Justia Alaska Supreme Court Opinion Summaries

Articles Posted in Tax Law
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The superior court affirmed a municipality’s tax valuation of a landowner’s property. The landowner argued on appeal the municipality’s valuation review board abused its discretion by excluding certain evidence of value on timeliness grounds. The landowner also argued the board applied fundamentally wrong principles of valuation by failing to consider, as definitive evidence of value, either his purchase price for the property or the price for which he sold a neighboring lot. The Alaska Supreme Court found no abuse of discretion as to either of the issues the landowner raised: the assessor explained at the hearing why he considered certain evidence of value more persuasive and more consistent with the municipality’s usual methods of appraisal, and it was well within the board’s broad discretion to accept the assessor’s explanation. Therefore, the Court affirmed the superior court’s decision upholding the board’s valuation of the property. View "Kelley v. Municipality of Anchorage, Board of Equalization" on Justia Law

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In 2013 and 2014 attorney Gerald Markham applied for a senior citizen tax exemption on his residential property in Kodiak, Alaska. The Borough assessor denied the applications due to Markham’s prolonged absences from Alaska. When given the opportunity to prove his absences were allowed under the applicable ordinance, Markham refused to provide corroborating documentation. He appealed the denials to the Borough Board of Equalization, which affirmed the denials. He appealed the Board’s decisions to the superior court. The superior court dismissed the 2013 appeal for failure to prosecute, denied the 2014 appeal on the merits, and awarded attorney’s fees to the Borough. Markham appealed. The Alaska Supreme Court affirmed the superior court’s 2013 dismissal and the Board’s 2014 denial on the merits, but vacated the superior court’s award of attorney’s fees and remanded for further findings. View "Markham v. Kodiak Island Borough Board of Equalization" on Justia Law

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Oil producers (the Producers) challenged an administrative decision (the Decision) in which the Alaska Department of Revenue (DOR) decided to treat separate oil and gas fields operated by common working interest owners as a single entity when calculating the Producers’ oil production tax obligations. Relying on a statute that gave DOR the discretion to “aggregate two or more leases or properties (or portions of them), for purposes of determining [their effective tax rate], when economically interdependent oil or gas production operations are not confined to a single lease or property,” DOR concluded that operations on a number of smaller oil fields were economically interdependent with larger operations on the adjacent Prudhoe Bay oil field. The Producers argued that in interpreting the phrase “economically interdependent” in the Decision, DOR effectively promulgated a regulation without following the procedures established in the Alaska Administrative Procedure Act (APA) and, as a result, DOR’s Decision was invalid. After its review, the Supreme Court concluded that DOR’s Decision was not a regulation because it was a commonsense interpretation of the statute and, therefore, DOR was not required to comply with APA rulemaking requirements. The Court therefore affirmed the superior court’s decision upholding DOR’s decision. View "Chevron U.S.A., Inc. v. Dept. of Revenue" on Justia Law

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Wasilla landowner, appellant Ray Pursche appealed the tax foreclosure against his property, arguing that the property was exempt from local property taxes because it was originally transferred to his predecessor by federal patent. He claimed that the federal patent made this property beyond state court jurisdiction. The Supreme Court affirmed the tax foreclosure, finding that after a patent issues, property disputes must generally be resolved in state court. Land once owned by the federal government was subject to local property taxes after it was conveyed to a private party. View "Pursche v. Matanuska-Susitna Borough" on Justia Law

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Pro se appellant Ray DeVilbiss owned property within a road service area, but did not make use of the roads built and maintained with the road service taxes levied on that property. He argued Alaska law required that his property therefore be excluded from the service area, and that the tax was invalid absent a special benefit to his property. The superior court rejected these claims, and granted the borough that oversaw the service area summary judgment. Appellant appealed to the Supreme Court, but the Supreme Court affirmed. Alaska law neither required boroughs and municipalities to exclude properties that do not make use of roads financed by road service taxes nor tied the validity of a tax to each taxpayer’s receipt of a special benefit. View "DeVilbiss v. Matanuska-Susitna Borough" on Justia Law

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At the center of this an appeal was the superior court's de novo valuation of the Trans-Alaska Pipeline System (TAPS) for tax assessment years 2007, 2008, and 2009. In February 2014 the Alaska Supreme Court issued a decision affirming the superior court's de novo valuation of TAPS for the 2006 assessment year.1 The parties introduced considerably more evidence during trial for the 2007, 2008, and 2009 years, but the operative facts remained substantially the same and the superior court applied similar standards and methods for valuation. Many of the issues raised on appeal were similar or identical to issues raised in the 2006 appeal and thus are partially or wholly resolved by the Court's prior opinion. Because the superior court did not clearly err or abuse its discretion with regard to any of its findings or its methodology, and because it committed no legal error in its conclusions, the Supreme Court affirmed. View "Alaska Dept. of Revenue v. BP Pipelines (Alaska) Inc." on Justia Law

