actually released into the water, not for each day on which the waste remained in the water. (March 28, 2018)

In American Electric Power Service Corporation v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania held that an interstate wholesaler of electricity is subject to gross receipts tax and not eligible for an exemption under the Pennsylvania Tax Code. In doing so, the court held that the lack of a public utility license is not determinative of whether a wholesaler was engaged in electric light business under the Tax Code. (March 15, 2018)

In Transupport, Inc. v. Commissioner of Internal Revenue, the United States Court of Appeals for the First Circuit addressed whether the Tax Court erred in making its reasonable compensation determination by not considering the return on equity enjoyed by the company’s shareholder in its analysis. The court held that it did not and explained that the test for determining the reasonableness of compensation is multi-factored, with the goal of determining whether the compensation at issue would have been offered in an arm’s-length bargain. The court reasoned that the return to shareholders could not be calculated because the company had not presented credible evidence of its cost of goods sold, thus making it exceedingly difficult to value the company or the percentage of the value that can be attributed to the shareholders. (February 14, 2018)

In Kite v. Director, Division of Taxation, the Superior Court of New Jersey, Appellate Division, addressed whether the amount the taxpayer recovered in a qui tam action constituted an award subject to the New Jersey Gross Income Tax Act. The court held that the Tax Court correctly found that the Division of Taxation’s interpretation of the term “award” in the statute was reasonable and consistent with the plain meanings of the words used and whether recoveries in qui tam actions brought under the False Claims Act should be exempt from taxation, in whole or in part, is a question for elected branches of government, not the judiciary. (February 8, 2018)

In Brown v. Chester County Tax Claim Bureau, the Commonwealth Court of Pennsylvania addressed whether the right of redemption under the Manufactured Home Act could be exercised after a manufactured home was listed for an upset tax sale. The court held that no rights, including the right of redemption, could be asserted once proceedings under the Tax Sale Law were initiated because once such proceedings commence, no other legislation can be used to secure additional rights. (January 29, 2018)

In Bay Harbor Marina Limited Partnership v. Erie County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania considered whether the operator of a recreational marina was immune from taxation because it leased the marina from the Erie-Western Pennsylvania Port Authority (“Authority”), a Commonwealth agency immune from taxation. Because the operator’s operation of a recreational marina departed from the purpose for which the Authority was created, the court held that the operator was not entitled to benefit from the Authority’s tax immunity. (January 10, 2018)

In Shubeck v. Carbon County Tax Claim Bureau, the Commonwealth Court of Pennsylvania addressed whether the Carbon County Tax Claim Bureau complied with the notice provisions of the Real Estate Tax Sale Law (RETSL) prior to a tax sale. The court held that the Bureau failed to establish its compliance with the requisite three forms of notice to the owner of the property: by publication, posting, and certified mail. The court also held that the property owner’s actual notice of the tax sale did not relieve the Bureau of its duty to comply with the RETSL notice requirement. (January 5, 2018)

In In re Trust Under Deed of David P. Kulig, the Supreme Court of Pennsylvania considered the effect of Section 7710.2 of Pennsylvania’s Probate, Estates and Fiduciaries Code (20 Pa.C.S. § 7710.2) whether a surviving spouse is entitled to a share of the assets in a revocable inter vivos trust if they were not contemplated in the execution of the trust. Section 7710.2 provides that the rules of construction that apply to the provisions of testamentary trusts also apply to the provisions of inter vivos trusts. In a case of first impression, the court held that, under the circumstances presented, an inter vivos trust should not be considered as part of the pretermitted spousal share. (December 21, 2017)

In Skotnicki v. Insurance Department, the Supreme Court of Pennsylvania considered whether an insurer is collaterally estopped from litigating issues that were previously discussed in an investigative report from the Pennsylvania Insurance Department’s Bureau of Consumer Services, during an earlier and separate appeal involving the same parties, when the Insurance Commissioner never entered a final order in the earlier appeal. The court held that for the purposes of the doctrine of collateral estoppel, an investigative report does not constitute a final adjudication on the merits of any issue. (December 21, 2017)

In City of Philadelphia v. Albert’s Restaurant, the Commonwealth Court of Pennsylvania granted a new trial in an action for recovery of delinquent taxes, where the trial court and the City failed to demonstrate that the taxpayer’s counsel was given 24 hours’ notice of trial and the taxpayer’s counsel proffered a satisfactory explanation for his absence. The court held that it was manifestly unreasonable to deny the taxpayer’s request for a short continuance (24 hours) while granting the City a three-hour continuance so that it could proceed on its case, knowing that the taxpayer’s counsel was out-of-state and could not be present the same day. (December 4, 2017)

In Mission Funding Alpha v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania addressed the issue of whether the three-year tax refund period specified in Section 3003.1(a) of the Tax Reform Code begins to run for a calendar-year taxpayer on the due date of its annual tax report (April 15) or on the date in which the corporate taxpayer actually filed its annual tax report (with respect to a late filing). The court held the three-year tax refund period began to run on the date in which the annual tax report was due, rather than the date of the late filing. (November 22, 2017)

In Nigro v. City of Philadelphia, the Commonwealth Court of Pennsylvania addressed whether the Salary Reduction Ordinance to the Commissioners of the Board of Revision of Taxes (BRT) of the City of Philadelphia was unconstitutional in its entirety. The BRT assessed the value of real property in Philadelphia, examined tax returns, and heard appeals from assessments, but was abolished by the Philadelphia City Council through the adoption of the Reorganization Ordinance, which replaced the BRT with the Office of Property Assessment. Prior to the Reorganization Ordinance coming into effect, the City Council adopted the Salary Reduction Ordinance, which reduced the annual salaries of the BRT members. The court held that because the Salary Reduction Ordinance did not take place during the term of the BRT members, the ordinance was not unconstitutional in its entirety(November 21, 2017) 


In EQR-LPC Urban Renewal North Pier, LLC v. City of Jersey City, theSupreme Court of New Jersey considered whether 2000 and 2001 financial agreements between a city and limited liability companies that qualify as urban renewal entities under the Long Term Tax Exemption (LTTE) Law, N.J.S.A., incorporate the 2003 amendments to the LTTE. The court held that the 2000 and 2001 agreements did not incorporate any future amendments to the LTTE because the agreements word for word recited LTTE law as it existed prior to the amendments as opposed to simply incorporating LTTE law by reference. (November 15, 2017)

In In Re Passarelli Family Trust, the Superior Court of Pennsylvaniaaddressed whether a finding of fraud may be premised upon a failure to identify each asset contributed to a trust. In order to establish fraud in the inducement, a plaintiff must demonstrate each of the following six factors: 1) a representation; 2) which is material to the transaction at hand; 3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; 4) with the intent of misleading another into relying on it; 5) justifiable reliance on the misrepresentation; and 6) the resulting injury was proximately caused by the reliance. The court held that assets which are not specifically listed on a trust schedule but are included in the trust under a corporation’s holdings does not constitute a false statement. Further, no injury is caused by this type of misrepresentation. Therefore, the court held that there was no fraudulent misrepresentation during the execution of the trust. (November 16, 2017)

In Estate of Wierzbicki, the Superior Court of Pennsylvania addressed whether the Transfer on Death (TOD) beneficiary designation in a TOD application for a bank account was invalid under section 6410(a)of the Transfer on Death Security Registration Act, 20 Pa.C.S.A. 6401-6413 (the Act), because the decedent did not properly completethe application pursuant to the bank’s internal document-rejection policy. The court held that the language in section 6410(a) of the Act, which provides that a registering entity “may establish the terms and conditions” under which it will receive requests for registrations in beneficiary form, is permissible language that merely authorizes such entities to, in their discretion, establish such terms and conditions – it does not mandate that any request be deemed invalid for failure to conform exactly to the entity’s terms and conditions. (November 6, 2017)

In In Re Jackson, the Superior Court of Pennsylvania addressed a deadlock between the trustees of a charitable trust concerning the recipients and amount of the trust’s yearly contributions. The court determined that, under the Uniform Trust Act, an evidentiary hearing on the grantor’s intent was required before ordering the distribution of assets from the trust. (November 7, 2017)

In Jerry’s Bar, Inc. v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether a bar must pay City of Philadelphia sales tax for beer it purchased from distributors in Philadelphia for resale to its customers in Delaware County. The court held that, because the beer distributors were located in Philadelphia and the beer was delivered to the bar in the Commonwealth of Pennsylvania, the sales tax is proper. (November 9, 2017)

In Nextel Communications v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania examined whether the net loss carryover provision of the Pennsylvania Revenue Code for tax year 2007 regarding the amount of loss a corporation could carry over from prior years as a deduction violates Article 8, Section 1 of the Pennsylvania Constitution (the Uniformity Clause) by capping the amount of net loss. The court held that the provision violates the Uniformity Clause because it provides a de facto total exemption from paying corporate income tax for corporations with $3 million or less in taxable income, and carryover losses equaling or exceeding their taxable income, whereas those with above $3 million are not permitted to exempt their entire income from taxes even if they have sufficient net losses from prior years to offset it. (October 18, 2017)

In Anato Opportunity Fund I, LP v. Wells Fargo Bank, N.A., the New York Supreme Court, Appellate Division, 1st Department, held, among other things, that a suit brought by a certificate holder in the securitization trust against the securities administrator was barred by the no-action clause in the pooling and servicing agreement governing the trust in which plaintiff invested. The court held that the clause applied to “any” claims “with respect to” the agreement, and expressly excluded any exceptions, which distinguished the agreement from instruments that allow claims for nonpayment even where such clauses exist. The court further held that such a clause is not violative of public policy, “given its salutary purpose of preventing undue expense to certificate holders and inconvenience to the investment vehicle in general.” (September 26, 2017)

In Mark Hershey Farms, Inc., v. Robinson, the Superior Court of Pennsylvania held that the sole beneficiary of an estate was not personally liable under principles of piercing the corporate veil and unjust enrichment for debts of the estate’s dairy farm for the purchase of feed. The court held that there was no legal basis to extend the principle of piercing the corporate veil to hold a sole beneficiary of an estate personally liable for the debts of a corporate entity owned by the estate. Additionally, in its unjust enrichment analysis the court held that dairy farm benefited from the feed deliveries and that the indirect and potential benefit to beneficiary of the estate was insufficient evidence of unjust enrichment. (September 27, 2017)

In Estate of Burke v. Burke the Supreme Court of Delaware determined whether a decedent’s son could make a claim against the proceeds of a sale of property devised to him, but which was sold during the decedent’s lifetime. The court held that the son had no claim, because the sale constituted an ademption of the devise of the property. (August 24, 2017)

In Passero v. Fitzsimmons, the Appeals Court of Massachusetts addressed whether it is proper, in a situation where the trustee is an estranged family member hostile to the beneficiaries, to appoint the contingent beneficiary’s children as the new trustees and order set distributions to the beneficiary from the trust. The court determined that the beneficiary’s children could not be trustees because they were contingent beneficiaries themselves, that a different trustee must be appointed, and that the amount of any distributions should remain within the new trustee’s discretion rather than being ordered by the court. (August 17, 2017)

In State of New Jersey ex rel. Leonard M. Campagna v. Post Integrations, Inc., the Superior Court of New Jersey, Appellate Division, concluded that qui tam actions arising from an alleged failure to pay taxes to the State of New Jersey are expressly barred by the New Jersey False Claims Act. (July 19, 2017) 

In Trust Under Agreement of Edward Winslow Taylor, the Supreme Court of Pennsylvania considered whether the beneficiaries of an irrevocable trust could modify its terms to permit them to replace the trustee at any time without cause or judicial approval. The court noted that many modern trust documents contain a portability clause that allows beneficiaries to do so, but the trust in question did not contain such a clause. Accordingly, Pennsylvania’s Uniform Trust Act, which permits the removal of trustees only if specific conditions are met, prohibited the removal of the trustee in question. (July 19, 2017)

In Duquesne Light Holdings, Inc. v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit held that during a complex and shifting regulatory environment, the IRS never had a regulatory scheme in place that would authorize a company to take a double deduction for the same loss. For consolidated-return tax payers, IRS regulations cannot merely imply authorization of a double deduction, a clear declaration allowing double deductions for the same loss on consolidated returns is required. (June 29, 2017)

In Estate of Sidney Rothberg, Deceased, the Superior Court of Pennsylvania considered whether Pennsylvania’s omitted heir statute permits recovery by a child not named in the will of a parent when the parent did not know of the child’s existence at the time of the execution of the will. The court considered the text of the statute and determined that it did not apply because the child was born nearly 50 years before the will was executed, not after the execution of the will as contemplated by the statute. (June 23, 2017)

In In Re Estate of DiSabato, the Superior Court of Pennsylvania addressed whether a trial court improperly imposed a criminal sanction for civil contempt against the former administrator of an estate for repeated failure to make scheduled payments to the estate. The court held that the order requiring him to make further monthly payments and stating that failure to comply may result in further sanctions, including jail, was clearly designed to obtain compliance with the order, not punish. (June 13, 2017)

In Green Acres Contracting Company, Inc v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether nuts, bolts, washers, and guardrail blocks used to attach guardrail posts to guardrail panels were exempt from the use tax. The applicable statute distinguishes between guardrail panels, which are tax exempt and guardrail posts, which are not, but makes no allowance for the connecting nuts, bolts, washers, and blocks. The court held that the nuts, bolts, washers, and blocks used by the contractor to connect the elements of the guardrail system together fall within the definition of “guardrails,” and are therefore exempt from use tax. (June 13, 2017)

In Roth v. Newpol, the Appeals Court of Massachusetts addressed the meaning of the term “monies” found within the residuary clause of an individual’s last will and testament.  The deceased owned a one-half interest in a house, did not specifically devise that interest in her will, but had included a residuary clause which disposed of “any monies remaining in [her] estate.”  The court held that the residuary clause did not encompass the interest in the house reasoning that “money” should be construed as commonly understood to mean gold, silver, or currency (not its broader meaning—wealth), unless a reading of the entirety of the will shows otherwise, which it did not in this instance. (May 31, 2017)

In Jiwungkul v. Director, Division of Taxation, the Superior Court of New Jersey, Appellate Division, examined whether the tax benefits afforded under the Domestic Partnership Act (DPA) violate the equal protection guarantee of the New Jersey Constitution. The court observed that the DPA does not permit a surviving same-sex registered domestic partner to be treated as a surviving spouse for purposes of calculating the New Jersey estate tax. However, the court reasoned that because same-sex couples can access all the rights and benefits of marriage through marriage or civil union, the DPA does not violate the New Jersey Constitution. (May 30, 2017)

