State Tax Cases
Case
Court
Tax Type
Principal Issue
Arkansas v. Farm Credit Services
U.S. Supreme
Court (AR)
Income
Tax Injunction Act - Exceptions for U.S. instrumentalities
U.S. Supreme
Court (ID)
Income
U.S. Supreme
Court (MO)
Income
520 U.S. 821 (1997)
ASARCO v. Idaho State Tax Comm’r
458 U.S. 307 (1982)
Missouri v. CoBank
531 U.S. 316 (2001)
Significance: Construed exceptions from Tax Injunction Act for U.S.
instrumentalities
Unitary - Whether affiliates were engaged in a unitary business
Significance: One of only two taxpayer victories in a unitary business
case (see above)
Federal Supremacy/Comity - Whether a federal instrumentality is exempt
from state income tax
Significance: Narrowed scope of McCulloch v. Maryland
Quill Corp. v. North Dakota
504 U.S. 298 (1992)
U.S. Supreme
Court (ND)
Use
Nexus - Whether the Constitution requires physical presence in a taxing
state as a predicate to use tax collection liability
Significance: Landmark case establishing physical presence
requirement
Woolworth v. Taxation and Revenue
Dept. of New Mexico
458 U.S. 354 (1982)
City of Birmingham v. Orbitz, Inc.
Siegelman v. Chase Manhattan Bank
575 So. 2d 1041 (1991)
Pine Bluff Advertising and Promotion
Commission v. Hotels.com, L.P.
McAllister v. Hotels.com L.P.
City of Fayetteville v. Hotels.com, L.P.
U.S. Supreme
Court (NM)
Income
AL
Supreme Court
Circuit Court
Hotel Occupancy
AL
Supreme Court
Financial
Institution Excise
Tax
Nexus - Whether nonresident financial institutions were taxable in
Alabama as a result of the presence of credit card customers
Hotel Occupancy
Applicability to internet travel companies
AR
Circuit Courts
Unitary - Whether affiliates were engaged in a unitary business
Significance: One of only two taxpayer victories in a unitary business
case (see below)
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Taxability held lacking on basis that Alabama had
historically not imposed a tax on out-of-state national banks
Significance: Coordination of multistate defense against actions
pending nationwide
1
State Tax Cases
Case
Court
Tax Type
Principal Issue
Upjohn Company v. Arizona DOR
AZ
Maricopa County
Court
CA
Superior Court
Income
P.L. 86-272 - Whether in-state activities of employees were limited to
those activities protected by the statute
Income
Whether FTB could disallow interest expense of unitary group, two
members of which received nontaxable dividend income from insurance
subsidiaries
App. Dkt. No. TX1997-000438 (2003)
American General Realty Investment
Corp. v. Franchise Tax Board
CGC-03-425690 (2005)
Significance: Taxpayer victory with Court awarded litigation costs in
excess of statutory rate
CA
Superior Court
Income
Unitary; Business Income - Whether voting trust severed unity of
ownership of a unitary group; ability of S corporation to file combined
return; whether interest on installment note is apportioned in year of sale
or of receipt
City of Los Angeles v. Hotels.com, L.P.
Bush v. Cheaptickets, Inc.
Montgomery v. Orbitz, LLC
City of San Diego v. Hotels.com, L.P.
City of Oakland v. Hotels.com, L.P.
In re Transient Occupancy Tax Cases,
Coordination Proceedings (City of
Anaheim)
In re Transient Occupancy Tax Cases,
Coordination Proceedings (City of
San Francisco)
City of Santa Monica v. Expedia, Inc.
CA
Federal Court of
Appeals
District Court
Court of Appeals
Superior Court
Hotel Occupancy
Applicability to internet travel companies
Fujitsu IT Holdings (Amdahl) v.
