Justia Civil Rights Opinion Summaries

To dispute a property tax assessment under Detroit ordinances and Michigan state law, taxpayers “make complaint on or before February 15th" before the Board of Assessors. Any person who has complained to the Board of Assessors may appeal to the Board of Review. For the Michigan Tax Tribunal to have jurisdiction over an assessment dispute, “the assessment must be protested before the board of review.” On February 14, 2017, Detroit mailed tax assessment notices to Detroit homeowners, including an “EXTENDED ASSESSORS REVIEW SCHEDULE” that would conclude on February 18, just four days later. At a City Council meeting on February 14, the city announced: “The Assessors Review process will end this year February the 28th.” News outlets reported the extension and that Detroit had waived the requirement of appearance before the Board of Assessors so residents could appeal directly to the Board of Review. Detroit did not distribute individualized mailings to so inform homeowners.Plaintiffs filed a class action, alleging violations of their due process rights; asserting that Michigan’s State Tax Commission assumed control of Detroit’s flawed property tax assessment process from 2014-2017 so that its officials were equally responsible for the violations; and claiming that Wayne County is “complicit” and has been unjustly enriched. The district court dismissed for lack of subject matter jurisdiction, citing the Tax Injunction Act and the principle of comity. The Sixth Circuit reversed, finding that a state remedy is uncertain. View "Howard v. City of Detroit" on Justia Law

Tyler owned a Minneapolis condominium. She stopped paying her property taxes and accumulated a tax debt of $15,000. To satisfy the debt, Hennepin County foreclosed on Tyler’s property and sold it for $40,000. The county retained the net proceeds from the sale. Tyler sued the county, alleging that its retention of the surplus equity—the value of the condominium in excess of her $15,000 tax debt—constituted an unconstitutional taking, an unconstitutionally excessive fine, a violation of substantive due process, and unjust enrichment under state law.The Eighth Circuit affirmed the dismissal of her complaint. Minnesota’s statutory tax-forfeiture plan allocates the entire surplus to various entities with no distribution of net proceeds to the former landowner; the statute abrogates any common-law rule that gave a former landowner a property right to surplus equity. Nothing in the Constitution prevents the government from retaining the surplus where the record shows adequate steps were taken to notify the owners of the charges due and the foreclosure proceedings. View "Tyler v. Minnesota" on Justia Law

The 2012 Cook County Firearm Tax Ordinance imposed a $25 tax on the retail purchase of a firearm within Cook County. A 2015 amendment to the County Code included a tax on the retail purchase of firearm ammunition at the rate of $0.05 per cartridge for centerfire ammunition and $0.01 per cartridge for rimfire ammunition. The taxes levied on the retail purchaser are imposed in addition to all other taxes imposed by the County, Illinois, or any municipal corporation or political subdivision. The revenue generated from the tax on ammunition is directed to the Public Safety Fund; the revenue generated from the tax on firearms is not directed to any specified fund or program.Plaintiffs alleged that the taxes facially violate the Second Amendment to the U.S. Constitution and the Illinois Constitution concerning the right to bear arms and the uniformity clause, and are preempted by the Firearm Owners Identification Card Act and the Firearm Concealed Carry Act. The trial court rejected the suit on summary judgment. The appellate court affirmed.The Illinois Supreme Court reversed. To satisfy scrutiny under a uniformity challenge, where a tax classification directly bears on a fundamental right, the government must establish that the tax classification is substantially related to the object of the legislation. Under that level of scrutiny, the firearm and ammunition tax ordinances violate the uniformity clause. View "Guns Save Life, Inc. v. Ali" on Justia Law

The Supreme Court held that a tax imposed solely upon a small number of billboard operators is a discriminatory tax that violates the rights to freedom of speech and a free press protected by the First Amendment to the United States Constitution.The City of Cincinnati imposed a tax on outdoor advertising signs, but through definitions and exemptions within the city's municipal code, the tax burdens feel predominantly on two billboard operators only. The two billboard operators (Appellants) sought a declaration that the tax violated their constitutional rights to free speech and a free press and requesting an injunction against the tax's enforcement. The trial court permanently enjoined the City from enforcing the tax. The court of appeals reversed in part. The Supreme Court reversed and reinstated the injunction, holding that the billboard tax did not survive strict scrutiny and therefore impermissibly infringed on Appellants' rights to free speech and a free press. View "Lamar Advantage GP Co. v. City of Cincinnati" on Justia Law

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) affirming the City of Cleveland's taxation of Hazel Willacy's stock-option income that she realized in 2016, holding that Willacy's propositions of law lacked merit.Willacy earned the disputed stock options in 2007 from her former employer while she was working in Cleveland. In 2009, Willacy retired and moved to Florida without having exercised any of the options. In 2014 and 2015, Willacy exercised the majority of the options and immediately resold the shares. In 2016, Willacy exercised the remaining options. Her former employer withheld her municipal-income-tax obligation and paid it to Cleveland. Willacy sought a refund on the grounds that she did not live or work in Cleveland. The refund was denied, and the BTA affirmed the denial. The Supreme Court affirmed, holding that Cleveland's taxation of Willacy's 2016 compensation was required under municipal law and did not violate her due process rights under either the United States or Ohio constitutions. View "Willacy v. Cleveland Board of Income Tax Review" on Justia Law