In Trustees of Conneaut Lake Park v. Erie Insurance Exchange, the United States Court of Appeals for the Third Circuit examined whether proceeds from an insurance company payout on a fire loss may go to the operator of the property that insures it, instead of the owner of the property. The court found that the operator could collect the insurance because the statute only refers to the rights of the “named insured” rather than “insured property owners.” The court also considered whether compelling payment of the owner’s delinquent taxes from the insurance payout to the operator would be unconstitutional under the Fifth Amendment Takings Clause. The court held that the operator did not have a legally cognizable property interest in the entirety of the insurance proceeds because Pennsylvania law conditioned receipt of the proceeds on satisfying delinquent taxes owed on the insured property. (May 2, 2017)

In Scotti v. Barrett, the New York Supreme Court, Appellate Division, 2d Department, addressed whether the son of a decedent abused his power of attorney for the decedent by transferring to himself certain funds belonging to the decedent before her death. The court made clear that absent a specific provision in the power of attorney document authorizing gifts, an attorney-in-fact may not make a gift to himself of the money or property which is the subject of the agency relationship. (April 19, 2017)

In Upper Moreland Township v. 7 Eleven, Inc., the Commonwealth Court of Pennsylvania addressed whether Upper Moreland Township’s assessment and interstate tax of 7 Eleven violated the Commerce Clause. The court reasoned that a local tax on interstate commerce is constitutionally permissible only if (1) the taxpayer has a substantial nexus with the taxing jurisdiction; (2) the tax does not discriminate against interstate commerce; (3) the tax is fairly apportioned; and (4) there is a reasonable relationship between the tax imposed upon the taxpayer and the services provided by the taxing jurisdiction. The court found that the Township’s assessment failed to satisfy the fair apportionment prong, requiring that a local tax on interstate commerce be both internally and externally consistent and, thus, violated the Commerce Clause. (April 13, 2017)

In United States v. Baker, the United States Court of Appeals for the First Circuit determined whether and to what extent a tax lien applied to marital assets. Because Massachusetts was not a community property state, the equitable division of marital assets depends on fourteen factors established in Mass. Gen. Laws ch. 208, § 34. (March 24, 2017)

In Ferri v. Powell-Ferri, the Supreme Judicial Court of Massachusetts found that trustees were empowered to distribute (or decant) a trust’s assets to a subsequent trust, and that when interpreting whether a settlor intended to permit such a decanting, the court should consider an affidavit of the settlor. (March 22, 2017)

In Estate of Agnew v. Ross, the Supreme Court of Pennsylvania addressed whether individuals who are not named in an executed testamentary document have standing to bring a legal malpractice action against the testator’s attorney. The court held that such individuals do not have standing, finding that an executed testamentary document naming an individual as a legatee is a prerequisite to that individual’s ability to enforce the contract between the testator and the testator’s attorney. The court further clarified that being named in an unexecuted testamentary document is insufficient to confer third-party beneficiary status under the contract for legal services. (January 19, 2017)

In Congregation Ateres Yisroel v. Town of Ramapo, the New York Supreme Court, Appellate Division, 2d Department, addressed the bounds of the real property tax exemption for a religious not-for-profit corporation. The town properly denied the exemption when the property owner illegally erected trailers on the property without the proper permits and used the primary structure as a dormitory for over 20 students in contravention of its certificate of occupancy. (January 18, 2017)

In Genentech, Inc. v. Commissioner of Revenue, the Supreme Judicial Court of Massachusetts held that a biotechnology company qualified as a manufacturing corporation for purposes of the Massachusetts corporate excise tax statute, G.L. c. 63., because its process of creating marketable drugs by implanting DNA into cells to produce proteins created a new product of substantially different character. The biotechnology company consequently had to calculate its Massachusetts income tax according to the statutory apportionment formula applicable to manufacturing corporations, G.L. c. 63. § 38 (1). (January 12, 2017)

In Costa v. City of Allentown, the Commonwealth Court of Pennsylvania considered whether a $75 licensing fee imposed on all residential rental units in the City of Allentown was an unlawful special tax. The court noted that the party challenging a licensing fee has the burden to prove that it is grossly disproportionate to the costs of the services provided. In evaluating the licensing fee, the direct costs of the services provided, as well as the indirect costs related to an increased burden on existing governmental services must be considered. Because the party challenging the licensing fee failed to meet its burden, the licensing fee was upheld. (January 12, 2017)

In Morris v. Pennsylvania Treasury Department Bureau of Unclaimed Property, the Commonwealth Court of Pennsylvania addressed ownership rights of a joint savings account originally owned by the claimant’s mother and half-sister. The court held, in accordance with 20 Pa. § C.S. 2103, that, since the mother pre-deceased the half-sister and the half-sister did not have a spouse or children, her property passed to her father and became part of her father’s estate. Since the claimant was not a child of his half-sister’s father, the court held that the claimant did not have a right to the property. (December 28, 2016)

In Sampson v. The Tax Claim Bureau of Chester County, the Commonwealth Court of Pennsylvania addressed whether an upset tax sale was invalid because it did not conform to the requirements of the Real Estate Tax Sale Law. The court held that the sale was invalid because the Tax Claim Bureau failed to offer an installment agreement that complied with Section 603 of the Tax Sale Law when the property owners tendered payment of more than 25% of their outstanding real property taxes. (December 12, 2016)

In Level 3 Communications, LLC v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania concluded that an entity’s sale of its Point-of-Presence (POP) service to internet provider AOL constituted internet access and “was therefore exempt from sales and use tax under the Pennsylvania Tax Reform Code of 1971 and the federal Internet Tax Freedom Act.” The court rejected the Commonwealth’s argument that AOL end-users are not “on the internet” when accessing AOL’s data center and agreed that there was “no generally recognized demarcation point that delineates the boundaries” or a public internet from those of private internets. The court also indicated that the POP was materially different from a port modem management service at issue in a previous case. (December 8, 2016)

In In re Report and Return of Christine L. Krzysiak, the Commonwealth Court of Pennsylvania considered whether an upset tax sale for failure to pay real estate taxes met the requirements of the Real Estate Tax Sale Law. In determining that all statutory requirements were met, the court held that the failure of various witnesses to observe the notice posted on the property did not establish that the notice had not been reasonably secured to the property. The court also rejected the appellant’s argument that the tax claim bureau was required to show certain conditions related to the method in which it was attached to establish that the posting was reasonably secured. (December 7, 2016)

In DS Waters of America, Inc. v. Commonwealth, the Commonwealth Court of Pennsylvania examined Section 202 of the Tax Code which contains a manufacturing exclusion to the imposition of tax on the retail sale and use of tangible personal property. The court held that a taxpayer’s filtration and pasteurization of municipal water did not amount to “manufacturing” under the exclusion. (November 30, 2016)

In City of Philadelphia v. Lerner, the Supreme Court of Pennsylvania upheld a tax judgment because the taxpayer failed to exhaust his administrative remedies. The court declined to hear the appeal even though the Department of Revenue admitted there was no rational basis for the amount of back taxes they sought and recovered from the taxpayer. (November 22, 2016)

In Gregury v. Greguras, the Superior Court of Pennsylvania held that an ambiguity did not exist in a will merely because none of the decedent’s assets passed through the will. Therefore, the court held that extrinsic evidence of the decedent’s purported, contrary testamentary intent was not admissible under the parol evidence rule. (November 22, 2016)

In Maula v. Northampton County Division of Assessment, the Commonwealth Court of Pennsylvania addressed whether an upset tax sale of a parcel of land that receives preferential tax treatment under the Clean and Green program constitutes a split off and subjects that parcel to roll-back taxes under Pennsylvania’s Farmland and Forest Land Assessment Act. The court held that an upset tax sale does not constitute a split off because the plain language of the act requires that the owner conveythe landor engage in a transaction of the same general nature as a conveyance to meet the statutory definition of a split off. (November 7, 2016)

In Verizon New England Inc. v. Board of Assessors of Boston, the Supreme Judicial Court of Massachusetts addressed whether certain tax assessments that were based on a “split” tax rate structure constituted a disproportionate tax that violated the Constitution of Massachusetts. The Court held that the tax did not violate the Massachusetts Constitution and upheld the tax commissioner’s denial of requested tax abatements. (November 2, 2016)

In Werner v. Werner, the Superior Court of Pennsylvania addressed whether a custodian/parent breached her fiduciary duty under the Pennsylvania Uniform Transfer to Minors Act when she used funds from the custodial investment accounts held for the benefit of her minor children to purchase a residence in her name alone. The court concluded that the purchase of the residence was not a necessary expenditure or for the primary use and benefit of the children and that the custodian’s comingling of personal assets with the custodial property was a breach of her fiduciary duty. (October 7, 2016)

In In the Matter of Greentree Foundation v. Assessor and Board of Assessors of County of Nassau, the New York Supreme Court, Appellate Division, 2nd Department, addressed whether a not-for-profit foundation needed to use all of its real estate exclusively for exempted purposes in order to receive a real property tax exemption. The court held that the term “exclusively” is not be read literally, and that if the primary use of the property is in furtherance of permitted purposes, other auxiliary uses or non-use of part of the real estate will not preclude the owner from the tax exemption. (August 24, 2016)

In The First Marblehead Corporation v. Commissioner of Revenue, the Supreme Judicial Court of Massachusetts addressed whether a holding company’s interests in securitized student loans held in its trusts were properly assigned to Massachusetts under the apportionment rules of G. L. c. 63, §2A. The Court held that the company’s interests in the securitized loans were properly assigned to Massachusetts under the state’s financial institution excise tax, and therefore the company was subject to increased tax liability. (August 12, 2016)

In Barker v. Chester County Tax Claim Bureau, the Commonwealth Court of Pennsylvania considered whether a taxpayer’s agreement with the County Tax Claim Bureau stayed the upset tax sale of property such that the sale was invalid. The court held that the sale was invalid because the Tax Claim Bureau did not notify the taxpayer of the alleged default on the agreement. (July 27, 2016)

In Herder Spring Hunting Club v. Keller, the Supreme Court of Pennsylvania addressed whether a tax sale transferred ownership of the entire property or merely the surface rights of a tract of unseated (undeveloped) land. Following an extensive historical analysis of tax sales of unseated land, the court concluded that the tax sale related to the entire property, including the subsurface rights. (July 19, 2016)

In United States of America v. McNicol, the United States Court of Appeals for the First Circuit addressed whether the federal priority statute, 31 U.S.C. §3713(b), applied to an individual, serving as executrix of an estate, for transferring assets of the estate to herself without first paying the estate’s federal tax debts. The court held that the priority statute applied individually to the executrix and, therefore, she was liable for the full value of the transferred assets. (July 15, 2016)

In In re Estate of Isabel Wilner, the Supreme Court of Pennsylvania addressed whether proof of a lost will is subject to the two-witness rule. The court held that the two-witness rule applies to a lost will, but only as to its validity as a testamentary document, and not its contents. The court concluded that the evidence regarding a copy of the will was sufficient to prove the contents of the lost will. (July 20, 2016)

In West Beit Olam Cemetery Corporation v. Board of Assessors of Wayland, the Appeals Court of Massachusetts addressed whether a lot purchased for further development of an existing cemetery was “dedicated to the burial of the dead” such that the land was afforded tax exempt status. Concluding that the land was not entitled to a tax exemption, the court reasoned that the land was contractually restricted to residential use and such contract also explicitly precluded any burial-related activities. The court further explained that while the contract required certain cemetery-related duties, those duties were not performed on the lot in question. (July 7, 2016)

In RB Alden Corporation v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether the Board of Finance and Revenue improperly sought corporate income tax from plaintiff for capital gain profits resulting from the sale of part of a partnership interest. The court held that the net loss carryover provision contained in the Tax Reform Code of 1971 is unconstitutional and the tax should be calculated without a cap on the net loss carryover. (June 15, 2016)

In In Re Estate of O’Connor, the Commonwealth Court of Pennsylvania addressed Section 2116(c) of the Inheritance and Estate Tax Act regarding timely renunciations of distributive shares of an intestate estate. The court looked to whether the “future interest” exception to the general time period for renunciations applied to an unliquidated survival claim. The court held that the right of the decedent’s surviving children to the unliquidated proceeds of a survival action was ascertainable and certain and, therefore, was not a future interest. (June 8, 2016)

In National Grid USA Service Company, Inc. v. Commissioner of Revenue, the Appeals Court of Massachusetts addressed whether a closing agreement between a company and the IRS, permitting deductions for the company’s Massachusetts corporate excise, was binding on the tax commissioner. The court held that the interest deduction provided for in the closing agreement did not constitute a binding determination of interest deductions allowable for Massachusetts corporate excise purposes. (June 8, 2016)

In National Grid Holdings, Inc. v. Commissioner of Revenue, the Appeals Court of Massachusetts addressed whether certain financing transactions, labeled as deferred subscription arrangements, constituted true indebtedness so that the interest paid thereon qualified for a deduction allowed under the Massachusetts statute allowing for taxation of corporations. The court held that the taxpayers failed to satisfy their burden of proving that critical portions of the transactions gave rise to an unqualified obligation to repay, and therefore, their claimed deductions for interest payments under these transactions were properly rejected. (June 8, 2016)

In S&H Transport, Inc. v. City of York, the Supreme Court of Pennsylvania held that freight brokerage services are not excepted from local business privilege tax under the “public utility” exception to the Local Tax Enabling Act. The Court held that the exception was inapplicable because the rates of the common carriers with whom S&H conducts business are not regulated by the Pennsylvania Public Utility Commission. (May 25, 2016)

In In re: Estate of Rich, the Superior Court of Pennsylvania addressed whether a specific property bequest is adeemed when it is sold at the direction of the guardian of an incapacitated testator. The court found that, under the Pennsylvania Probate Code’s non-ademption provision, such a bequest avoids ademption, even where proceeds from the sale went towards the care and maintenance of the incapacitated testator. (May 20, 2016)

In In the Matter of the Estate of Byung-Tae Oh, the Superior Court of New Jersey, Appellate Division, held that a money transfer made by a now deceased Korean citizen to a New Jersey limited liability company constituted an investment, rather than a gift to his son who owned the company, and thus an asset of the decedent at the time of his death subject to distribution among all of the decedent’s children pursuant to Korean law. The court held that because the money transfer was made to the decedent’s son’s company and not to his son individually, the son was not entitled to the presumption under New Jersey law that the transfer constituted an inter vivos gift. (May 13, 2016)

