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Recovery of Attorney's Fees State Tax Controversies (Portfolio 1590)

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Recovery of Attorney's Fees in State Tax Controversies examines the availability of fee awards in state tax cases. Written by Maryann B. Gall and Laura A. Kulwicki, both of Jones Day, this Portfolio addresses the substantive issues that arise when using federal civil rights statutes 42 U.S.C. Section 1983 and Section 1988 to challenge state taxes, as well as the basic procedural requirements for successfully litigating a claim for attorney's fees under federal law.  Specifically, this Portfolio examines the questions of whether states are required to entertain Section 1983 claims in state tax cases and some of the states' arguments against availability of Section 1983 state court jurisdiction. 

Further issues arise in raising such claims in a post-National Private Truck Council era.

In light of the Supreme Court's decision in Private Truck Council, state statutes and other state-created vehicles for obtaining fee awards in state tax controversies are increasingly relevant and are discussed as an additional (and perhaps primary) avenue of taxpayer relief. Although many state remedies do not create a general right to attorney's fees, some form of state relief is often available. Recovery of Attorney's Fees in State Tax Controversies examines in detail these state-created remedies, some of which may apply to a broader range of issues than the federal civil rights statutes. 

This Portfolio also considers the “ins and outs” of pleading and litigating a claim for attorney's fees and identifies some of the most significant issues, particularly focusing on issues that have arisen in state tax civil rights litigation.  The Portfolio also discusses the issue that the absence of a forum to review Section 1983/1988 claims violates procedural due process. 

Recovery of Attorney's Fees in State Tax Controversies allow you to benefit from: 

  • Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area.
  • Invaluable practice documents including tables, charts and lists.
  • Plain-English guidance from world-class experts.
  • Real-world and in-depth analysis that lets you explore various options.
  • Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
  • Alternative approaches to both common and unique tax scenarios.

This Portfolio is part of the Premier State Tax Library, a comprehensive series, which covers major state tax transactions and issues with expert, in-depth analysis, and offers commentary on a wide range of multi-state and state-specific taxation topics, including Sales and Use, Corporate Income, Individual Income, Property, Gross Receipts, Limitations on States' Authorities to Tax, Credits and Incentives, Electronic Commerce, Mergers and Acquisitions, Procedure and Administration, Special Industries, and more.

 

