Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Plaintiff-Appellant, the Northern Arapaho Tribe, sued various state and county officials in Wyoming, seeking an injunction against the state’s imposition of certain vehicle and excise taxes in an area that Appellant contended was Indian country. Appellant claimed that the state may not tax its members in Indian country, and that the Indian country status of the land was conclusively established by an earlier decision of the Wyoming Supreme Court. The district court dismissed the action with prejudice for failure to join a party under Federal Rule of Civil Procedure 12(b)(7) after determining, pursuant to Federal Rule of Civil Procedure 19(b), that two absent entities (the Eastern Shoshone Tribe and the United States) were necessary parties who could not feasibly be joined, and in whose absence the action could not proceed. The district court also concluded that the Indian country status of the land had not been conclusively determined by the earlier state litigation. Appellant appealed both determinations. Upon review, the Tenth Circuit agreed with the lower court that the dismissal of the action was proper because the Eastern Shoshone was necessary party that could not feasibly be joined, but vacated the judgment and remanded with instructions to dismiss without prejudice. View "Northern Arapaho Tribe v. Harnsberger, et al" on Justia Law

Defendant-Appellant International Bancshares Corporation (IBC) appealed the judgment of the district court in favor of Plaintiff-Appellee MCC Management of Naples (Colliers). The Colliers sued for breach of contract and fraud in a dispute over tax benefits. The dispute arose over the parties' disagreement over the entitlement to $16 million in benefits that accrued over a period of years in Local bank. Brothers and investors Miles and Barron Collier owned Local at the time the tax benefits arose. IBC now owns the bank. Local bought troubled loan assets. An agency (now the FDIC) guaranteed the value of the assets. In return, Local had to "share" some of its profits. When Congress repealed the deductions Local claimed on the losses from the assets, Local stopped paying its share from those assets and sued in federal court. The FDIC counterclaimed for non-payment. The Townsend Group had purchased Local Bank from the Colliers while the lawsuit was pending. Townsend required the Colliers promise to indemnify Townsend/Local in the event the FDIC won the lawsuit for more than the potential liability in the suit. Local eventually settled the suit for approximately $25-27 million. Townsend/Local and the Colliers signed a Resolution and Modification Agreement from which the Colliers claimed entitlement to the aforementioned tax benefits. Furthermore, through the "excess basis deduction," Local claimed a deduction on principal payments made to the FDIC and for attorney's fees. In addition to the dispute over the tax benefits, Local's former "tax director" quit over what she believed was the bonus owed to her for discovering the excess basis deduction. She began consulting for the Colliers and notified them of the millions in deductions that Local claimed. IBC counterclaimed against the Colliers, and added third-party claims against the former tax director for breaching confidentiality and tortious interference with contract. The Colliers and tax director prevailed after a jury trial. IBC appealed, arguing it was entitled a judgment as a matter of law. But after review, the Tenth Circuit found no error in the district court's findings at trial. View "MCC Mgmt of Naples v. International Bancshare " on Justia Law

Petitioner-Appellant Jean Mathia is the widow of Doyle Mathia, who was a limited partner in Greenwich Associates. Greenwich was a partnership that incurred losses that were passed through to the couple’s income tax returns for the years 1982–84. After an investigation of numerous related tax shelters, the Commissioner of Internal Revenue disallowed these losses. Petitioner was assessed more than $150,000 in taxes following lengthy administrative and judicial proceedings involving the partnership. Petitioner appealed to the United States Tax Court to challenge the assessments as untimely, and to assert that the government bore the burden of proof in establishing timeliness. The Tax Court denied the appeal. On appeal to the Tenth Circuit, Petitioner contended the tax assessments were untimely because the relevant statute of limitations had run. The Tenth Circuit concluded that Petitioner's contention turned on whether Mr. Mathia entered into a settlement agreement under the tax code that resolved his partnership tax liability on an individual basis. The Court agreed with the tax court that he entered into no such agreement which would have qualified under the tax code as a settlement of Mr. Mathia's liability as an individual partner. Therefore, the Court concluded the assessments were timely and properly applied by the IRS. View "Mathia v. Commissioner of Internal Revenue" on Justia Law

Petitioners Anschutz Company and Philip and Nancy Anschutz appealed a Tax Court decision to hold them responsible for substantial income tax deficiencies for the taxable years 2000 and 2001. Those deficiencies, the Tax Court concluded, resulted from their failure to recognize taxable gain when a subsidiary of the Anschutz Company entered into a series of related agreements that included a variable prepaid forward contract for the sale of certain shares of stock and accompanying share-lending agreements. Finding no error in the Tax Court's decision, the Tenth Circuit affirmed. View "Anschutz Company v. CIR" on Justia Law

Appellant Philip Allen Worack, challenged the sufficiency of the evidence that resulted in his conviction of two counts of filing fraudulent and false federal income tax returns. For tax years 1998-2002, Appellant reported income from LKS, a company in which he was president and treasurer, and owned half the stock. LKS listed Appellant's income on its 1099 forms for his personal income taxes. During that time period LKS set up multiple foreign-based business entities that Appellant helped manage. Once the entities folded, Appellant assumed the assets and used them to pay for his personal expenses. He did not report any of the money taken from the liquidated companies' bank accounts as income. Appellant argued that the money from the entities were corporately owned, and the monies paid were for his business related expenses. Upon review, the Tenth Circuit found sufficient evidence for a rational trier of fact to find Appellant guilty. The Court affirmed Appellant's convictions.