In Giant Eagle, Inc. v. Commissioner of Internal Revenue, the United States Court of Appeal for the Third Circuit addressed whether a supermarket’s fuel discounts were permissible deductions under the “all events” test. The court held that the fuel discounts were issued as a unilateral contract formed at a customer’s checkout, which in turn attached liability to the supermarket. Because the supermarket demonstrated the existence of absolute liability and near-certainty of discharging that liability, it was entitled to deduct the discounts during the specified tax years. (May 6, 2016)

In Davis v. City of Philadelphia, the United States Court of Appeals for the Third Circuit addressed whether the protections afforded to service members by the service members Civil Relief Act (Act) extend to a service member’s company’s property. The Act, among other things, limits the interest and penalties that may be charged to a service member for overdue property taxes. The court held that the limited liability company, although wholly owned by a member of the military, was not a service member as defined by the statute, and therefore it was not entitled to interest and penalty limitations on the overdue taxes levied on its rental property. (May 4, 2016)

In In the Matter of the Estate of Adrian J. Folcher, the Supreme Court of New Jersey addressed whether attorneys’ fees should be assessed against a wife and reimbursed to her husband’s estate where the wife used undue influence to modify her husband’s estate documents. In New Jersey, the “American Rule” prohibits recovery of attorneys’ fees by the prevailing party against the losing party. The court created an exception to this rule where an executor or trustee commits the tort of undue influence. The court held that an award of attorneys’ fees was not proper where the wife was not the executor of the estate and did not owe a fiduciary responsibility to the estate or its beneficiaries. (April 26, 2016)

In Mercury Systems, Inc. v. Shareholder Representative, the United States Court of Appeals for the First Circuit interpreted a merger agreement in which the seller agreed to indemnify the buyer as to the tax liabilities of the company being sold, but the indemnification provision was ambiguous as to how tax refunds would affect the indemnification obligation of the sellers (here, refunds offset the tax obligation entirely). The court determined that it was not clear, as a matter of law, that the indemnity obligation should be offset, and more facts would be needed to interpret the intent of the parties. (April 26, 2016)

In Susquehanna County Commissioners v. Montrose Bible Conference, the Commonwealth Court of Pennsylvania considered whether a bible conference was subject to the county’s hotel tax, when retreat attendees were permitted to use the conference’s overnight accommodations for meditation and reflection. The court held that the primary purpose was religious in nature and deemed it a place of worship, thereby, exempting it from the tax. (April 21, 2016)

In Heyn v. Director of the Office of Medicaid, the Appeals Court of Massachusetts addressed whether assets within a self-settled irrevocable inter vivos trust should be available to the trust grantor for payment of nursing home expenses, causing the grantor to become ineligible for Medicaid benefits. The court held that the particular trust did not permit its trustee to distribute the proceeds from the sale of trust assets to the grantor. (April 15, 2016)

In In Re: Estate of Nicholas Culig, the Superior Court of Pennsylvania addressed whether a wife who inherited a residence from her husband was forced to pay for ordinary repairs and maintenance to the residence. The court held that while the wife received a right to reside from her husband as opposed to a life estate, she was still responsible for ordinary repairs and maintenance. (March 18, 2016)

In Abrahamson v. Estate of John LeBold, the Appeals Court of Massachusetts addressed whether a complaint against an estate, on the same issue as a complaint dismissed in Ohio for lack of personal jurisdiction, was timely where it was filed more than a year after the decedent’s death, but within a year of the procedural dismissal of the Ohio action. The savings statute provides that a case dismissed as a matter of form may be refiled within one year of the dismissal; the statute of limitations regarding suits against an estate provides that claims must be filed within a year of the decedent’s death. The court noted that the legislative purposes of the two statutes were in conflict, and reasoned that the one-year limitation on suits against an estate controlled, barring the complaint here. (March 17, 2016)

In In Re: Estate of Schumacher, the Superior Court of Pennsylvania addressed two prongs – weakened intellect and confidential relationship – of the undue influence test in determining whether a will was valid. The court held that where the decedent suffered from progressive dementia and acted out of character, his intellect was weakened. The court further held that a confidential relationship existed between the decedent and his son where the previously strained relationship became increasingly more involved as the dementia progressed. The court found the will to be invalid because of undue influence. (January 29, 2016)

In Schiffmann v. United States, the United States Court of Appeals for the First Circuit addressed whether the CEO and CFO of a company that provided wireless internet services were liable under the Internal Revenue Code for not paying the government certain withheld federal income taxes, known as trust fund taxes. The Court held that the CEO and CFO were responsible persons who willfully caused their company to not pay their company’s trust fund taxes, in violation of federal law. (January 29, 2016)

In Famageltto v. County of Erie Tax Claim Bureau, the Commonwealth Court of Pennsylvania addressed the reasonableness of a tax claim bureau’s efforts to locate an owner in order to notify it of an impending upset tax sale. The court found that a tax claims bureau need not place a phone call to a property owner or personally serve notice on any address besides the property at issue in order to satisfy the notice requirements and comply with due process. (January 21, 2016)

In In re Consolidated Reports and Return By the Tax Claims Bureau of Northumberland County, the Commonwealth Court of Pennsylvania addressed the notice requirements attendant to an upset tax sale. Because there was proof that the property owner at issue had actual notice of the pending tax sale, the court found that strict compliance with statutory notice requirements was not necessary. The court also held that, although an owner-occupier must receive notice by personal service, no such service was required where the tax claims bureau made good faith efforts at personal service and obtained an appropriate waiver. (January 21, 2016)

In In re Girard, the Commonwealth Court of Pennsylvania addressed a request for modification to a charitable trust under 20 Pa. C.S. § 7740.3, which authorizes modification to a charitable trust where an administrative deviation is necessary to preserve the trust or where the charitable purpose has become impracticable (commonly known as the cy pres doctrine). Because the court found that the requested modification, i.e., eliminating the residential and high school programs at Girard College due to an allegedly declining financial state, was not administrative and was not necessary, it denied the request. (January 21, 2016)

In the Estate of Susan C. McAndrew, the Superior Court of Pennsylvania addressedwhether the Slayer Act prevents inheritance from an estate when the potential heir is found guilty but mentally ill of first degree homicide of the testator. While the guilty but mentally ill verdict will entitle the potential heir to greater access to mental health treatment while in prison, it does not transform the verdict into a successful insanity defense, which would have resulted in an acquittal and an entitlement to the inheritance. Accordingly, the potential heir was ineligible to receive an inheritance from his victim’s estate. (January 5, 2016)

In In re: Betty J. Fielder, the Superior Court of Pennsylvania addressed whether an agent who was designated to act with power of attorney may write gift checks from a principal’s account. The Court held that a power of attorney agent is constrained by the specific gift giving limitations in the power of attorney document and by the Pennsylvania Decedents, Estates and Fiduciaries Code. The court further held that gifts in excess of the Internal Revenue Code’s annual gift tax exclusion were not valid. (January 5, 2016)

In Mission Funding Alpha v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed the definition of “actual payment of the tax” for the purposes of calculating the time to seek a refund. A corporate taxpayer remitted quarterly estimated payments to its franchise tax account and later filed its annual corporate tax report. Since a corporation’s tax liability is established when the corporation’s annual report is due, that date, not when a quarterly payment is made, triggers the running of the three-year period of limitation for seeking a refund. (December 10, 2015)

In Estate of Davis, the Superior Court of Pennsylvania reversed an order prohibiting payment of inheritance tax from the estate before distribution of the residue to beneficiaries. The court held the language of the will was sufficiently clear to overcome the Pennsylvania statute that calls for beneficiaries to pay inheritance tax on bequests. As the intent of the decedent was clear, taxes were to be paid from the estate prior to distribution to the beneficiaries. (November 30, 2015)

In Myers v. Pennsylvania, the Commonwealth Court of Pennsylvania addressed the issue of appellate procedure for appealing advisory opinions of the Department of Revenue when taxpayers sought review of a determination that sales tax applies to the price of an item before application of a coupon. The court held that the Department of Revenue’s decision was not appealable to the Board of Finance and Revenue and that the Board lacked authority to review advisory opinions issued by the Department of Revenue. (November 24, 2015)

In Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth, the Commonwealth Court of Pennsylvania addressed the constitutional validity of the net loss calculation provision of the state's corporate net income tax statute. Under the statute, if businesses with taxable income of $3 million or less had net loss carryovers that exceeded their taxable income, they could deduct the full loss and reduce their corporate net income tax obligation to zero. Larger businesses were limited to a 12.5 percent reduction. The court held that a classification based solely on income amount cannot withstand scrutiny under the uniformity clause of the Pennsylvania Constitution, because the classification is not rationally related to a legitimate state purpose. (November 23, 2015)

In Verizon Pennsylvania, Inc. v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania held that Verizon’s gross receipts from: (1) the installation of private phone lines; (2) the provision of directory assistances services; and (3) certain non-recurring charges levied on its customers for the installation and repair of telephone lines constituted revenue subject to Pennsylvania gross receipts tax. (November 18, 2015)

In Brissette v. Ryan, the Appeals Court of Massachusetts addressed whether any damages resulted from an attorney’s failure to reserve a life estate for his elderly client in the house purchased with her funds for her to live in which was placed in her children's names for Medicaid planning purposes. The court rejected the view that the attorney’s failure was mere negligence in the abstract while the children permitted their mother to live in the house. Because a life estate would have permitted the elderly client to rent or mortgage the property in addition to living in it, the failure to reserve the life estate caused the elderly client damages because she did not obtain something of value that she otherwise would have had. (October 29, 2015)

In Level 3 Communications v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania held that Level 3’s 3CM service, which provides internet access, is an enhanced telecommunications service, not a basic telecommunications service, and therefore, is not subject to the sales and use tax under Section 202 of the Pennsylvania Tax Code, 72 P.S. § 7202, which applies to basic telecommunications services purchased to deliver internet access. (October 15, 2015)

In Martinez v. Christian Financial Management Corp.the Superior Court of Pennsylvania considered whether federal law preempted the state court from enjoining a company from issuing amended W-2 statements in light of evidence that the W-2 statements were based on inaccurate wage information. The court held that because a W-2 is merely a vehicle for data collection that occurs before any taxes are assessed, levied or collected, the injunction did not restrain the assessment or collection of taxes within the meaning of the Federal Anti-Injunction Act. (October 7, 2015)

In In Re: Estate of Robert M. Mumma, the Superior Court of Pennsylvania reviewed challenges to multiple orders concerning an estate which has been litigated for almost 30 years. Beneficiaries challenged an order denying their exceptions to a Final Auditor’s Report and an order which authorized the estate’s sole representative and trustee to vote shares of stock owned by the residual trust and denied the beneficiary’s motion seeking an alternate resolution of the authority to vote issue or an order directing distribution of the stock to the remainderman in kind. Eleven separate issues were raised. With regard to the testator’s intent, the court concluded that the testator’s “desire” that the applicable businesses remain in the family was precatory language and/or a wish, rather than a mandate. The language utilized expressed a wish which was contingent upon expedience and possibility and specifically provided the trustee discretion to distribute assets through means other than “in kind.” The orders were both affirmed. (October 2, 2015)

In Trust Under Agreement of Edward Winslow Taylor, the Superior Court of Pennsylvania interpreted the ability of trust beneficiaries to amend the terms of a trust to permit the beneficiaries to remove a corporate trustee under 20 PA. C.S.A §7740.1. The court found that nothing under 20 PA. C.S.A §7740.1 or Section 7766 prevented modernizing the provisions of the trust to allow beneficiaries to remove a corporate trustee. (September 18, 2015)

In United States of America v. Chabot, the United States Court of Appeals for the Third Circuit addressed the enforceability of an Internal Revenue Service’s petition to enforce summonses for foreign bank account records. Having failed to raise any valid policy or other reasons as to why the account records should not be produced, the court held that the requested records fall within the required records exception to the Fifth Amendment privilege against self-incrimination. Accordingly, the petition for such documents was appropriate(July 17, 2015)

In King v. Burwell, the United States Supreme Court addressed whether the Internal Revenue Service (IRS) may permissibly promulgate regulations to extend tax-credit subsidies to insureds who purchase coverage through federally facilitated health care exchanges. The Court found the statute ambiguous but refused to defer to the interpretation of the IRS because the availability of subsidies is a question of “economic and political significance,” which Congress did not assign to the IRS. The Court therefore considered what Congress intended and concluded that Congress intended for subsidies to apply regardless of whether the insured purchased coverage through state-run or federally facilitated exchanges. (June 25, 2015)

In Quest Diagnostic Venture LLC v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether a petition seeking refund of Pennsylvania capital stock tax (franchise tax) was properly dismissed as untimely or whether an amended tax report should be treated as a petition for refund timely-filed under Section 3003.1(a) of the Tax Reform Code of 1971. The court found that 61 Pa. Code  Section 151.14(d)(1)and(2) provides that the filing of an amended report does not replace the filing of a petition for refund and does not extend the three-year time period for filing a petition for refund, and further that rejection of an amended report is not an appealable action. (June 9, 2015)

In Comptroller of the Treasury of Maryland v. Wynne, the United States Supreme Court addressed the issue of whether Maryland’s personal income tax scheme violates the Dormant Commerce Clause because it effectively double-taxes the income of Maryland residents earned outside the State. The Court held that this scheme violates the Dormant Commerce Clause because it creates an incentive for taxpayers to opt for intrastate rather than interstate economic activity. (May 18, 2015)

In In re Estate of Moskowitz, the Superior Court of Pennsylvania addressed whether: (1) Pennsylvania’s two-year statute of limitations governing actions for the recovery of personal property applied to an action by the executor of a decedent’s estate to recover over $600,000 of assets for the estate; and (2) an individual exceeded his power of attorney by transferring the assets at issue to a joint bank account shared with the individual’s mother. The court held that the two-year statute of limitations did not bar the lawsuit brought by the decedent’s estate, since the action was equitable in nature. The court also held that the individual with power of attorney exceeded that power by making unlimited gifts with the decedent’s assets, rendering the gifts void under 20 Pa. C.S.A.  §5611. (May 8, 2015)