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The State Department of Revenue sought to hold the sole shareholder, director, and employee of a closely held Washington corporation personally liable for the corporation’s unpaid tax debts. The superior court pierced the corporation’s corporate veil, ruled that the shareholder’s successor corporation was liable for the tax debt, voided two contract transfers as fraudulent conveyances, and ruled that the shareholder had breached fiduciary duties to the corporation and the State as the corporation’s creditor. The shareholder and corporation appealed the superior court’s decision to pierce the corporate veil, arguing that the superior court erred by not barring the State’s suit under the principle of res judicata, by applying Alaska rather than Washington veil-piercing law, and by making clear factual errors. The shareholder and corporation also appealed the superior court’s finding that two contracts were fraudulently conveyed. After review, the Alaska Supreme Court concluded that res judicata did not bar the State from seeking to pierce the corporation's corporate veil to collect tax debt established in an earlier case. Furthermore, the Court held that the corporation's veil was properly pierced under both Alaska and Washington state law. Though the superior court's fraudulent conveyance determination contained errors of fact, the Supreme Court concluded that those errors were harmless. Therefore, the Court affirmed the superior court in part, reversed in part, and remanded for further proceedings. View "Pister v. Dept. of Revenue" on Justia Law

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The State Department of Revenue sought to hold the sole shareholder, director, and employee of a closely held Washington corporation personally liable for the corporation’s unpaid tax debts. The superior court pierced the corporation’s corporate veil, ruled that the shareholder’s successor corporation was liable for the tax debt, voided two contract transfers as fraudulent conveyances, and ruled that the shareholder had breached fiduciary duties to the corporation and the State as the corporation’s creditor. The shareholder and corporation appealed the superior court’s decision to pierce the corporate veil, arguing that the superior court erred by not barring the State’s suit under the principle of res judicata, by applying Alaska rather than Washington veil-piercing law, and by making clear factual errors. The shareholder and corporation also appealed the superior court’s finding that two contracts were fraudulently conveyed. After review, the Alaska Supreme Court concluded that res judicata did not bar the State from seeking to pierce the corporation's corporate veil to collect tax debt established in an earlier case. Furthermore, the Court held that the corporation's veil was properly pierced under both Alaska and Washington state law. Though the superior court's fraudulent conveyance determination contained errors of fact, the Supreme Court concluded that those errors were harmless. Therefore, the Court affirmed the superior court in part, reversed in part, and remanded for further proceedings. View "Pister v. Dept. of Revenue" on Justia Law

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The issue before the Supreme Court in this case involved the assessed value of the Trans-Alaska Pipeline System for property tax purposes. The parties disputed the method used to assess the pipeline's value as well as the specific deductions made for functional and economic obsolescence. Finding no reversible error, the Supreme Court affirmed the superior court's valuation. View "BP Pipelines (Alaska) Inc. v. Alaska" on Justia Law

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Schlumberger Limited conducts its business in Alaska through a wholly owned subsidiary, Schlumberger Technology Corporation. Schlumberger Technology's primary business is oilfield services, but it also owns all of Schlumberger Limited's associated companies incorporated in the United States and operates all of Schlumberger Limited’s domestic businesses. Schlumberger Technology files a consolidated federal tax return for all of Schlumberger Limited’s domestic subsidiaries. For tax years 1998-2000, Schlumberger Technology filed Alaska corporate income tax returns that included only the domestic subsidiaries working in the oilfield services business. In September 2003, a Department of Revenue auditor concluded that Schlumberger Limited was engaged in a unitary business with Schlumberger Technology. Based on these conclusions, the Department issued a notice of assessment for additional corporate income taxes of $429,739 plus interest. Schlumberger Technology argued on appeal of the assessment that under the Internal Revenue Code, domestic corporations were taxed on their worldwide income, but entitled to claim a tax credit against their United States income tax liability for taxes paid to foreign countries. Foreign corporations, on the other hand, are taxed differently. The issue this case presented to the Supreme Court centered on the application of Alaska's Net Income Tax Act (ANITA). ANITA incorporates certain provisions of the Internal Revenue Code, unless the federal provisions are "excepted to or modified by other provisions" of the act. ANITA required a corporation to report its income and the income of certain affiliates and to exclude "80 percent of dividend income received from foreign corporations." The Internal Revenue Code had a different formula; it required a foreign corporation to report only income "effectively connected with the conduct of a trade or business within the United States." Schlumberger Technology argued that since ANITA has no explicit exception for Internal Revenue Code (section 882), this sourcing rule was incorporated by reference. Thus, Schlumberger Technology argued that the foreign dividends paid to Schlumberger Limited should not have been included in its taxable income under ANITA. In response, the State argued that the provisions of ANITA applied to all business income of the taxpayer, not just income derived from sources in the United States. Upon review of the matter, the Alaska Supreme Court concluded that the Internal Revenue Code provision in question here was not adopted by reference because it was inconsistent with the formula provided by ANITA. The Court affirmed the decision of the Department of Revenue. View "Schlumberger Technology Corp. v. Alaska Dept. of Revenue" on Justia Law