Tax Law

Recent Posts

California Court of Appeal Finds That Sourcing of Income for Individuals Applies to Trusts
Posted on 24 Jul 2020 by Eversheds Sutherland LLP

The California Court of Appeal held that California income tax applies to the entire amount of trust income that is derived from California sources, even though a trust is managed in part by a non-resident trustee. The taxpayer had requested a refund... Read More

Pump the Brakes: North Carolina Supreme Court Determines that Brake-Pad Manufacturer Does Not Qualify for Special Apportionment Rule for Public Utilities
Posted on 6 Jul 2020 by Eversheds Sutherland LLP

The North Carolina Supreme Court affirmed a lower court decision that held that a manufacturer of brake pads used by railroads did not qualify for an exception to the state’s standard three-factor apportionment formula that allows “public utilities” to... Read More

How Does California Source Sales of Services and Intangibles for Apportionment Purposes
Posted on 30 Jun 2020 by Eversheds Sutherland LLP

California uses market-based sourcing to apportion sales of other than tangible personal property to the state. Under the governing statute, sales of services are sourced to California to the extent the purchaser of the service receives the benefit in... Read More

Tennessee Court of Appeals Holds Legal Malpractice Settlement Proceeds are Taxable Business Earnings
Posted on 15 Jun 2020 by Eversheds Sutherland LLP

The Tennessee Court of Appeals held that a manufacturer’s proceeds from a legal malpractice action are business earnings subject to the Tennessee excise tax. The malpractice action arose when the taxpayer’s attorneys improperly filed a European patent... Read More

Pennsylvania Attorney General Criticized For Not Representing Department of Revenue
Posted on 12 Jun 2020 by Eversheds Sutherland LLP

Oral argument was held June 11 in the highly unusual case of Synthes USA HQ Inc. v. Commonwealth of Pennsylvania. The Attorney General faced skeptical questioning from the Commonwealth Court, with one judge suggesting that the Attorney General was... Read More

Representative Representation Required
Posted on 20 Mar 2020 by Eversheds Sutherland LLP

The Washington Court of Appeals held that Seattle’s method of apportioning the City’s business and occupation tax (B&O tax) was unconstitutionally applied and unfairly apportioned when the City excluded compensation paid to independent representatives... Read More

Taxpayer Dials the Wrong Number: New Jersey Court Holds Phone Company Sourcing Rule Inapplicable
Posted on 17 Mar 2020 by Eversheds Sutherland LLP

On January 9, 2020, the New Jersey Superior Court, Appellate Division, upheld a New Jersey Tax Court decision that income, or “receipts,” earned by a taxpayer from providing broadcast fax, email and voice messaging services were performed within New Jersey... Read More

Massachusetts ATB Allows Taxpayers to Claim Refunds Based on Apportionment of Sales Tax
Posted on 20 Dec 2019 by Eversheds Sutherland LLP

The Massachusetts Appellate Tax Board determined that three licensors of software properly sought refunds (or “abatements”) to apportion sales tax based upon proof of their purchasers’ intent to use the software in multiple locations, including outside... Read More

Too Bad, So Sad – Virginia Supreme Court Upholds COP Apportionment Despite Subjecting the Taxpayer to Double Taxation
Posted on 22 Mar 2019 by Eversheds Sutherland LLP

The Virginia Supreme Court held that the use of the cost-of-performance method to apportion nearly 100% of the taxpayer’s sales of services to Virginia did not violate the U.S. Constitution, even though over 95% of the taxpayer’s customers were located... Read More

New Jersey Tax Court Holds Appointment Allowed in Place of Business Suit
Posted on 11 Feb 2019 by Eversheds Sutherland LLP

The New Jersey Tax Court ruled that a corporation was entitled to apportion its corporate income based on a “regular place of business” outside of New Jersey. This now-repealed apportionment requirement was the source of several New Jersey Tax Court cases... Read More

New Mexico Administrative Hearings Office Rejects Department’s Attempt to Eliminate Payroll Factor from Apportionment Factor Calculation
Posted on 26 Jan 2019 by Eversheds Sutherland LLP

The State of New Mexico Administrative Hearings Office held that the New Mexico Taxation and Revenue Department could not remove the payroll factor from the apportionment factor calculation of a taxpayer in the credit card and personal lending business... Read More

New Jersey Tax Court Upholds Division’s Use of 25/50/25 Sourcing Rule
Posted on 25 Sep 2018 by Eversheds Sutherland LLP

The New Jersey Tax Court upheld the New Jersey Division of Taxation’s use of the 25/50/25 sourcing rule for “certain services” against a provider of mass messaging services by fax, email and voice. Specifically, the court upheld the Division’s determination... Read More

Minnesota Supreme Court Upholds Commissioner’s Use of Alternative Apportionment for Financial Institution
Posted on 26 Jul 2018 by Eversheds Sutherland LLP

The Minnesota Supreme Court held that the state’s standard apportionment method did not fairly reflect the taxpayer’s net income allocable to the state, reversing the Tax Court’s ruling. The taxpayer, a national financial institution, transferred its... Read More

Giving Credit Where It Isn’t Due: Arkansas Office of Hearings and Appeals Treats Sales of Tax Credits as Business Income
Posted on 22 Jun 2018 by Eversheds Sutherland LLP

On June 13, 2018, an Arkansas Administrative Law Judge concluded that a taxpayer’s proceeds from dispositions of tax credits were apportionable business income. In Arkansas, business income arises from either: (1) transactions and activity in the regular... Read More

Oregon Deems Amendments to Statutory State Apportionment Formulas to Be Constitutional
Posted on 4 May 2018 by Eversheds Sutherland LLP

In another of the so-called “Compact” cases, the Oregon Supreme Court affirmed the decision of the Oregon Tax Court and held that: (1) the 1967 Oregon Legislature, in enacting Oregon Statute Section 305.655, did not clearly and unmistakably intend for... Read More