In Global Links v. Keystone Oaks School District, the Commonwealth Court of Pennsylvania addressed whether Section 505(b) of the Allegheny General County Assessment Law allowed mid-year property tax exemptions when taxed and tax-exempt entities exchange real property. The court held that, because Section 10 of the Second Class County Assessment Law does not allow mid-year tax exemptions contemplated in Section 505(b), the two provisions were inconsistent, and Section 505(b) did not apply to a non-profit organization’s request for tax-exempt status. (May 8, 2015)

In Starwood Airport Realty v. School District of Philadelphia,the Commonwealth Court of Pennsylvania addressed whether a school district may discontinue its tax assessment appeal. Here, the landowner appealed the City’s 2012 property tax assessment and received a reduced assessment. The School Board appealed the reduced assessment, but eventually sought to discontinue the appeal. The landowner objected because if the appeal was dropped, it lost the ability to challenge the subsequent 2013 and 2014 tax assessments. The court did not permit the school district to unilaterally discontinue its appeal, because it would improperly thwart the right of the landowner to challenge the later tax assessments. (May 7, 2015)

In Re: Grover C. Shoemaker, TST,the Superior Court of Pennsylvania addressed whether a creation of a Pour Over Endowment Trust and a requirement that charitable trust funds be spent only in years in which the hospital has an operating surplus was proper. The court held that the Orphans’ Court abused its discretion in creating the Pour Over Endowment Trust and limiting conditions that were not part of the bequests where the intent of the settlors has not been compromised. Because the hospital was utilizing the trust funds in accordance with the settlors’ intent, the doctrine of cy pres did not apply. (May 7, 2015)

In In re Estate of Fred H. Navarra, the Superior Court of Pennsylvania addressed whether the language of a stock purchase agreement and the payment of the stock redemption proceeds overcame a presumption of entireties ownership. At the time the agreement was entered, each spouse was represented by separate agents responsible for their care, and the monies were made payable directly to each agent at each agent’s own address. When property held by the entireties is sold, the proceeds of that sale are themselves held by the entireties. The court noted that labeling spouses as “joint owners” in the stock purchase agreement and dividing the proceeds from the sale into two equal but separate income streams does not manifest an intent to sever the tenancy by the entireties. Accordingly, upon the death of one spouse, the proceeds belong solely to the remaining spouse under the tenancy by the entirety theory. (April 6, 2015)

In Vaello-Carmona v. Siemens Medical Solutions USA, the United States Court of Appeals for the First Circuit addressed whether, under the law of Puerto Rico, an employment discrimination claim was inheritable after the death of the original plaintiff.  Under Puerto Rican law, one category of claim that survives an individual’s death are claims seeking indemnification for damages that were caused to the deceased during life. The court concluded that the employment discrimination claims, which seek indemnification for damages caused during life, were inheritable. (March 17, 2015)

In Direct Marketing Assoc. v. Brohl, Executive Director, Colorado Department of Revenue, the United States Supreme Court held that a suit against the state tax agency questioning the constitutionality of a law requiring retailers to notify customers about tax requirements is not barred by the Tax Injunction Act (TIA).  TIA does not permit federal district courts to enjoin, suspend or restrain the assessment, levy or collection of state taxes.  Because the relief sought would not restrain the assessment of taxes, the suit is not barred by the TIA. (March 4, 2015)

In Estate of Gentry v. Diamond Rock Hill Realty, Inc., the Superior Court of Pennsylvania addressed the issue of whether the orphans’ court lacked subject matter jurisdiction over claims by the executor of an estate against the defendant for fraudulent conveyance of the decedent’s real property.  The court held that the orphan’s court had subject matter jurisdiction over the executor’s claims.  This is because 20 Pa. C.S.A. § 711 grants the orphan’s court mandatory and exclusive  jurisdiction over the administration and distribution of the property of a decedent’s estate and the orphan’s court must adjudicate disputes concerning the title and rightful possession of such property. (February 20, 2015)

In Fox v. Lincoln Financial Group, the Superior Court of New Jersey, Appellate Division, addressed whether it should adopt a bright-line rule that marriage creates a presumptive right to a spouse’s life insurance benefits.  The court refused to adopt such a bright-line rule because it would be an expansion of the existing law and the decision to make such a drastic change in the law is within the purview of the legislature rather than the court. (February 24, 2015)  

In Dwyer v. Luzerne County Tax Claim Bureau, the Commonwealth Court of Pennsylvania addressed whether the tax claim bureau complied with the notice provisions of the Real Estate Tax Sale Law.  The notice provision of the law provides that each owner shall receive notice of the tax sale at least thirty days before the sale.  The court found that the bureau did not provide proper notice because there was nothing to indicate that it had made a reasonable effort to locate and notify both owners of the property. (February 17, 2015)

In Estate of Robert H. Agnew v. Daniel Ross, Esquire, the Superior Court of Pennsylvania addressed whether beneficiaries who are not named in a will or contract, should be automatically precluded from bringing suit against the drafting lawyer for breach of contract.  If evidence exists of an intent by the testator to change the will to the benefit of the unnamed beneficiaries, the unnamed beneficiaries have standing to pursue a breach of contract claim against the attorney. (February 2, 2015)

In In re: Estate of Moskowitz, the Superior Court of Pennsylvania determined whether a statute of limitations running against an estate’s action to recover property founded on alleged tortious conduct was tolled until a personal representative obtains letters of administration. The court found that the estate’s action was equitable in nature and the statute of limitations does not control whether the claim is time-barred. The court also determined that a power of attorney’s action of re-titling a decedent’s assets into joint ownership while the decedent was still alive did not constitute an inter vivos gift under Pennsylvania’s 20 Pa.C.S.A. § 5611 even if valid in another state. (February 4, 2015)

In First Marblehead Corporation v. Commissioner of Revenue, the Supreme Judicial Court of Massachusetts, addressed whether a taxpayer, which held beneficial interests in trusts which held out-of-state loans, correctly allocated income to Massachusetts on its tax return.  Massachusetts law requires a determination of a taxpayer’s “property factor,” which refers to the location in which its property is located.  Because the loans were administered by the Massachusetts taxpayer in its domicile, the court held that income derived from the out-of-state loans should be allocated to Massachusetts for tax purposes. (January 28, 2015)

In Herder Spring Hunting Club v. Keller, the Supreme Court of Pennsylvania granted a Petition for Allowance of Appeal on the following issues:

  1. Did the Superior Court err in ruling that a tax sale that occurred thirty-six years after the duly recorded severance of the subsurface oil and gas estate, extinguished petitioners’ interests where the tax deed and related documents described the assessed property as being held by the then unseated surface estate owner and when it is undisputed that there was no prior production or other basis upon which a valid assessment could be made of the reserved oil and natural gas interests?
  2. Did the Superior Court deny the petitioners’ due process rights under the United States and Pennsylvania Constitutions when it held that the 1935 tax sale divested petitioners of their properly reserved oil and natural gas interests?
  3. Did the Superior Court overlook controlling authority which provides that a grantee is bound by prior exceptions and reservations cited in its deed?
  4. Did the Superior Court exceed the scope of its appellate authority by making a factual finding that the petitioners never notified the Centre County Commissioners of their severed oil and gas estate when the trial court found that there was no evidence one way or another as to whether such notice was provided? (January 27, 2015)


In Sisson v. Stanley, the Superior Court of Pennsylvania addressed whether, under Rule 430 of the Pennsylvania Rules of Civil Procedure, property owners in a dispute to quiet title effectuated proper service of process via publication to the heirs of a reservation of rights of oil and gas underlying the owners’ property.  The owners served the Complaint to quiet title after filing an affidavit claiming that potential heirs to the reservation could not be found.  The court held that counsel for the property owners’ did not conduct a sufficient good-faith investigation to locate the heirs to satisfy Rule 430, including a search for wills or probate records, obituaries, and using internet services to trace ancestry and family history.  (January 28, 2015)

In In Re Fiedler, the Superior Court of Pennsylvania addressed whether disbursements from an estate by the holder of a power of attorney were proper.  The court held that gifts which exceed the IRS’$12,000 annual exclusion amount were improper.  However, the court declined to hold that gifts to distant relatives were improper and found that such gifts were within the authority provided by the power of attorney.  Lastly, the court held that the holder of the power of attorney’s payment of funeral expenses was beyond the scope of her authority, however, these were legitimate expenses which the estate may be obligated to reimburse. (January 16, 2015)

In Rosasco v. Cella, the New York Supreme Court, Appellate Division, First Department, addressed the issue of whether a part owner could rely on an estate’s appraisal to obtain partition and sale of the subject property. The court found that because the appraisal was prepared on the estate’s behalf it constituted a party admission, and because it supported the part owner’s assertion that it would be prejudicial to physically divide the property, partition and sale of the property was properly granted.  (January 13, 2015)

In Montgomery County Tax Claim Bureau v. Queenan, the Commonwealth Court of Pennsylvania addressed the validity of a tax sale of a property where the tax claim bureau failed to comply with all of the notice requirements of the Real Estate Tax Sale Law.  The court held that while the property owner had actual notice of the tax sale, she was not provided with personal service of the notice as required.   The court concluded that the notice provisions of the Real Estate Tax Sale Law must be strictly construed, and a tax claim bureau’s failure to comply with all of the notice requirements ordinarily nullifies a tax sale. (January 12, 2015)

In Fulton v. Fulton, the Superior Court of Pennsylvania addressed whether the doctrine of laches barred an administratrix’s complaint, seeking money damages in connection with property conveyances.  The court held that the complaint was barred because when there was an undue delay in prosecuting the action and the delay caused prejudice. (December 5, 2014)

In Battisti v. Beaver County Tax Claim Bureau, the Commonwealth Court of Pennsylvania addressed whether the tax claim bureau had a duty, under the Real Estate Tax Sale Law, to offer a taxpayer an installment plan to pay an outstanding tax.  The court ruled that, as a matter of due process, the tax claim bureau’s failure to offer the taxpayer an installment plan nullified the sale of the property. (December 11, 2014) 

In CSX Transportation, Inc. v. Delaware County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania considered whether property owned by CSX Transportation, Inc., a railway services company, was exempt from local real estate taxes.  The court held that only the property that was essential to the operation of the railroad as a “right of way” was exempt from real estate taxes pursuant to Article VIII, § 4 of the Pennsylvania Constitution and the Pennsylvania Public Utility Realty Tax Act. (November 21, 2014)

In Reading Housing Authority v. Board of Assessment Appeal, the Commonwealth Court of Pennsylvania addressed whether property with an apartment building, which housed 20% low income and 80% market rate tenants, is immune from real estate tax, and whether this mixed-use project is considered an “essential public and governmental purpose” of the Reading Housing Authority. The court held that the subject property was properly assessed and met the “public-use” test immunizing the property from real estate tax. (November 12, 2014)

In In Re: Foundation For Anglican Christian Tradition, the Commonwealth Court of Pennsylvania addressed whether the donor of a charitable gift had standing to enforce conditions placed on the gift. The court held that, generally, inter vivos gifts are irrevocable and “when asserting an inter vivos gift was conditional, the donor bears the burden of establishing the same.” (November 5, 2014)

In Strategic Environmental Partners, LLC v. New Jersey Department of Environmental Protection, the Superior Court of New Jersey, Appellate Division, considered whether an emergency order issued by the Commissioner of the Department of Environmental Protection enjoining the plaintiff from accepting any material onto its landfill was valid.  The court held that it was not because judicial approval was required before issuing such an order and because it constituted a retroactive application of a law which was signed into law only a half hour before the order was issued. (November 13, 2014)

In Thorpe v. Borough of Jim Thorpe, the United States Court of Appeals for the Third Circuit addressed whether the remains of Native-American Olympic legend, Jim Thorpe, should be disinterred and returned to his tribe pursuant to the Native American Graves Protection and Repatriation Act (NAGPRA).  The NAGPRA requires museums possessing or controlling holdings or collections of Native American human remains for historical purposes to return those remains to the tribe of the deceased upon the request of a lineal descendent. However, because the court found that the Borough of Jim Thorpe was not a “museum” within the terms of the NAGPRA, and because removal of the remains would create a “patently absurd result” in which the NAGPRA would be applied to resolve a family dispute, the court refused to apply the Act. (October 23, 2014)

In S&H Transport, Inc. v. City of York, the Commonwealth Court of Pennsylvania addressed the Local Tax Enabling Act which generally prevents local governments from taxing subjects involved in the rendering of public utility services.  The court held that a company that facilitates the buying of shipping services but does not, itself, transmit, deliver or furnish transportation of property, is not entitled to the protections of the Act. (October 15, 2014)

In Friends of Pennsylvania Leadership Charter School v. Chester County Board of Assessment Appeals, the Supreme Court of Pennsylvania addressed whether a retroactive real estate tax law was unconstitutional. The court held that the “retroactive tax exemption of Section 1722-A(e)(3) was unconstitutional under the Pennsylvania Constitution because it violates the separation of powers doctrine.” (September 24, 2014)

In Fish, Hrabrick and Briskin v. Township of Lower Merion, the Commonwealth Court of Pennsylvania held that income in the form of gross receipts from lease transactions and rental income are not subject to the Township’s business privilege tax.  The court held that Section 301.1(f)(1) of the Local Tax Enabling Act excludes “any tax on leases or lease transactions” from a political subdivision’s right to impose taxes on real property.  As such, real estate income cannot be taxed by the Township because it is considered part of a “lease transaction.” (September 19, 2014)

In The Matter of the Estate of George McFadden, Deceased, the Superior Court of Pennsylvania addressed who constituted the measuring life for purposes of the termination and distribution of the principal of a trust.  The court examined the rule against perpetuities, which prohibits the creation of future interests of estates which may not become vested within a life or lives in being at the death of the testator and twenty-one years thereafter.  The court concluded that the decedent intended that the measuring life for the residuary trust was the surviving grandchild among any grandchildren alive at the time of the decedent’s death.  On this basis, the court reversed the orphans court. (September 18, 2014)

In Princeton South Investors, LLC v. First American Title Insurance Company, the Superior Court of New Jersey, Appellate Division, addressed, in the context of title insurance claims, whether a pending tax appeal by a municipality creates an encumbrance on a property’s title.  The court held a municipality’s tax appeal does not concern title to the property, but rather, its valuation for tax purposes, and taxes do not become a lien on property until they are assessed.  As the title insurance policy at issue excluded coverage for liens “attaching…subsequent to Date of Policy,” the court found no coverage existed. (September 8, 2014)

