February 11, 2013 Boardwalk Case to go to the Supreme Court?
Posted at 11:02h in Blog
In previous blog posts we discussed the IRS?s decision to deny the allocation of federal historic tax credits to the corporate member of a redevelopment project partnership associated with the rehabilitation of the Historic Boardwalk Hall in New Jersey. In United States Tax Court the partnership (HBH) subsequently challenged the IRS?s decision to deny the corporate member true partnership status and reallocate the credits. After initially winning its case, but later losing on appeal before the Third Circuit Court of Appeals, HBH filed a petition asking the Third Circuit to rehear the case. The Third Circuit denied this petition, and HBH, intent on having the Third Circuit?s decision overturned, subsequently filed a petition for review with the US Supreme Court.
According to the rules governing the Supreme Court, a petitioner like HBH is not entitled to review; rather, the decision to review the Third Circuit?s decision for an error of law is a matter of judicial discretion and is only granted by the Supreme Court for compelling reasons. Indeed, at least 4 of the 9 Supreme Court Justices must agree to hear the case. Another significant obstacle for HBH is the fact that significantly more petitions for review are filed with the Supreme Court each term than the Court can possibly grant. The result is that the Supreme Court generally accepts only 1% of petitions, typically choosing the cases it finds most significant, particularly those posing important and unresolved constitutional questions. Thus, while it seems likely that the Supreme Court will ultimately deny HBH?s request, that does not necessarily mean the Court wholly agrees with the Third Circuit?s opinion; it simply may not have the time or resources to address the lower court?s decision. Of course, that would be little consolation to HBH, particularly the corporate member, which had its tax credits reallocated. HBH?s only hope is that the Supreme Court finds the arguments advanced in its petition, which will be discussed in later blog posts, sufficiently compelling.