Preliminary Injunction to Halt Implementation of Nevada’s Private School Voucher Program

  • January 15, 2016

Editorial Note: For background information on SB302, a statewide private school voucher program and the recent lawsuits that brought about this injunction, click here.

It is now widely reported that on January 11, 2016, Nevada, District Judge Jamesschool_vouchers_INJUNCTION Wilson, Jr., issued an order granting a preliminary injunction halting the implementation of Nevada’s private school voucher/ESA program.

A copy of Judge Wilson’s can be read here and the following text is a key part of the order:

Plaintiff Parents have clearly shown that SB 302 violates Article 11, Sections 6.1 and 6.2.

Plaintiff Parents argued SB 302, Section 16(1) violates Article 11, Sections 6.1 and 6.2 because general funds appropriated to fund the operation of the public schools must only be used to fund the operation of the public schools, but under SB 302 some amount of general funds appropriated to fund the operation of the public schools will be diverted to fund education saving accounts.

Under SB 302 general fund money appropriated to fund the operation of the public schools will be used to fund education savings accounts. The legislature recognized that general fund money appropriated to fund the operation of public schools would be used to fund education savings accounts. This is evidenced by the legislature’s amendment of NRS 387.045 which provides:

  1. No portion of the public school funds or of the money specially appropriated for the purpose of public schools shall be devoted to any other object or purpose.
  1. No portion of the public school funds shall in any way be segregated, divided or set apart for the use or benefit of any sectarian or secular society or association.

The legislature amended that statute to make an exception so funds appropriated for public schools can be used to pay the education savings account grants established by SB 302.

Sections 6.1 and 6.2 require the legislature to support public schools by direct legislative appropriation from the general fund before any other appropriation is enacted. Those sections do not expressly say that the general funds appropriated to fund the operation of the public schools must only be used to fund the operation of the public schools. Sections 6.1 and 6.2 do however necessarily imply that the legislature must use the general funds appropriated to fund the operation of the public schools only to fund the operation of the public schools.

Sections 6.1 and 6.2 mandate that the legislature make appropriations to fund the operation of the public schools. An “appropriation” is “the act of appropriating to … a particular use;” or “something that has been appropriated; specif: a sum of money set aside or allotted by official or formal action for a specific use (as from public revenue by a legislative body that stipulates the amount, manner, and purpose of items of expenditure) …. “‘To “appropriate” means “to set apart for or assign to a particular purpose or use in exclusion of all others.”‘ Therefore, Sections 6.1 and 6.2 require the legislature to set apart or assign money to be used to fund the operation of the public schools, to the exclusion of all other purposes. Because some amount of general funds appropriated to fund the operation of the public schools will be diverted to fund education saving accounts under SB 302, that statute violates Sections 6.1 and 6.2 of Article 11.

Plaintiff Parents have met their burden of clearly proving that there is no set of circumstances under which the statute would be valid, and therefore Plaintiff Parents have shown a reasonable likelihood of success on the merits on the Article 11, Sections 6.1 and 6.2 issue.

[emphasis added.]

 

 

Mortgage Debt Relief Act Extended Through 2016….Finally

  • January 11, 2016

Buried deep in the Tax Extenders provisions of the 2016 Appropriations Bill (H.R. 2029) quietly passed by Congress and signed by the President on December 18, 2015, was a very unpublicized extension of the Mortgage Forgiveness and Debt Relief Act of 2007.  In fact, the reference to this extension of this very relevant Act was so deeply buried, that I am indebted to a very generous Regional Rep of Senator Dean Heller for providing me with a map to find the needle in the haystack (see pages 824-825 of 887!).Mortgage Forgiveness Debt Relief Act Extended

This extension is of great importance for homeowners who are still suffering under the weight of underwater homes.  As I have discussed in numerous articles and blog postings, the Mortgage Forgiveness and Debt Relief Act of 2007 provides a tax exemption for homeowners for “income” resulting from debt forgiveness related to foreclosures, short sales and principal forgiveness of loans.

When a Lender “forgives” debt, e.g. it waives pursuing a deficiency in a short sale or elects not to sue for deficiency after a foreclosure sale, the debt that is forgiven is, in most circumstances considered by the IRS to be ordinary income and taxable as such.  Under the Mortgage Forgiveness Debt Relief Act of 2007 taxpayers can generally exclude income resulting from the discharge of debt on their principal residence.  For more information click here (please note that the IRS has not yet updated its website to reflect the extension of the Act through January 1, 2017).

This latest extension will continue this tax protection for homeowners through the 2016 tax year.  This means that if you relinquished your home in a foreclosure, short sale or deed in lieu, or had a loan modification resulting in debt forgiveness in 2015, or if one of these unfortunate events happens to you in 2016, you may be able to take advantage of this latest extension of the Act.

Please note that before making the decision to relinquish your home and incur taxable debt forgiveness, it is highly advisable that you speak with a tax professional.  As with most IRS rules, there are exceptions and restrictions that could be a “gotcha” for an unsuspecting homeowner.  But if you do in fact qualify, this is fantastic news for underwater homeowners!

If you have questions about an underwater mortgage, loan modification, foreclosures or short sales, Incline Law Group LLP can provide you with options and information to help you make informed decisions.