In Fresenius Medical Care Holdings v. United States, the United States Court of Appeals for the First Circuit addressed the tax treatment of settlement payments made to the U.S. government under the False Claims Act, which the parties had not characterized as compensatory (deductible) or punitive (not deductible).  The government argued that, as tax deductions are a matter of legislative grace, the taxpayer should bear the burden of proving its entitlement to the deduction, and that the absence of an agreement between the parties should defeat the claim of deductibility.  The court, parting ways with a previous opinion by the Ninth Circuit, concluded that a tax characterization agreement by the parties is not a precondition to deductibility, and that a court should look to the economic realities of the transaction. (August 15, 2014)

In In re Princeton Office Park, the Supreme Court of New Jersey addressed whether a tax sale certificate purchaser holds a lien on the property.  The court held that, because the purpose of the Tax Sale Law is to aid municipalities in raising revenue by enhancing the collection of taxes, the purchaser holds a lien based on the tax delinquency. (June 25, 2014)

In United States v. Clarke, the United States Supreme Court held that a taxpayer has the right to an evidentiary hearing to examine an IRS official regarding their reasons for issuing a summonsas long as the taxpayer points to specific facts or circumstances plausibly raising an inference of bad faith. The objector to a summons must not simply offer naked allegations of bad faith, but some credible evidence to support a claim of improper motive. (June 9, 2014)

In In re Estate of Dolores Jean Andrews, the Superior Court of Pennsylvania addressed whether an executrix, who was loaned $113,000.00 by the decedent during her lifetime and then claimed the decedent provided the money as a gift, had a conflict of interest requiring her removal.  The court held that a conflict of interest exists and removal was proper because the executrix is acting in derogation of her duty to garner the estate assets by failing to attempt to recoup for the estate the amounts transferred to her. (May 29, 2014)

In In Re: Estate of Mary L. Bechel,the Superior Court of Pennsylvania addressed whether a surcharge imposed on the Decedent’s son (her attorney-in-fact) for failure to keep full and accurate records of all disbursements was a breach of his fiduciary duties under20 Pa.C.S. § 5601(e)(4).   The court held that the surcharge was not proper because the lower court provided no analysis as to how the son failed to perform his fiduciary duties, given that of 850 itemized expenses for a ten-year period, only 32 checks were at issue, and there was no evidence that the records were intentionally destroyed. (May 19, 2014)

In Estate of Isabel Wilner, the Superior Court of Pennsylvania addressed whether an unsigned photocopy of a “lost” will, the contents of which were confirmed by the attorney- scrivener and consistent with two subsequent codicils, was entitled to probate, contrary to the “two-witness” rule. The court applied the two-witness rule, holding that the copy was not supported by sufficient proof to permit probate, but urged the Supreme Court of Pennsylvania to accept appeal and revisit the rule. (May 6, 2014)

In Greenwood Gaming and Entertainment, Inc. v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania, addressed whether a slot machine operator could deduct promotional awards from the operator’s “gross terminal revenue,” as defined by the Gaming Act.  The court held that the Gaming Act permitted gaming facilities to deduct promotional awards given for slot machine play generally, and did not require the casino to tie the awards to the play of specific machines at specific times.  The Court noted that the exclusionary language in the statute was ambiguous, and should be strictly construed in favor of the taxpayer. (April 28, 2014)

In In re Sale of Real Estate by Monroe County Tax Claim Bureau, the Commonwealth Court of Pennsylvania, addressed a bank’s challenge to a judicial tax sale of a property on which it held a mortgage, on the basis that it did not received proper notice of the sale.  The court held that the sale was valid because service was made by the sheriff at one of the bank’s branches and the bank failed to present any evidence challenging the presumptively valid return of service. (April 20, 2014)

In United States v. Quality Stores, Inc., the United States Supreme Court addressed whether payments issued to involuntarily terminated employees, as a result of a Chapter 11 bankruptcy filing, could be taxed as wages under the Federal Insurance Contributions Act (FICA). The court held that disbursed severance payments were in fact taxable wages under FICA. (March 25, 2014)

In Muscarella v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether the estate of a claimant who paid annual property taxes on her residence, but died before the end of the tax claim year, is still entitled to a rebate under the Senior Citizens Property Tax and Rent Rebate Assistance Act.  The court held that regulations that afford a rebate only if the claimant survives the entire tax claim year violate the United States and Pennsylvania Constitutions. (March 14, 2014)

In Delaware County/Chester County v. Federal Housing Finance Agency, the United States Court of Appeals for the Third Circuit addressed a challenge to the tax exemption provision contained in the statute establishing Fannie Mae, the Federal Housing and Finance Agency, and Freddie Mac.  The court held that the language reading, “all taxation now or hereafter imposed by any State,” included state and local real estate transfer taxes.  The court further held that this exemption was not in violation of the Commerce Clause or the Tenth Amendment and noted that real estate transfer taxes are considered to be an excise tax and not a tax on the property itself. (March 18, 2014)

In Luther P. Miller, Inc. v. Commonwealth, the Commonwealth Court of Pennsylvania addressed whether fuel sales to public school bus operators are exempt from taxation under the Liquid Fuels and Fuel Tax Act.  Based on Department of Revenue regulations, the court held that a fuel sale to a bus operator that provides service to public school districts is not exempt from taxation.  The court also held that a Head Start agency is “simply a contractor that receives funds and provides service to the Commonwealth” and not an instrumentality of the Commonwealth. (March 20, 2014)

In Upper Moreland School District v. Crisafi, the Commonwealth Court of Pennsylvania addressed how pre-sheriff sale payments are to be applied between the principal tax claim and additional fees and costs accrued (e.g., legal fees and costs) under the Municipal Claims and Tax Liens Act.   The court held that pre-sheriff sale payments are not prioritized.  Therefore, any pre-sheriff sale payment does not need to be applied to the principal before being applied to attorney fees and costs. (March 7, 2014)

In Re: Appeal of P-Ville Associates from the Decision of the Chester Counter Board of Assessment Appeals for Property Located at 101 116 Starr St., Phoenixville, PA; Tax Parcel No. 19-279.1, the Commonwealth Court of Pennsylvania held that a taxpayer’s 2013 assessment was automatically appealed by virtue of anunc pro tunc appeal of the taxpayer’s 2011 assessment.  The court found that because the trial court had jurisdiction to rule on the 2011 appeal, the automatic assessment appealprovision of § 8854(a)(5) of the Consolidated County Assessment Law was triggered. (March 6, 2014)

In Beim v. Hulfish, the Supreme Court of New Jersey addressed whether the New Jersey Wrongful Death Act authorizes claims for damages based on estate taxes paid by a decedent's estate.  The court held that the Act does not authorize such claims because they do not fit within the statutory cause of action defined by the Act and the alleged damages do not constitute "pecuniary" losses as required by N.J.S.A. 2A:31-5. (January 28, 2014)

In Douglas Village Residents Group v. Berks County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania held that real property taxes on garages and decks located in a mobile home community should have been assessed to the landowner and the not the individual mobile homeowners. The Consolidated County Assessment Law, which governed taxation of mobile homes, required appurtenances to be attached to the mobile home itself in order to be taxed. However, unlike the mobile homes, the garages and decks are not mobile and are permanently affixed to the ground. Therefore, despite the improvements being paid by the mobile home owners, the land owners were responsible for the taxes on the garage and decks. (January 27, 2014)

In PA Game Commission v. Seneca Resources Corp., the Commonwealth Court of Pennsylvania addressed whether an oil and gas exploration company had rights to the oil or gas underneath a property owned by PA Game Commission and whether modern day fracking could be used to extract the oil. The oil and gas exploration company received the land in a 1929 deed, which permitted oil and gas extraction by the usual and ordinary manner, and subsequently conveyed the land to the PA Game Commission in a 1932 deed, while reserving the right to drill and extract oil and natural gas. The court held that the oil and gas exploration company had the rights to the oil and gas underneath the property. However, while the 1932 deed posed no limits on the methods for extracting the resources, the 1928 deed was ambiguous and further discovery was necessary to determine if the extraction methods were limited to those used at the time the deed was conveyed. (January 27, 2014)

In Bhagat v. Bhagat, the Superior Court of New Jersey, Appellate Division, held that a party must provide clear and convincing evidence to rebut the presumption that a transfer of property was a gift.  The evidence here was in the form of prior statements in a separate lawsuit which contradicted the son’s current claim that the transfer was a gift.  The court could not use these statements to invoke judicial estoppel because the prior action settled.  However, these contradictory statements were admissions which could be used to impeach the son in the current action. (January 31, 2014)

In City of Altoona Paid Firemen’s Pension Fund Association v. Kimberly Ann Dale-Dambeck, the Commonwealth Court of Pennsylvania addressed whether “retired on pension” means the decedent spouse must be receiving actual pension benefit payments or rather, must only be entitled to benefits at a fixed, certain date. The court found a right to benefits are fixed and certain when a decedent has retired, he no longer made pension contributions, and has not begun to collect his pension at the time of  death.  Accordingly, payments are guaranteed to start upon reaching the date which would have been decedent’s “retirement date,” and decedent’s surviving spouse was entitled to pension benefits at that time. (January 3, 2014)

In McClean v. Djerassi, the Superior Court of Pennsylvania addressed whether a complaint against a deceased defendant can be cured by amendment to substitute the estate beyond the statute of limitations.  The court held that the original complaint against the deceased was void and could not be cured by amendment.  The proper procedure was to file a new complaint against the estate within the time period provided by 20 Pa.C.S. § 3383. (December 27, 2013)

In Lebanon Valley Farmers Bank v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania addressed whether the averaging method for calculating the taxable amount of shares under the Shares Tax, 72 P.S. §§ 7701-7706, violates the Uniformity Clause of the Pennsylvania Constitution in the context of bank mergers.  The court held that the averaging method does not create an unconstitutional disparity between mergers or combinations of in-state and out-of-state banks. (December 27, 2013)

In Estate of Gaetano Ciuccarelli, the Superior Court of Pennsylvania addressed the proper procedure for handling a claim filed in a court division lacking subject matter jurisdiction.  The court held that it was improper for the Trial Division of the Court of Common Pleas to dismiss the action for lack of subject matter jurisdiction and that it should have instead transferred the case to the Orphan's Court Division. (December 3, 2013)

In United States v. Woods, the United States Supreme Court addressed whether the tax penalty for valuation misstatements applies to an underpayment resulting from a partnership disregarded for lack of economic substance.  The Court first held that the Tax Equity and Fiscal Responsibility Act of 1982 gave the district court jurisdiction to determine the applicability of such a penalty.  Further, the penalty applies to a transaction disregarded for lack of economic substance because the resulting underpayment is attributable to a valuation misstatement. (December 3, 2013)

In In re: Estate of: Jessie M. Tyler, Deceased, the Superior Court of Pennsylvania addressed whether a draft codicil, comprised of handwritten changes to the original will, was a legally valid testamentary instrument where the deceased passed away before a formal codicil could be finalized and fully executed.  The court held that the draft codicil was ambiguous because it contained indicia of a testamentary writing, as well as indicia that a future document was contemplated, and therefore extrinsic evidence needed to be reviewed in order to determine the decedent’s testamentary intent. (November 13, 2013)

In Advance Housing, Inc. v. Township of Teaneck, the Supreme Court of New Jersey addressed whether Advance Housing was entitled to tax-exempt status under N.J.S.A. 54:4-3.6.  The court held that Advance Housing was entitled to tax-exempt status because it established that it is a not-for-profit corporation, organized exclusively for a charitable purpose, and that the properties for which it seeks tax exemptions are actually used for the charitable purpose of providing supportive housing for the mentally disabled. (September 25, 2013)

In In re Gregory Stewart Trust, the Supreme Court of New York, Appellate Division, First Department, addressed whether trustee misconduct that occurs after the period for which the trustee’ s commission is sought can be considered in determining whether to grant the trustee its commission.  The court concluded that it had the discretion to take into consideration all of a trustee’s misconduct in determining the grant of annual commission, even conduct that occurred after the period applicable to the commission. (September 26, 2013)

In In re Estate of Zeevering, the Superior Court of Pennsylvania addressed whether a partial intestacy should be ordered during probate of a will, made without legal counsel and containing no direction as to the distribution of residue, when doing so would include beneficiaries that the testator specifically omitted from his will. The court held that, where the intent of the testator is not clear from the will, where the will fails to dispose of a decedent’s entire estate, and where the will fails to provide a residuary clause, the residuary estate is to be distributed under intestacy laws. (September 26, 2013)

In Barylak v. Montgomery County Tax Claim Bureau, the Superior Court of Pennsylvania addressed whether a property owner, whose property was sold at a tax sale, had successfully rebutted the presumption of regularity created by the Deputy Sheriff’s affidavit of posting the property.  The court noted that generally tax sales are presumed valid, and a property owner can only overcome this presumption by filing exceptions to the sale averring that the law’s notice provisions were not strictly followed.  The court affirmed that an affidavit of service was competent evidence to prove that the law was followed. (September 4, 2013)

In In Re Estate of Ash, the Superior Court of Pennsylvania addressed whether an order authorizing an administratrix to sell realty during the process of disposition of an estate was appealable. The court held that it lacked jurisdiction to address the appeal because the order was interlocutory and did not determine an interest in real property, as provided under the recently-amended Pennsylvania Rule of Appellate Procedure 342. (August 23, 2013)

In Chester Gerstenbluth v. Credit Suisse Securities (USA) LLC, the United States Court of Appeals for the Second Circuit addressed whether proceeds collected by a plaintiff in connection with a settlement of an employment discrimination action constitute “wages” received “with respect to employment,” such that they are subject to taxation under the Federal Insurance Contributions Act (FICA).  The court held that those proceeds do constitute taxable FICA “wages” and therefore rejected the plaintiff’s claim for a refund of taxes paid on the settlement. (August 27, 2013)

In Waksal v. Director, Division of Taxation, the Superior Court of New Jersey, Appellate Division considered the deductibility of a worthless non-business debt under a provision of the New Jersey Gross Income Tax Act.  The plaintiffs loaned money to a relative, and when they realized the money would not be repaid, they reported a short-term capital loss on their joint federal income tax return pursuant to 26 U.S.C. § 166(d)(1)(B).  The plaintiffs then attempted to do the same with regard to their New Jersey gross income tax return pursuant to N.J.S.A. 54A:5-1c.  The court found that there was no counterpart statute in New Jersey, and held that plaintiffs could not offset their capital gains derived from the “sale, exchange or other disposition of property” with their worthless non-business debt. (August 13, 2013)

