Friday, March 22, 2013

The Boardwalk Appeal: What's In That Petition Anyway?

The previous Boardwalk blog post  focused on the limited likelihood of the Supreme Court granting Historic Boardwalk Hall’s appeal due to a lack of judicial resources.  The points raised in HBH’s petition however, merit discussion.  Should the Supreme Court decide to expend some of its limited judicial resources hearing the Boardwalk appeal, it will face some difficult issues. 

 The petition opens by providing some context within which to consider the case.  It begins by emphasizing Congress’s legislative intent, harkening back to the enactment of the National Historic Preservation Act of 1966, which Congress passed to ensure new development did not come at the expense of the nation’s “irreplaceable heritage” embodied by its historic buildings.  The petition then recounts Congress’s experimentation with tax incentives over the ensuing decades in its pursuit of one that effectively encouraged private sector investment in the rehabilitation of these historic buildings, investment it knew would not occur without such incentives due to the extra costs that often accompany historic rehabs.  Proving to be the most effective incentive, the federal historic tax credit program has done just that: it has stimulated $99 billion in projects, created 2.2 million jobs, and helped save a countless number of historic buildings.  Not to mention, the petition cleverly adds, many of these projects relied on the very type of partnership utilized by HBH in the case at hand. 

The petition then fast forwards to the present to point out that the tax court that initially heard the Boardwalk case ruled in favor of HBH, rejecting all four prongs of the IRS’s argument in doing so.  And when the Third Circuit then ruled in favor of the IRS on appeal, it contradicted Supreme Court precedent, the tax code, and put in jeopardy thousands of other historic tax credit projects with similar partnership investments totaling in the billions of dollars. 

            The petition also claims that the tax law issues raised by Boardwalk are of national significance, which, as you may recall from the previous blog post, is a prerequisite for the Supreme Court to grant a petition for review.  Namely, it emphasizes the greater implications for the historic tax credit program as a whole.  Indeed, this case is the first time the IRS has made a sweeping challenge to an allocation of federal tax credits within a historic rehabilitation project partnership, not to mention one that accomplished the very goal Congress intended when it created the tax credit program.  In essence, then, the petition dramatically casts the Boardwalk case as an argument that goes to the very heart of the separation of powers inherent in our government.  In other words, it pits the legislative power of Congress against the enforcement power of the Executive Branch (via the IRS), the resolution of which by the Judicial Branch may have far-reaching implications for the entire historic tax credit program.

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