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CBS, Inc. v. Comptroller of Treasury

Court of Appeals of Maryland

June 25, 1990

No. 136, September Term, 1989

Opinion

 [*688]   [**324]  In Consumer Protection v. Consumer Pub., 304 Md. 731, 755, 501 A.2d 48, 61 (1985), we observed that "[t]his Court has not addressed the question of when, if ever, an agency is required to proceed by rulemaking" as opposed to adjudication. On the record there before us we held that it was "appropriate"  [***2]  for the agency "to proceed by adjudication. . . ."@ Id. at 755-756, 501 A.2d at 61. We now revisit that topic. Although we do not depart from our holding in Consumer Protection, we conclude that on the record now presented, the agency was required to adopt a policy change via rulemaking.

The agency here is the appellee, the Comptroller of the Treasury (the Comptroller). The taxpayer which insists that rulemaking is mandatory under the circumstances of this case is appellant, CBS, Inc. (CBS). The factual background  [*689]  of the controversy between them is largely undisputed.

 [**325]  I.

CBS is a New York corporation. In 1980 and 1981, the tax years here involved, as well as prior thereto, its headquarters were in New York City. It conducted numerous activities, including the manufacture and sale of records, tapes, musical instruments, and toys; the publication of books and magazines; and the ownership and operation of five television stations, seven AM and FM radio stations, and television and radio networks. Its physical presence in Maryland was minimal: a records division sales office in Silver Spring and a toy manufacturing plant in Hagerstown.  [***3]  Both of these enterprises were conducted as CBS divisions, not as separate corporations.

Also organized as divisions were the network operations, which provided advertising services to those who wished to broadcast commercials or other messages. The network broadcasting facilities, the related sales offices, and the network employees staffing them were all outside of Maryland. Some 70 percent of CBS's net income was derived from network advertising receipts.

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319 Md. 687 *; 575 A.2d 324 **; 1990 Md. LEXIS 93 ***

CBS INC. v. COMPTROLLER OF THE TREASURY

Subsequent History:  [***1]  As Corrected June 29, 1990.

Prior History: Appeal from the Circuit Court for Baltimore City pursuant to certiorari to Court of Special Appeals, Ellen M. Heller, Judge.

Disposition: JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY REVERSED. CASE REMANDED TO THAT COURT WITH DIRECTION TO AFFIRM THE JUDGMENT OF THE TAX COURT. COSTS TO BE PAID BY APPELLEE.

CORE TERMS

rulemaking, advertising, network, formula, audits, broadcasting, apportioned

Administrative Law, Agency Rulemaking, Formal Rulemaking, Governments, State & Territorial Governments, General Overview, Rule Application & Interpretation, State Proceedings, Agency Adjudication, Informal Agency Action, Tax Law, State & Local Taxes, Administration & Procedure, Judicial Review, Judicial Review, Standards of Review, Environmental Law, Administrative Proceedings & Litigation