In Tristan Associates v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed the finding of the Board of Finance and Revenue denying a radiology group's petition for refund of sales and use taxes paid on equipment and supplies.  The Court held that while services rendered by “learned professions” are not subject to tax, such professionals must pay tax on the personal property and services used in their businesses.  Further, only medical equipment used for therapeutic purposes, is exempt from taxation.  As such, when a radiologist-taxpayer produces images of patients and downloads them onto film or discs, the equipment and supplies are taxable because the equipment is clearly diagnostic, not therapeutic. (August 6, 2013)

In Re: Estate of Richard A. Devoe, deceased, the Pennsylvania Superior Court addressed the issue of whether equitable subrogation permits the plaintiff, a co-owner of residential property, to recover from the co-owner’s Estate the balance of the deceased’s mortgage loan that plaintiff had paid off in order to avoid foreclosure on the property.  The court held that, due to the Estate’s refusal to pay the deceased’s mortgage loan, the plaintiff had a legal duty to pay off the loan, and did not do so voluntarily, and therefore was entitled to recover from the Estate under the doctrine of equitable subrogation. (August 8, 2013)

In Morse v. Kraft, the Supreme Judicial Court of Massachusetts addressed whether a trustee of an irrevocable trust established in 1982 for the benefit of four minor sons had the authority under the terms of the trust to distribute the trust property of the original trust, for which the beneficiaries were not eligible disinterested trustees, to four new trusts (decanting) that would permit the sons – now in their 40’s – to each serve as trustees with respect to their respective trusts.  Because the decanting would trigger the generation skipping transfer tax if the Trust did not authorize such distributions without the consent or approval of any beneficiary or court, the court was asked to determine whether the trustee held such decanting power under the terms of the 1982 trust. The court concluded that a trustee’s decanting authority turns on the language of the trust, and that the broad language of the trust here, permitting distributions for the benefit of the beneficiaries, encompassed the power to decant to other trusts. (July 29, 2013)

In Verizon Pennsylvania v. Commonwealth,  the Commonwealth Court of Pennsylvania held that under Section 1101(a)2 of the Tax Reform Code of 1971, telephone companies doing business in Pennsylvania, must pay a tax on gross receipts for telephone messages transmitted within the state. The court interpreted private telephone line receipts and directory assistance charges as receipts subject to this tax since private lines are used to “transmit a message” and directory assistance is a form of “transmitting a message.”  However, non-recurring charge receipts, such as installation fees, adding a line to a location or additional wiring is not subject to the gross receipt tax since these are not charges for “transmitting messages.” (July 5, 2013)

In In the Matter of the Estate of Alice R. Sharis, the Appeals Court of Massachusetts addressed whether a grandmother’s will was properly set aside for lack of testamentary capacity and the undue influence of her grandson.  The court held that, where the grandson had near complete control of the grandmother’s finances, and played an instrumental role in arranging for the will to be drafted and executed, he bore the burden of showing that the will was not a product of undue influence. Although there was no direct evidence of undue influence, the court held that the circumstantial evidence of undue influence was sufficient. (June 28, 2013)

In U.S. v. Windsor, the United States Supreme Court addressed whether Section 3 of the Defense of Marriage Act (DOMA), which defines “marriage” as a legal union between a man and a woman and “spouse” as a person of the opposite sex, is constitutional.  The Court held that Section 3 of DOMA is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment to the extent that same sex couples who are legally married must be treated the same as opposite sex married couples under federal law.  As a result of the ruling, the Internal Revenue Service is required to apply the federal estate tax exemption for surviving spouses to the inheritance received by the Plaintiff, a widow of a same sex spouse. (June 26, 2013)

In Alkhafaji v. TIAA-CREF, the Supreme Court of Pennsylvania addressed whether a change in beneficiaries by will is permitted, as a matter of law, when the notice provisions in annuity contracts did not clearly and unambiguously preclude a beneficiary designation by will. The court found that to allow modification of non-testamentary contractual assets by testamentary documents blurs the distinction between the two. Holding that there was no logical basis for changing the law nor a cognizable reason in equity for conflating the law of contracts and probate, the court found that the decedent made no effort to change the beneficiary designations by the terms of his annuity contract, and as such, his will did not undo his designations in the contract. (June 17, 2013)

In Sears, Roebuck & Co. v. Commissioner of Revenue, the Appeals Court of Massachusetts addressed whether Sears was entitled to the reimbursement of sales taxes it remitted to the Commonwealth from purchases of its products by customers using a private label credit card issued by Citibank, N.A. (Citibank), and who later defaulted on their accounts with the bank.  When those customers defaulted, Citibank wrote off the losses.  Although Sears had been paid by Citibank, it sought reimbursement of the sales tax under the Massachusetts bad debt statute claiming to be, as required by the statute, a “vendor who has paid to the commissioner an excise . . . upon a sale for which credit is given to the purchaser and such account is later determined to be worthless.”  The court held that where Sears had protected itself from the adverse consequences of the purchasers’ defaults, its interpretation was implausible and Sears was not entitled to the reimbursement of the sales tax. (June 19, 2013)

In Robert L. McNeil, Jr. Trust v. Commonwealth of Pa., the Commonwealth Court of Pennsylvania addressed whether the Department of Revenue violated the Commerce Clause of the United States Constitution when it assessed Pennsylvania Income Tax (PIT) and interest on all of the income of two inter vivos trusts, which were located in, administered in, and governed by the laws of Delaware and which had no Pennsylvania income or assets. The court held that the PIT violated the Commerce Clause as applied. It reasoned that the Trust did not have a substantial nexus to the taxing jurisdiction; it was not fairly apportioned; and the imposition of the PIT on the Trusts’ entire income was not reasonably related to the benefits Pennsylvania provides the Trusts. (May 24, 2013)

In Citizens Bank of Massachusetts v. Coleman, the Appeals Court of Massachusetts addressed whether purported transfers of the beneficial interests in two pieces of real estate by a husband to his wife as an alleged estate planning maneuver failed and thereby gave rise to resulting trusts.  The court held that, where it was clear that the husband did not intend to transfer a beneficial interest to his wife, but transferred the property only to protect the assets from his creditors, the wife held the property in trust for the benefit of her husband and that thus the resulting trusts were subject to reach and apply actions by the husband's creditor. (May 15, 2013)

In PPL Corp. v. Commissioner of Internal Revenue, the United States Supreme Court addressed whether a part owner of a privatized U.K. company may claim a credit for its share of the company’s total U.K. windfall tax burden in its federal income-tax return under Internal Revenue Code §901(b)(1), which states that any “income, war profits, and excess profits taxes” paid overseas are creditable against U.S. income taxes.  The Court found that the tax is creditable under Section 901(b)(1). (May 20, 2013)

In In Re Estate of McKinney, the Superior Court of Pennsylvania addressed whether a family’s movement over time from northwestern Pennsylvania to Virginia, coupled with the fact that the original trustee institution underwent approximately six corporate mergers leading to entirely different bank officers involved in administering the trusts, represents a change of circumstances substantial enough to come within the no-fault statutory provisions of Pennsylvania’s Probate, Estates, and Fiduciaries Code § 7766(b)(4), a provision which permits the removal of a trustee due to a substantial change in circumstances. The court held that the beneficiaries were within their rights to petition for removal of the trustee. (May 21, 2013)

In In the Matter of the Estate of Thomas, the Superior Court of New Jersey, Appellate Division, addressed the statute of limitations for an action establishing the proper line of intestate succession wherein the chancery division applied the six month time bar established by R. 4:85-1.  The court held that R. 4:85-1 has no application to an action establishing the proper line of intestate succession. (May 22, 2013)

In Vento v. Director of VI Bureau of Internal Revenue, the United States Court of Appeals for the Third Circuit addressed the issue of when a taxpayer should pay income taxes to the Virgin Islands Bureau of Internal Revenue rather than the Internal Revenue Service. The proper tax jurisdiction depends on whether the taxpayers were bona fide residents of the Virgin Islands on the last day of the filing year. The court set forth eleven factors to determine whether a taxpayer‘s claimed residency is bona fide, but such factors can be placed into four groups: the taxpayer’s intent; the taxpayer’s physical presence; the taxpayer’s social, familial, and professional relationships; and the taxpayer’s own representations. (April 17, 2013)

In Crispin v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit, addressed a loss deduction for the taxpayer’s participation in a Custom Adjustable Rate Debt Structure (CARDS) transaction and a penalty under Section 6662 of the Internal Revenue Code.  The court stated that the CARDS transaction lacked “economic substance.”  It also found that the penalty was appropriate because the taxpayer’s reliance on the advice of an independent and qualified tax professional was unreasonable. (February 25, 2013)

In Pinecrest Lake Community Trust v. Monroe County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania addressed whether a planned residential development’s golf course is entitled to a “common or controlled facilities” tax exemption under the Uniform Planned Community Act.  The court held that the tax exemption applied even though the golf course was not for the exclusive use of the homeowners because all that is required is that the course was located within the planned community and was owned or leased by the homeowner’s trust. (February 19, 2013)

In Giles & Ransom, Inc. v. Whitehall Township, the Commonwealth Court of Pennsylvania refused to allow the municipality to impose a local tax on a salesman taxpayer on transactions made outside the municipality.   Section 301.1 of the Local Tax Enabling Act allows certain municipalities to levy and collect taxes on persons, transactions, etc. within the limits of such political subdivision.   Here, the municipality audited the taxpayer for sales made outside the municipality since his place of business was within municipality.  The court held that the Board improperly interpreted the Ordinance to tax the person and not the transaction. (February 11, 2013)

In Stephenson v. Spiegle, the Superior Court of New Jersey addressed whether the doctrine of rescission was appropriate to remedy a unilateral mistake in which a decedent unintentionally directed funds intended for a family trust to his attorney.  The court determined that such an equitable remedy was appropriate, as the decedent made a material mistake which would have brought about an unconscionable result. (January 31, 2013)

In Glatfelter Pulpwood Co. v. Commonwealth of Pennsylvania, the Supreme Court of Pennsylvania held that gains from the sale of a tract of timberland in Delaware were properly characterized as “business income” subject to taxation in Pennsylvania because: (1) the sale constituted an integral part of the company’s regular business operations; and (2) the company’s Delaware business was integrally related to its business activities in Pennsylvania. The court also held that neither the Due Process Clause nor the Commerce Clause was violated despite the fact that there was double taxation, because the total income from the sale was apportioned in Pennsylvania. (January 22, 2013)

In Macys v. Board of Property Assessment, the Commonwealth Court of Pennsylvania held that, when a tax assessment is appealed, fixing the fair market value of the real property on the date of the appeal is proper. The court also held that if the Board deviates from an assessment provided by uncontradicted expert testimony in a case, it must provide the reasons for not following the expert. (January 22, 2013)

In Krohn v. Snyder County Board of Assessment Appeals, the Commonwealth Court of Pennsylvania addressed the standard for property value reassessment. The court found that arbitrarily increasing the value of property by declaring homesites where no homes exist is simply a fictitious method of increasing the taxable value of the property by assigning it an unsupported hypothetical value, which would be contrary to the “theory of ad valorem taxation, i.e., real estate taxes based on the actual value of the property, not its hypothetical value.” (January 23, 2013)

In Estate of Steven Gavin v. Tewksbury State Hospital, the Appeals Court of Massachusetts addressed whether an attorney, who is not a duly appointed executor or administrator of an estate, may act as a claimant under the Massachusetts Tort Claims Act, for purposes of having the legal capacity to make a valid presentment under that statute.  The court concluded that the attorney was not a valid claimant, the presentment letter was thus defective, and the suit must be dismissed for a failure of presentment. (January 18, 2013)

In Kimberly-Clark Corporation v. Commissioner of Revenue, the Appeals Court of Massachusetts addressed whether certain transactions were sham transactions between a parent company and its subsidiaries.  The court concluded that the transactions had no legitimate business purpose or economic substance apart from the asserted tax benefit. (January 11, 2013)

In Berks County Tax Collection Committee v. The Pennsylvania Department of Community and Economic Development, the Commonwealth Court of Pennsylvania addressed whether, under Section 317 of the Local Tax Enabling Act (LTEA), the earned income tax (EIT) credit for EIT paid to the City of Philadelphia applies as a “super” credit to the taxpayer’s total income earned outside of Philadelphia. The court held that, because the “super credit” is intended to encourage non-residents to work in Philadelphia, a taxpayer can apply a “super credit” for EIT paid to Philadelphia to his total earnings. (January 7, 2013)

In County of Carbon v. Panther Valley S.D., the Commonwealth Court of Pennsylvania reviewed two seemingly conflicting sections of the Real Estate Tax Law regarding tax collection. The court determined that Section 501(a.1) allows taxing districts to use a collection service other than a county tax claim bureau and does not require collections to be made payable to the tax claim bureau. The court found that Section 204(b), which provides that “all taxes for which returns have been made to the bureau shall be payable only to the bureau,” merely establishes that the tax claim bureau has the right to expect a commission, but does not have the right to exercise physical control over the payment, so it does not negate Section 501(a.1). (January 10, 2013)

In L.F. Maya v. County of Erie TCB, the Commonwealth Court of Pennsylvania determined that the Tax Claim Bureau did not make a reasonable effort to give a taxpayer notice of an impending sale after its certified mailing was returned as unclaimed. The Tax Sale Law, 72 P.S. §5860.607a(a), requires a tax claim bureau to conduct a reasonable search to discover the whereabouts of the taxpayer whose certified notice is returned unclaimed. (January 10, 2013)

In In re Estate of John J. Strahsmeier, the Superior Court of Pennsylvania held that a treasury bill registered and owned by Decedent alone, which was deposited into an ITF account under the name of a co-executor of the Estate, nonetheless belonged to Decedent’s Estate. The court further held that the Orphans Court correctly determined that clear and convincing evidence existed that Decedent had an intent contrary to the co-executor’s presumed right of survivorship when he created the ITF account. (September 7, 2012)

In Bedard v. Corliss, the Appeals Court of Massachusetts addressed whether adult children from a first marriage may have their mother’s spouse removed as administrator of their mother’s estate by attacking the validity of the marriage. The court held that where the mother enjoyed the benefits of marriage, and therefore would have been estopped from denying its validity herself, third parties to the marriage were likewise estopped from contesting its validity. (August 23, 2012)

In Township of Jefferson v. Director, Division of Taxation, et al., the Superior Court of New Jersey, Appellate Division, addressed a township’s challenge to the Table of Equalized Valuations used by the Commissioner of Education for the apportionment of school aid. The Township argued that, as a result of using an averaging step in the equalization process in a declining real estate market, the Township’s school aid was lessened and county taxes unfairly increased. The court rejected the Township’s argument, finding that the equalization table was valid because its average ratio was not arbitrary, capricious or unreasonable. (August 6, 2012)