Detailed Analysis

1590.01. INTRODUCTION

1590.02. OVERVIEW OF FEDERAL REMEDIES: 42 U.S.C. SECTIONS 1983 AND 1988

A. History and Purposes of Section 1983 and Section 1988

B. Application of Section 1983 to State Tax Cases

1. Taxpayers' Rights under the Commerce Clause: Dennis v. Higgins

2. Other Constitutional Rights

3. Federal Statutory Rights

C. Benefits of Utilizing Section 1983 and Section 1988 in State Tax Actions

1590.03. FEDERAL COURT JURISDICTION OVER SECTION 1983 STATE TAX CLAIMS

Introductory Material

A. The Eleventh Amendment

B. The Tax Injunction Act

1. Exceptions to the Act: The "Plain, Speedy and Efficient" Requirement

2. The Act's Exception as Applied to Section 1983 State Tax Claims: Federal Cases

3. Implication of Additional Federal Statutes

1590.04. AVAILABILITY OF SECTION 1983/1988 RELIEF IN STATE COURT: THE JURISDICTIONAL CONTROVERSY

Introductory Material

A. Must States Entertain Section 1983 Claims in State Tax Cases?

B. States' Arguments Against Availability of Section 1983 State Court Jurisdiction

1. The Tax Injunction Act

a. The States' Argument

b. Taxpayers' Responses

2. Principles of Comity and Federalism

a. The States' Argument

b. The Taxpayers' Response

3. Failure to Exhaust State Remedies

a. The States' Argument

b. Taxpayers' Response

4. Discretion to Decline Jurisdiction

a. The States' Argument

b. Taxpayers' Response

1590.05. SECTION 1983/1988 CLAIMS PRIOR TO NATIONAL PRIVATE TRUCK COUNCIL

Introductory Material

A. Cases Holding Section 1983/1988 Claims Cannot Be Brought in State Court

1. Connecticut

2. Delaware

3. Georgia

4. Kentucky

5. Missouri

6. North Carolina

7. North Dakota

8. Ohio

9. Oklahoma

10. South Carolina

11. Tennessee

B. Cases Holding Section 1983/1988 Claims Can Be Brought in State Court

1. Alabama

2. Arizona

3. Arkansas

4. Colorado

5. Connecticut

6. Illinois

7. Indiana

8. Kansas

9. Louisiana

10. Maine

11. Massachusetts

12. Michigan

13. Mississippi

14. Nebraska

15. New Jersey

16. New York

17. Pennsylvania

18. Tennessee

19. Washington

C. Taxpayer Must Exhaust Administrative Remedies Before Bringing Action in State Court

1. Connecticut

2. Illinois

3. Kansas

4. Maryland

5. Mississippi

6. Oregon

7. Pennsylvania

8. Wisconsin

1590.06. NATIONAL PRIVATE TRUCK COUNCIL, INC. V. OKLAHOMA STATE TAX COMMISSION

A. The Supreme Court's Decision

B. Outlook for State Taxpayers after National Private Truck Council

1590.07. POST-PRIVATE TRUCK COUNCIL: TAXPAYER ARGUMENTS FOR RAISING SECTION 1983/1988 CLAIMS

Introductory Material

A. Private Truck Council Applies only if State Remedies Are Adequate

1. When Are State Remedies "Inadequate?"

2. A State Remedy that Fails to Provide for an Award of Attorney's Fees Is Not "Adequate"

B. Absence of Forum to Raise Section 1983/1988 Claim as Violation of Procedural Due Process

C. Violations of Substantive Constitutional Rights

1590.08. PROCEDURAL ISSUES: SUCCESSFULLY PLEADING AND LITIGATING A SECTION 1988 CLAIM FOR ATTORNEY'S FEES

Introductory Material

A. The Essential Elements of a Section 1983 Claim

1. Conduct Leading to Liability

2. "Rights, Privileges and Immunities" Protected by Section 1983

3. Naming a Proper Defendant

4. The "Prevailing Party" Requirement

a. In General

b. State Law v. Constitutional Grounds as Basis for Underlying Decision

c. Miscellaneous Issues of Standing

B. Special Pleading Issues

1. Specifically Identifying Section 1983 as a Basis for Relief

2. What Tribunal Can Award Fees?

C. Calculating the Fee Award and Determining Compensable Hours

1. The Lodestar Method

2. "Reasonable" Hours and "Reasonable" Fees

3. Upward and Downward Adjustments to the Lodestar

D. Entitlement to Fees v. Rejecting Fee Awards

1590.09. AWARDING ATTORNEY'S FEES UNDER STATE LAW

A. In General

B. State Survey

1. Alabama

2. Alaska

3. Arizona

4. Arkansas

5. California

6. Colorado

7. Connecticut

8. Delaware

9. District of Columbia

10. Florida

11. Georgia

12. Hawaii

13. Idaho

14. Illinois

15. Indiana

16. Iowa

17. Kansas

18. Kentucky

19. Louisiana

20. Maine

21. Maryland

22. Massachusetts

23. Michigan

24. Minnesota

25. Mississippi

26. Missouri

27. Montana

28. Nebraska

29. Nevada

30. New Hampshire

31. New Jersey

32. New Mexico

33. New York

34. North Carolina

35. North Dakota

36. Ohio

37. Oklahoma

38. Oregon

39. Pennsylvania

40. Rhode Island

41. South Carolina

42. South Dakota

43. Tennessee

44. Texas

45. Utah

46. Vermont

47. Virginia

48. Washington

49. West Virginia

50. Wisconsin

51. Wyoming

1590.10. CONCLUSION

Working Papers

Table of Worksheets

Worksheet 1 National Private Truck Council, Inc., V. Oklahoma Tax Commission (No. 94-688), Decided June 19, 1995

Opinion

Bibliography

Bibliography

Maryann Gall
Maryann B. Gall is a tax partner with Jones, Day, Reavis & Pogue, resident in the Columbus, Ohio office. Mrs. Gall's practice is concentrated in the areas of state and local taxation with emphasis on tax litigation. She graduated from The Ohio State University in 1967 and received her law degree from OSU's College of Law in 1970, with honors. Mrs. Gall was an Assistant Attorney General in the Taxation Section of the Ohio Attorney General's Office from 1971 until 1974, when she was appointed Chief of the Taxation Section. When she represented the Ohio Tax Commissioner, she argued over 50 cases before the Supreme Court of Ohio. From 1975 to 1976, she was Chief Counsel to the Ohio Attorney General. Thereafter, she has been in private practice, and since 1983, has been a partner at Jones Day, specializing in state tax matters. She is the editor of Banks Baldwin Law Publishing Company's Ohio Tax Service, a quarterly Ohio tax publication, and serves as the editor of the Taxation Chapter (Title 57) of the Ohio Revised Code. Mrs. Gall is a member of the CCH State Tax Advisory Board, the Board of the New York University Institute on State & Local Taxation, and the National Institute on State & Local Taxation. She is a frequent lecturer for the Committee on State Taxation, the Institute of Property Taxation, and Tax Executives Institute. 
Laura Kulwicki
Laura A. Kulwicki was special counsel to Jones, Day, Reavis & Pogue in Cleveland, Ohio when this Portfolio was originally written. Ms. Kulwicki received her B.A. degree from The Ohio State University in 1984 and her J.D., with honors, from The Ohio State University in 1987. A member of the American Bar Association, Ohio State Bar Association, and Cleveland Bar Association, Ms. Kulwicki has published numerous articles on state taxation which have appeared in such publications as State Tax Notes, CCH State Tax Review, and Banks Baldwin Ohio Tax Service. She also has lectured for the Council On State Taxation and other local tax organizations.