A jury convicted Linda Abramson-Schmeiler of five counts of filing a false tax return. The charges were based on her alleged failure to report all of the income she received from her business of "diversionary sales" (purchasing and then reselling large quantities of hair-care products). The government alleged that she falsely underreported her business's gross receipts or sales, by more than $1.4 million during the years 2003, 2004, and 2005, which then resulted in her falsely underreporting her personal income for the same amount. At trial, Defendant’s main defense was that she did not intentionally underreport her sales and income. She admitted that she had failed to report payments her business received for selling hair-care products. But she asserted that many of her diversionary sales were in cash and unrecorded and that she lost money or broke even on many of these transactions. She testified that when she did not make money on a transaction, she would consider it a "wash" and she would not report the transaction to her accountant for reporting on her income tax returns. The jury convicted Defendant on all counts. She was sentenced to thirty-six months’ imprisonment on each count, to be served concurrently, and ordered to pay restitution. Defendant challenged her convictions on three grounds: 1) the district court erred in precluding important lay witness testimony; 2) the district court erred in refusing to give defendant’s good-faith jury instruction; and 3) the government committed prosecutorial misconduct throughout the trial. Finding that Defendant failed to show any error at trial, the Tenth Circuit affirmed the district court's decision.

A jury convicted Lindsey Springer of one count of conspiring with Oscar Stilley to defraud the United States, three counts of tax evasion, and two counts of willful failure to file a tax return. Mr. Stilley was convicted of one count of conspiracy and two counts of aiding and abetting Mr. Springer’s tax evasion. The district court sentenced both men to fifteen years in prison, three years of supervised release, and restitution for tax losses exceeding $2 million. Mr. Springer and Mr. Stilley (Defendants) respectively challenged their convictions and sentences. Mr. Springer founded "Bondage Breakers Ministries" to offer legal and tax advice to individuals embroiled in tax disputes for which he was paid thousands upon thousands of dollars. He eventually met Mr. Stilley (now a disbarred lawyer) and together they devised a scheme to channel Mr. Springer's unreported income through Mr. Stilley's client trust account. "By 2005, Mr. Springer had gained the full attention of the IRS." The government executed a search warrant of Mr. Springer's residence, and Mr. Stilley was served with a grand jury subpoena. During the course of the investigation, Defendants denied receiving any income for their advice, representing instead that people simply made donations to Mr. Springer’s ministry, with no expectation of services in return. But at trial, the government refuted those statements, offering testimony from numerous witnesses who had paid large sums of money to defendants in exchange for their supposed tax and legal expertise. Based on this and other evidence, the jury convicted Defendants on all counts to which Defendants appealed. Upon review, the Tenth Circuit affirmed Defendants' convictions for substantially the same reasons articulated by the district court. The Court affirmed Defendants' respective convictions and sentences.

This appeal arose from a suit filed by the United States that asked the district court to reduce certain of Defendant-Appellant Jack Wilson’s tax liabilities to judgment, to set aside a fraudulent transfer of real property from Wilson to Defendant Joey Lee Dobbs-Wilson, and to enforce the government’s new liens, as well as one preexisting tax lien, against the real property by ordering a sale. Wilson appealed the district court’s order granting summary judgment to the United States. Wilson argued in his response to the government’s motion for summary judgment and in his cross-motion for summary judgment that Ms. Dobbs-Wilson was not his nominee when he transferred the property to her in 1998 and, as a result, a 1997 lien became invalid when the government mistakenly released it in 2003, after he no longer owned the property. Assuming the validity of Wilson's argument, and after supplemental briefing on the matter, the Tenth Circuit concluded that Wilson failed to demonstrate any injury to him that the Court could redress. Having determined that the Court lacked jurisdiction over his appeal, the case was dismissed.

Petitioner Charles Raymond Wheeler appealed a Tax Court decision finding him liable for (1) income-tax deficiencies for the years 2002, 2004, and 2005; (2) additions to tax for those years; and (3) a $25,000 sanction. Petitioner did not claim to have filed returns for the years in question, or to have paid taxes owing for those years, yet he urged the Tenth Circuit to overturn the Tax Court’s decision and determine that he had no liability. He contended on appeal that the Commissioner did not prove that he had failed to file returns, did not carry the burden of production on the additions to tax, and did not create a valid substitute return to support the taxes and additions imposed. In addition, he claimed that the Tax Court judge was biased against him. The Commissioner filed a motion for sanctions against Petitioner for filing a frivolous appeal maintained primarily for delay. Upon review of Petitioner's arguments, the Tenth Circuit found all without merit and affirmed the Tax Court's decisions and the imposition of sanctions.

Defendant Jodi Hoskins was convicted of tax evasion after she and her husband failed to pay taxes for income they earned through their Salt Lake City escort service. The government contended the Hoskins' failed to account for more than one million dollars in income generated in cash payments and credit card receipts. At sentencing, the government's tax loss was relevant to potential jail time and restitution under the United States Sentencing Guidelines. To minimize the tax loss for sentencing purposes, the Hoskins' offered hypothetical tax returns to account for the unreported income and attempted to take deductions they claimed they would have been entitled to but for the tax evasion. The district court rejected the hypothetical tax returns and accepted the government's tax-loss estimate. Defendant appealed her eventual sentence, arguing the sentencing judge abused his discretion in establishing the lost taxes. Furthermore, Defendant challenged the sufficiency of the evidence presented against her and the reasonableness of her sentence. Finding no abuse of discretion, and that the evidence presented at trial sufficient to support her sentence, the Tenth Circuit affirmed Defendant's conviction.