In Bridgewater State University v. Board of Assessors of Bridgewater, the Supreme Judicial Court of Massachusetts addressed whether a statute exempting charitable organizations from local property tax if the property was used by the organization also applied where the organization’s property was used by an affiliated public university. The court noted that the organization was formed for the exclusive benefit of the university, and construed the statute to exempt a charitable organization’s property from tax where the property was occupied by an affiliated university. (August 8, 2012)

In Southwest Regional Tax Bureau v. Kania, the Commonwealth Court of Pennsylvania addressed the definition of “domicile” under the Local Tax Enabling Act, and held that a resident of Florida, who owned a home in Pennsylvania, was not domiciled in Pennsylvania. (July 24, 2012)

In Re: Appeal of Dunwoody Village  the Commonwealth Court of Pennsylvania held that a not-for-profit corporation operating a continuing care retirement community was not qualified as an institution of purely public charity and could not take a real estate exemption under Article VIII, Section 2(a)(v) of the Pennsylvania Constitution since it did not fulfill the five-prong test set forth in Hospital Utilization Project v. Commonwealth (known as the HUP test). The Court held that the community in this case charged substantial entrance fees, failed to donate or render gratuitous a substantial portion of its services, did not benefit a substantial and definite class of persons who are legitimate subjects of charity, failed to relieve the government of some of its burden, and failed to operate entirely free from private profit motive. (July 9, 2012)

In Re: Estate of William O. Smaling, the Superior Court of Pennsylvania considered whether the Orphans’ Court erred when it declined a wife’s request to probate a will executed by her husband, the decedent, because it was invalid due to lack of testamentary capacity and undue influence. The Superior Court of Pennsylvania held that the appellant wife failed to file exceptions under Pa.O.C.R. 7.1 after the court issued the opinion and ruling in question, and therefore she waived her argument that the court misapplied the law. (July 10, 2012)

In the Matter of the Estate of Richard D. Erlich, the Superior Court of New Jersey, Appellate Division, held that the unexecuted copy of a purportedly executed original document sufficiently represented the decedent’s final testamentary intent to be admitted into probate under N.J.S.A. 3B:3-3. The court further held that the objection to probate did not warrant sanctions under the Frivolous Litigation statute, N.J.S.A. 2A::15-59.1 (a)(1), because there was no showing that the objection to probate was filed “in bad faith, solely for the purpose of harassment, delay, or malicious injury” or had no “reasonable basis in law or equity.” (June 29, 2012)

In National Federation of Independent Business v. Sebelius, the United States Supreme Court addressed the constitutionality of the Patient Protection and Affordable Care Act, commonly known as the “Healthcare Reform Act.” The Court upheld the Act’s individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage, but declared the Act’s penalty provision relating to the expansion of Medicaid to be unconstitutional. Specifically, the Court held:

1.    the Anti-Injunction Act, which bars lawsuits relating to taxation until the tax is actually paid, did not bar this lawsuit;

2.    the Act’s individual mandate is not a valid exercise of Congress’s Commerce Clause powers;

3.    the individual mandate is constitutional as a tax on those who do not have health insurance imposed within Congress’s powers under the Taxing Clause;

4.    the penalty imposed by the Act on states failing to comply with the Medicaid expansion provisions of the Act is unconstitutional “economic dragooning” beyond Congress’s powers under the Spending Clause; and,

5.    the Medicaid expansion penalty portion of the Act is severable from the remainder of the Act. (June 28, 2012)

In Beim v. Hulfish, the Superior Court of New Jersey, Appellate Division addressed whether an heir’s loss of a prospective inheritance resulting from the imposition of increased estate taxes—incurred due to the premature death of a decedent—is recoverable in a wrongful death action. The court concluded that because such a tangible, readily-calculable diminishment in an heir’s expectancy is in the nature of “pecuniary injuries resulting from such death,” N.J.S.A. 2A:31-5, it is an element of damages for jury consideration and subject to appropriate expert evidence. (May 29, 2012)

 In Astrue v. Capato, the United States Supreme Court addressed whether the children conceived through in vitro fertilization and born to the wife of the decedent, 18 months after his death, may qualify for Social Security survivors benefits. The Court held that, under Florida law, posthumously conceived children do not qualify. (May 21, 2012)

In Otto  v. Gore, the Supreme Court of Delaware clarified that, while Delaware courts cannot use extrinsic evidence to interpret the meaning of unambiguous terms in a trust instrument, they may consider extrinsic evidence to determine an intent to create a trust. Beyond a signature on a trust instrument, the court considered various manifestations of intent, such as publicly announcing the trust, initialing schedules and observing other formalities as dispositive of intent. (May 23, 2012)

In Farrell v. McDonnell, the Appeals Court of Massachusetts addressed what is required to witness a will in Massachusetts. The court concluded that the two witnesses need not observe the testator sign her name. The testator’s presence in the room when the witnesses signed the will was sufficient evidence that she implicitly acknowledged the signature as her own. (May 11, 2012)

In Himmelberger v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania, addressed whether a surviving beneficiary who entered a civil union with the decedent in New Jersey is entitled to a familial tax exemption. The court held that the surviving beneficiary was not entitled to the tax exemption because “Appellant is not a child, parent or spouse of the decedent” under Pennsylvania law which states that a “marriage between persons of the same sex which was entered into in another state or foreign jurisdiction, even if valid where entered into, shall be void in this Commonwealth.” (May 10, 2012)

In  Richard Hvisdak v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania held that although the Plaintiff registered as a Florida driver in August of 2004, registered to vote in Florida by July 4, 2004, maintained a permanent place of abode in Florida, purchased the necessities of life in Florida, and engaged in religious and social activities in Florida, the Plaintiff was considered a Pennsylvania resident for income tax purposes because the Plaintiff maintained a home in Cranberry township and he provided support to his wife (even though the marriage ended in 2004) and children in Pennsylvania. (April 24, 2012)

In United States v. Home Concrete and Supply, LLC, the Supreme Court of the United States addressed whether the three-year period in which the Government must assess a deficiency against a taxpayer is extended to a six-year period when the taxpayer overstates the basis of property sold, understating the gain. The Court held that 26 U.S.C. § 6501(e)(1)(A), which extends the period to six years when a taxpayer “omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in the return,” does not apply to an overstatement of basis. Thus, the default three-year period is not extended. (April 25, 2012)

In Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, the Supreme Court of Pennsylvania addressed whether the General Assembly may, by statute, influence the constitutional definition of “purely public charity” exempt from real estate taxes in Pa. Const. art. VIII, § 2(a)(v). The court held that the Pennsylvania Constitution nowhere grants non-reviewable authority to the General Assembly to determine what constitutes an “institution of purely public charity.” Accordingly, “legislation may codify what is intended to be exempted, but it cannot lessen the constitutional minimums by broadening the definition of ‘purely public charity’ in the statute.” (April 25, 2012)

In Tech One Associates v. Board of Property Assessment, the Supreme Court of Pennsylvania addressed whether real estate is subject to taxation under the Second Class County Assessment Law, 72 P.S. § 5432.201(a), even if owned under a lease. The court held that because the statute is “concerned with the particular nature of the property involved, not the means by which the property is owned,” the fact that real estate is owned as a leasehold interest does not affect its status as property subject to taxation. (April 25, 2012)

In Estate of Palumbo v. U.S., the United States Court of Appeals for the Third Circuit affirmed that an estate was not entitled to costs and fees related to a successful suit for a tax refund. The matter involved estate proceeds in dispute, and a settlement agreement reached between the decedent’s son and a charitable organization. The IRS disallowed a charitable deduction by the Estate. The District Court granted summary judgment in favor of the Estate as to the refund but denied the request for costs and fees under 26 U.S.C. sec. 7430. (April 2, 2012)

In Denaples v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit addressed the issue of whether I.R.C. section 103 exempts from federal taxation the installment interest paid by the State of Pennsylvania under an agreement that allowed the State to make yearly payments. The court held that the interest plaintiffs received from the State was exempt from federal taxation because I.R.C. section 103 permits exclusion of interest payments which are obligations of the state. (March 19, 2012)

In Telebright Corporation, Inc. v. Director, New Jersey Division of Taxation, the Superior Court of New Jersey, Appellate Division addressed whether a foreign corporation that regularly permits one of its employees to telecommute full-time from her New Jersey residence is subject to the New Jersey Corporation Business Tax Act (CBT Act).  Because the employee produced computer code in New Jersey, the court held that the corporation is doing business in New Jersey no different than a foreign manufacturer fabricating parts in New Jersey for a product that will be assembled elsewhere.  The court also held that application of the CBT Act to the employee’s activities in New Jersey did not violate the Due Process or Commerce Clauses of the United States Constitution. (March 2, 2012)

In Estate of Robert M. Mumma, the Superior Court of Pennsylvania addressed whether an Executrix’s dual roles as Trustee for both the estate of her mother and father was subject to challenge by a sibling. The court held no conflict of interest existed that required removal of the appointed Executrix.The Court noted that such a removal was a “drastic remedy” that requires actual proof of a breach of a fiduciary duty and for the protection of the trust property. (February 22, 2012)

In R & R Express v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania held that a taxpayer was not entitled to a credit for fuel purchased at retail under the Motor Carriers Road Tax Act, 75 Pa. C.S. §§ 9601-9622, because the taxpayer did not keep detailed records of its purchases, and the Act requires strict compliance with its provisions. (February 8, 2012)

In Barrel of Monkeys, LLC v. Allegheny County, the Commonwealth Court of Pennsylvania considered the validity of the county ordinance known as the “Drink Tax,” Ordinance No. 54-07-OR/3548-07. The court held that the Drink Tax does not violate the “single subject” rule of the Pennsylvania Constitution, and it does not violate the uniformity clause of the Pennsylvania Constitution or the equal protection clause of the United States Constitution. The court further held that the conflict-of-interest provisions of the County Administrative Code do not empower courts to void the vote of a City Council member, which was necessary for the Ordinance’s passage. (February 8, 2012)

In City of Philadelphia v. City of Philadelphia Tax Review Board, the Commonwealth Court of Pennsylvania addressed whether Expedia, Inc. was subject to the City’s Hotel Room Rental Tax (Hotel Tax).The court held that the City of Philadelphia’s Tax Review Board properly concluded that Expedia was not a hotel “operator” under the Philadelphia Code, as Expedia does not possess the right to rent or lease rooms, and no rental occurs until a customer checks in at a hotel. Accordingly, because Expedia is not a hotel operator, it is not subject to the Hotel Tax. (February 2, 2012)

In Muscarella v. Pennsylvania, the Commonwealth Court of Pennsylvania considered a class action petition for review for the certification of a class to challenge the application of the Senior Citizens Property Tax and Rebate Assistance Act to deceased taxpayers. The petitioner successfully certified a class of persons to challenge a ruling that, to be eligible for the rebate, a taxpayer act must survive the entire year, and the rebate could not be awarded to an estate making a claim on behalf of a deceased taxpayer. (January 18, 2012)

In Marshall v. Pennsylvania, the Commonwealth Court of Pennsylvania addressed whether the discharge of a partnership’s debt secured by a nonrecourse mortgage note was a taxable gain under Pennsylvania’s personal income tax law. A split en banc panel held that, because the amount realized from the property’s disposition in foreclosure exceeded its adjusted basis at the time of disposition, the foreclosure was a taxable gain. (January 3, 2012)

In PPL Corporation v. Commissioner of IRS, the United States Court of Appeals for the Third Circuit addressed whether the U.K. windfall tax was an “income, war profits, [or] excess profits” tax within the meaning of § 901(b)(1) entitling a business to a tax credit.  The U.K. windfall tax was a measure taken to curb excess profits due to government privatization of utilities and was a one-time 23% tax on the difference between each company’s “profit-making value” and its “flotation value,” (i.e. the price for which the U.K. Government had sold the business).  The court held that the tax failed to meet the gross receipts requirement of the code  which requires that the tax is imposed on gross receipts or an amount not greater than gross receipts. (December 22, 2011)

In Estate of Alice Brown, the Superior Court of Pennsylvania upheld a surcharge to a guardian who incurred expenses at a residence not used by the ward. (October 17, 2011)

In Sunoco, Inc. v. Commissioner of the IRS, the United States Court of Appeals for the Third Circuit addressed whether the Tax Court had subject matter jurisdiction over Sunoco’s claim for interest on tax overpayments. The Third Circuit found that, because interest owed to the taxpayer is not a part of, or related to, a taxpayer’s tax liability and is not assimilated in treatment to the principal amount of tax, the Tax Court did not have jurisdiction over Sunoco’s claim. (October 7, 2011)

In Estate of Alvina Taylor v. Director, Division of Taxation, the Superior Court of New Jersey, Appellate Division addressed whether an estate which overpaid its estimated tax could preclude the Director from relying on the three-year statute of limitations for requesting a refund.  The court held that the Square Corners Doctrine which requires governmental officials to exercise their duties fairly and reasonably did not apply and the statute of limitations barred recovery of the overpayment. (October 6, 2011)

In In re: Miller, the Supreme Court of Pennsylvania addressed whether a parent has legal standing to challenge the appointment of a guardian for their child’s estate.  The court, finding that a parent has a substantial, direct, and immediate interest in the appointment of a guardian for their child’s estate, held that such a parent has legal standing to challenge that appointment. (September 29, 2011)

In Estate of Elkins v. Temple University Hospital, the Superior Court of Pennsylvania addressed the doctrine of cy pres with respect to a charitable trust created in 1919 for Hahnemann Hospital.  As Hahnemann Hospital ceased operating as a non-profit entity, it could no longer receive proceeds from a charitable trust and the trust therefore failed.  Thus, the court was called upon to apply the doctrine of cy pres, which acts to give effect to the intent of the donor and reform a trust instrument in favor of another beneficiary when the original trust fails.  The court held that the donor’s intent was to benefit the medical community of Philadelphia at-large, and not just a hospital, and that the Philadelphia Health & Education Corporation was a proper cy pres beneficiary of the trust. (September 1, 2011)