In 2011, Folajtar pled guilty to a federal felony: willfully making a materially false statement on her tax returns, which is punishable by up to three years’ imprisonment and a fine of up to $100,000, 26 U.S.C. 7206(1). She was sentenced to three years’ probation, including three months of home confinement, a $10,000 fine, and a $100 assessment. She also paid the IRS over $250,000 in back taxes, penalties, and interest. Folajtar was then subject to 18 U.S.C. 922(g)(1), which prohibits those convicted of a crime punishable by more than one year in prison from possessing firearms.Folajtar sued, asserting that applying section 922(g)(1) to her violated her Second Amendment right to possess firearms. The district court dismissed, finding that Folajtar did not state a plausible Second Amendment claim because she was convicted of a serious crime. The Third Circuit affirmed, noting the general rule that laws restricting firearm possession by convicted felons are valid. There is no reason to deviate from this long-standing prohibition in the context of tax fraud. View "Folajtar v. Attorney General of the United States" on Justia Law

Freed owed $735.43 in taxes ($1,109.06 with penalties) on his property valued at about $97,000. Freed claims he did not know about the debt because he cannot read well. Gratiot County’s treasurer filed an in-rem action under Michigan's General Property Tax Act (GPTA), In a court-ordered foreclosure, the treasurer sold the property to a third party for $42,000. Freed lost his home and all its equity. Freed sued, 42 U.S.C. 1983, citing the Takings Clause and the Eighth Amendment.The district court first held that Michigan’s inverse condemnation process did not provide “reasonable, certain, and adequate” remedies and declined to dismiss the suit under the Tax Injunction Act, which tells district courts not to “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had" in state court, 28 U.S.C. 1341. The court reasoned that the TIA did not apply to claims seeking to enjoin defendants from keeping the surplus equity and that Freed was not challenging his tax liability nor trying to stop the state from collecting. The TIA applied to claims seeking to enjoin enforcement of the GPTA and declare it unconstitutional but no adequate state court remedy existed. The court used the same reasoning to reject arguments that comity principles compelled dismissal. After discovery, the district court sua sponte dismissed Freed’s case for lack of subject matter jurisdiction, despite recognizing that it was “doubtful” Freed could win in state court. The Supreme Court subsequently overturned the "exhaustion of state remedies" requirement for takings claims.The Sixth Circuit reversed without addressing the merits of Freed’s claims. Neither the TIA nor comity principles forestall Freed’s suit from proceeding in federal court. View "Freed v. Thomas" on Justia Law

CSX argued that SCVA impermissibly discriminates against railroads in violation of the Railroad Revitalization and Regulatory Reform Act of 1976. The Fourth Circuit reversed the district court's determination that South Carolina had provided sufficient justification for the discriminatory tax. The court held that CSX has made a prima facie showing of discriminatory tax treatment based on the appropriate comparison class of other commercial and industrial real property taxpayers in South Carolina. Furthermore, the state's three justifications -- the equalization factor applied to railroad assessments, the combined effect of other tax exemptions applied to rail carriers, and assessable transfers of interest which trigger new appraisals -- were insufficient to justify the discriminatory tax scheme. View "CSX Transportation, Inc. v. South Carolina Department of Revenue" on Justia Law

The Supreme Court affirmed the decision of the tax court reducing Hennepin County's valuation of a Lowe's store in Plymouth, Minnesota for the 2015 tax year, holding that the tax court did not inflate the property's fair market value and did not violate Lowe's due process rights.Lowe's petitioned the tax court asserting that Hennepin County's assessment for the 2015 tax year overstated the fair market value of the property. The tax court agreed and reduced the County's valuation. The Supreme Court affirmed, holding (1) the tax court did not violate Lowe's due process rights by failing to rely on evidence in the record in reaching its conclusions; and (2) because the record supported the tax court's decision to place greater weight on the cost approach rather than on the sales approach and its adjustments under both approaches, the tax court did not violate Lowe's due process rights. View "Lowe's Home Centers, LLC (Plymouth) v. County of Hennepin" on Justia Law

Before 2008, Cook County ordinances required the Assessor to assess single-family residential property at 16%, commercial property at 38%, and industrial property at 36% of the market value. In 2000-2008, the Assessor actually assessed most property at rates significantly lower than the ordinance rates. In 2008, the Assessor proposed to “recalibrate” the system. The plaintiffs claim that their assessment rates may have been lawful but were significantly higher than the actual rates for most other property owners and that they paid millions of dollars more in taxes in 2000-2008 than they would have if they were assessed at the de facto rates. The taxpayers exhausted their remedies with the Board of Review, then filed suit in state court, citing the Equal Protection Clause, Illinois statutory law and the Illinois Constitution. Years later, their state suit remains in discovery.Claiming that Illinois law limits whom they can name as a defendant, what evidence they can present, and what arguments they can raise, the taxpayers filed suit in federal district court, which held that the Tax Injunction Act barred the suit. The Act provides that district courts may not “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State,” 28 U.S.C. 1341. The Seventh Circuit reversed, noting the County’s concession that Illinois’s tax-objection procedures do not allow the taxpayers to raise their constitutional claims in state court. This is the “rare case in which taxpayers lack an adequate state-court remedy.” View "A.F. Moore & Associates, Inc. v. Pappas" on Justia Law