In Whirlpool Properties Inc. v. Dir., Div. of Taxation, the Supreme Court of New Jersey addressed whether the "Throw-Out Rule" for corporate sale receipts tax was constitutional. The court held that the Throw-Out Rule applied only to corporate taxpayers having a substantial nexus to New Jersey for untaxed receipts from states that lack jurisdiction to tax the corporation due to insufficient connection with the corporation or due to congressional action, but not to receipts that are untaxed because a state chooses not to impose an income tax. (July 28, 2011)

In Merck & Co., Inc. v. U.S., the United States Court of Appeals for the Third Circuit addressed whether the plaintiff was improperly assessed for income taxes and whether the plaintiff had suffered from disparate treatment as compared to a similar taxpayer who did not receive a similar assessment. The court held that the income generated by the plaintiff was properly taxed because it was the result of loans rather than sales. The court also held that different treatment of an allegedly similarly situated taxpayer by the IRS did not preclude the IRS from its assessment of the plaintiff. (June 20, 2011)

In Clifton v. Allegheny County, the Commonwealth Court of Pennsylvania addressed the availability of counsel fees pursuant to 42 U.S.C. § 1988 in claims involving state tax assessment laws. The court held that the United States Supreme Court's decision in National Private Truck, Inc. v. Oklahoma Tax Commission bars the availability of 42 U.S.C. §§ 1983 and 1988 as remedies for violations of the Federal Equal Protection Clause where an adequate state remedy exists. Because a cause of action in equity is available in Pennsylvania to obtain relief in state taxation cases under the Pennsylvania Uniformity Clause, the court held that an adequate state remedy existed and that there was no basis for counsel fees pursuant to 42 U.S.C. § 1988. (June 2, 2011)

In Stoloff v. Neiman Marcus Group, the Superior Court of Pennsylvania addressed the viability of a class action lawsuit regarding the department store's practice of requiring Pennsylvania customers to pay a six percent sales tax on clothing. The court held that any dispute involving the payment of sales tax must first be resolved by the Pennsylvania Revenue Department, and upheld the partial dismissal of the complaint based on the plaintiffs' failure to exhaust their administrative remedies. The court further held that the doctrine of exhaustion of administrative remedies does not implicate subject-matter jurisdiction and allowed claims that did not involve tax refund issues to proceed. (May 23, 2011)

In Prime Accounting Dept. v. Township of Carney's Point, the New Jersey Superior Court considered what determines timely filing under N.J.S.A. 54:3-21 so as to confer jurisdiction upon the Tax Court to review assessments on real property. The Court held that the statutory time periods for filing a complaint are jurisdictional and must be adhered to strictly, and that the Tax Court does not have discretion to relax the time requirements. Moreover, the statute mandates that a complaint challenging a tax assessment must be filed in the name of true party in interest, without exception. (May 9, 2011)

In Scheafnocker v. Comm. of IRS, the United States Court of Appeal for the Third Circuit addressed whether a wrongful levy claim based on a violation of taxpayer's procedural due process was time barred. The court held that the otherwise untimely claim must be addressed on its merits because it raised an issue of procedural due process issues where the taxpayer did not receive notice that the IRS had levied her funds. (April 19, 2011)

In Arizona Christian School Tuition Organization v. Winn, the United States Supreme Court reviewed a challenge by taxpayers to an Arizona law that provides tax credits for contributions to school tuition organizations. These contributions are used to provide scholarships to students attending private and religious schools. The taxpayers alleged this system violated the Establishment Clause principles under the First and Fourteenth Amendments. In a 5-4 opinion, the Court ruled that the taxpayers did not have standing to challenge the tax credit system. According to the Court, they did not qualify for the narrow exception to the general rule against taxpayer standing created in Flast v. Cohen, 392 U.S. 83 (1968) because there was not a logical link between their taxpayer status and the constitutional infringement alleged. (April 4, 2011)

In Hartmann v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit evaluated the requirements for filing a proposed collection alternative. In doing so, the court held that the plaintiff had not satisfied those requirements and that the IRS was therefore permitted to levy upon the plaintiff's property. (March 22, 2011)

In Society of the Holy Child Jesus v. City of Summit, the Superior Court of New Jersey, Appellate Division, addressed whether a municipality may revoke a tax exempt status because a property was used in a manner not permitted by the municipal zoning ordinance. In a matter of first impression in New Jersey, the court held that N.J.S.A. 54:4-3.6 entitled the taxpayer to exemption if its use of the property was consistent with the tax-exempt purposes defined in the statute. The court further held that a municipality may not revoke exempt status based on noncompliance with a zoning ordinance because there is no requirement under N.J.S.A. 54:4-3.6 that a property comply with a lawful use under the municipality's zoning ordinance. (February 17, 2011)

In Denise Manella v. Commissioner of Internal Revenue, the United States Court of Appeals for the Third Circuit addressed whether 26 C.F.R. § 1.6015-5(b)(1), that sets a two-year deadline to file a claim for equitable "innocent spouse" relief under 26 U.S.C. § 6015(f) from liability resulting from a jointly filed federal income tax return, was properly invalidated by the Tax Court. The court reversed, holding that the regulation is neither contrary to nor an impermissible implementation of section 6015. Additionally, the court remanded the case to the Tax Court to decide whether 26 C.F.R. § 1.6015-5(b)(1) is subject to equitable tolling and, if so, whether the appellee met the equitable tolling standard. (January 19, 2011)

In Mayo Foundation v. United States, the Supreme Court of the United States addressed whether medical residents are properly viewed as students under the exemption from paying Federal Insurance Contributions Act (FICA) taxes. The Court held that residents' work of more than 40 hours a week is not exempt from FICA because it is not "incident to, or for the purpose of, pursuing a course of study." (January 11, 2011)

In In re: Flood, the Superior Court of New Jersey, Appellate Division, addressed whether the doctrine of probable intent can be invoked to fulfill a decedent's wishes in the absence of a will. The court held that the doctrine is not applicable when there is no will. (December 29, 2010)

In Whirlpool Properties, Inc. v. Director, Division of Taxation, the Supreme Court of New Jersey granted a Petition for Certification of Appeal to address the following question: "Is N.J.S.A. 54:10A-6(B) of the New Jersey Corporation Business Tax Act, as amended in 2002, which is known as the 'Throwout Rule,' facially constitutional under the United States Constitution?" (October 21, 2010)

In Trammell v. Trammell, the Supreme Court of Delaware addressed factors which would disqualify an individual from serving as administrator of an estate. Under Delaware law, a person is statutorily prohibited from serving as administrator of an estate if they have been convicted of a crime that would disqualify them from taking an oath. Because defendant had previously been convicted of forgery, he was found unfit to serve as the administrator of his father's estate. (October 21, 2010)

The Superior Court of New Jersey, Appellate Division, in In the Matter of the Probate of the Alleged Will and Codicil of Louise Macool, upheld that portion of the trial court's order declining to admit into probate a will that was not reviewed by the deceased prior to her death. According to the court, even though the deceased was present when her attorney dictated a draft of the will, she never had an opportunity to confer with counsel after reviewing the document to clear up any ambiguity or modify the document. The court observed that the draft will was a work in progress which did not reflect the testamentary intent of the deceased. Because the proponent of the document could not demonstrate that the deceased actually reviewed it and gave final assent to its terms, the draft will could not be admitted into probate. (September 16, 2010)

In International Schools Services, Inc. v. West Windsor Township, the Supreme Court of New Jersey granted a Petition for Certification of Appeal to address the following question: "Did this non-profit organization, which aids and promotes independent educational associations, forfeit its local property tax exemption under N.J.S.A. 54:4-3.6 by using some of its reserves, staff, and property to subsidize its related for-profit entities?" (July 19, 2010)

In Wells Reit II v. Director, Division of Taxation, the Superior Court of New Jersey, Appellate Division, addressed the meaning of the term "fully executed" in a 2006 amendment to New Jersey's "Mansion Tax," N.J.S.A. 46:15-7.2. The amendment, codified at N.J.S.A. 46:15-7.4, provides a refund of the Mansion Tax to commercial property contracts that were "fully executed before July 1, 2006," provided that the deed to the property was transferred on or before November 15, 2006. The court held that the plain meaning of the term "fully executed" in the statute means a real estate contract that is signed and binding, whether or not there are any subsequent amendments to the terms of the contract. (July 28, 2010)

In Lingo v. Lingo, the Supreme Court of Delaware addressed the appropriate remedy for a breach of an attorney-in-fact's fiduciary duties to the estate and the beneficiaries. Eleanor Lingo named her daughter, Dinah, to be her attorney-in-fact to administer her estate. Her son, Archibald, claimed that Dinah misappropriated funds from the estate and asked the Chancellor to impose equitable forfeiture of Dinah's inheritance in the amount of the misappropriation. The Chancellor instead ordered Dinah to return the funds to the estate. Archibald appealed. The Supreme Court affirmed the Chancellor's decision holding that restitution adequately restored the amount of the loss, and equitable forfeiture would have conflicted with Eleanor's testamentary intent. (June 10, 2010) 

In Mayo Foundation for Medical Education and Research v. United States, the United States Supreme Court granted a Petition for a Writ of Certiorari to consider a tax question. The issue the court will consider is: "Whether the Treasury Department can categorically exclude all medical residents and other full-time employees from the definition of 'student' in 26 U.S.C. § 3121(b)(10), which exempts from Social Security taxes 'service performed in the employ of a school, college, or university' by a 'student who is enrolled and regularly attending classes at such school, college or university.'" (June 1, 2010) 

In Levin v. Commerce Energy, Inc., et al., the Supreme Court of the United States addressed whether a taxpayer's complaint of allegedly discriminatory state taxation must proceed initially in state court. The respondents were independent natural gas marketers that did not enjoy tax exemptions exclusively granted to local distribution companies. The respondents sought a declaratory judgment invalidating the exemptions under the Commerce and Equal Protection Clauses of the United States Constitution. The Supreme Court dismissed the suit, holding that the comity doctrine, which restrains federal courts from adjudicating claims that risk disrupting state tax administration, demands that a taxpayer's allegation of discriminatory state taxation proceed originally in state court. Thus, a state's tax-enforcement methods should not be interfered with absent strong cause. Because no suspect classifications or fundamental rights were involved, comity required that the lawsuit begin in a state court, where a judge more familiar with state legislative preferences would be better suited to correct any violation. (June 1, 2010)  

In International Schools Services, Inc. v. West Windsor Township, the Superior Court of New Jersey considered whether a nonprofit organization satisfied the requirements for an exemption under N.J.S.A. 54:4-3.6 in a local property tax appeal. Under N.J.S.A. 54:4-3.6, a claimant seeking an exemption must demonstrate that: (1) it is organized exclusively for the moral and mental improvement of men, women and children; (2) the property must be actually used for the tax exempt purpose; and (3) the operation and use of the property must not be conducted for profit. The Superior Court affirmed the denial of the exemption on the basis that the plaintiff failed to satisfy the third prong, i.e., that the operation and use of the property was not conducted for profit. The court reasoned that the plaintiff failed the third prong of the test because, among other things, it lent its name and reputation to promote joint profit-making ventures, which operated out of the same building as did the plaintiff's nonprofit organization. (April 20, 2010) 

In In Re: Estate of Donald J. Aiello, the Superior Court of Pennsylvania addressed whether an estate executor, who was alleged to have breached a fiduciary duty, could invoke the equitable doctrine of laches in a case where the complaining party failed to petition for an estate accounting for more than 20 years. As noted by the court, in order for a responding party to invoke the doctrine of laches, which acts as a complete bar to relief, the responding party must establish: (1) a delay arising from the complaining party's failure to exercise due diligence; and (2) prejudice to the responding party as a result of the delay. Prejudice, according to the court, means that the responding party must change his position to his detriment because of the delay. The court noted that the responding party continued to actively administer the estate after the decedent's death and, as such, did not show that he changed his position to his detriment. Because prejudice was not shown, the doctrine of laches could not be invoked. (March 30, 2010)

In In re Novosielski, the Supreme Court of Pennsylvania addressed whether a presumption of survivorship under the Multiple-Party Accounts Act (MPAA) is defeated if a joint account results in an allocation of an estate inconsistent with an existing will. Before death, the decedent had executed a U.S. Treasury Bill Tender that opened a treasury account in her name "or" that of appellant, the appointed executor of her will. This language choice created a presumption of a right of survivorship under MPAA § 6304(a) governing joint accounts. Such a presumption can be rebutted only by clear and convincing evidence of a different intent. When the decedent died, the executor did not list the treasury account in the accounting of decedent's estate and other family members brought suit. The Orphans' Court appointed a special master who concluded that the executor was the sole owner of the account. In reversing the decision of the Superior Court, which had rejected the finding of the special master, the Supreme Court held that a potential inconsistency with a will is not clear and convincing evidence of a different intent. In so holding, the Supreme Court explained that there is no statutory provision giving a will primacy over a right of survivorship in the MPAA. (March 25, 2010)

In All Staffing, Inc. v. Commonwealth of Pennsylvania, the Commonwealth Court of Pennsylvania addressed an issue of first impression: the scope of "help supply services" made taxable by Section 201(cc) of the Tax Reform Code of 1971 (Tax Code). All Staffing, Inc. (Taxpayer) is a Professional Employer Organization (PEO) that provides human resources-related services (PEO Services) to clients through the mechanism of placing the clients' employees on the PEO's payroll. Taxpayer acts as a virtual human resources department for the "Worksite Employer," but the Worksite Employer retains control and direction over the day-to-day activities of the client's employees, and makes hiring and firing decisions. PEO Services are provided by Taxpayer's own personnel, under Taxpayer's supervision. The Pennsylvania Department of Revenue and the Board of Finance and Review concluded that Taxpayer's PEO Services constituted taxable "help supply services" and assessed sales tax on Taxpayer's fees for those services, and Taxpayer appealed. The court reversed, holding that because PEO Services are performed solely by Taxpayer's own employees, not by the client's employees transferred to Taxpayer's payroll, and Taxpayer, not its clients, supervises the employees providing the PEO Services, the PEO Services did not fall within the definition of "help supply services." (January 5, 2010) 

In In Re: Estate of Ronald Slomski, the Supreme Court of Pennsylvania addressed the power of an agent with a durable power of attorney to change the beneficiary of the principal’s retirement plan. The court held that an agent having a durable power of attorney pursuant to 20 Pa. Cons. Stat. § 5603, with the power to engage in retirement plan transactions, may change the beneficiary of the principal’s retirement plan. The court held that § 5603(q) authorizes an agent to change the beneficiary designation of a retirement plan owned by the principle provided the terms of the power of attorney include the proper statutory language. (December 28, 2009) 

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