Franchise Tax Board
CA
Court of Appeal
Income
Apportionment - Taxability of distributions of previously taxed income in a
water’s-edge group
CA
Court of Appeal
Income
Credits - Whether credits generated pursuant to a combined report are
available to all taxpayer members of the group
CA
Court of Appeal
Sales
Nexus - Whether parent company of mail order subsidiaries is subject to
California sales tax as a drop shipper
CDA Cable v. Franchise Tax Board
CGC 01-402879 (2002)
Significance: Coordination of multistate defense against actions
pending nationwide
120 Cal. App. 4th 459 (2004)
Guy F. Atkinson
A0805075 (2000)
Mason Shoe Manufacturing Co. v. State
Board of Equalization
A104964 (2004)
CGC-02-411873 (2003)
2
State Tax Cases
Case
Court
Tax Type
Principal Issue
MBIA Insurance Corporation v. State
Board of Equalization
CA
Superior Court
Retaliatory
Whether California’s retaliatory tax on insurance companies is
constitutional
CA
Superior Court
Income
Disallowance of expenses incurred to manage insurance company
subsidiaries. The Superior Court held that all expenses were properly
allocated to management fee income, and the FTB did not appeal.
CA
Superior Court
Income
Apportionment - Inclusion of gross vs. net receipts from treasury
operations
CGC-99-308484 (2000)
Mercury General Corporation
CGC 07-462688
(Closed)
Square D Company v. Franchise Tax
Board
CGC 05-442465 (2007)
Sterling Drug v. Franchise Tax Board
Expedia, Inc. v. City and County of
Denver
Town of Breckenridge v. Colorado
Travel Company
J. Crew v. Connecticut
Texaco v. Connecticut
District of Columbia v. Expedia, Inc.
Significance: First application of Microsoft/GM decisions; quantification
of distortion necessary for alternative apportionment
CA
Superior Court
CO
State District Courts
Income
Combined reporting - Worldwide combined reporting sought by affiliates
Hotel Occupancy
Applicability to internet travel companies
CT
Superior Court
CT
Superior Court
Sales
Capital improvements
Income
P.L. 86-272 - Applicability to a corporate partner registered to do
business in the state where the partnership operates.
DC
Superior Court
Hotel Occupancy
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Coordination of multistate defense against actions
pending nationwide
3
State Tax Cases
Case
Court
Tax Type
Principal Issue
City of Jacksonville v. Hotels.com, L.P.
Leon County v. Hotels.com, L.P.
Miami-Dade County v. Internetwork
Publishing Corp.
Orbitz, LLC v. Miami-Dade County
County of Monroe v. Priceline.com, Inc..
Orbitz, LLC v. Broward County
Orbitz, LLC v. Osceola County
Brevard County v. Priceline.com, Inc..
Volusia County v. Expedia, Inc.
Orange County v. Expedia, Inc.
Gannon v. Hotels.com, L.P. (Palm
Beach)
FL
Federal Court of
Appeals
District Courts
Circuit Courts
Hotel Occupancy
Applicability to internet travel companies
City of Atlanta v. Hotels.com, L.P.
City of Columbus v. Orbitz, Inc.
City of Rome et al. v. Hotels.com, L.P.
GA
District Court
Supreme Court
Court of Appeals
Superior Court
Hotel Occupancy
Orbitz, LLC v. Hawaii Department of
Taxation
HI
Tax Appeal Court
Hotel Occupancy
American Express v. Idaho
ID
Supreme Court
Use
Whether mailing promotional material into state was a taxable use
IL
Appellate Court
Income
Unitary - Whether affiliates were engaged in a unitary business
IL
Admin. Hearing
Use
IL
Appellate Court
Use
920 P.2d 921 (1996)
A.B. Dick v. Illinois DOR
678 N.E. 2d 1100 (1997)
Aggregate Equipment v. Illinois DOR
UT 00-3
American River Transportation v. Bower
351 Ill. App. 3d 208 (2004)
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Defined IL unitary standard
Estoppel - Taxpayer’s right to rely on written advice presented by auditor
Significance: Assessment voided under Taxpayers’ Bill of Rights
State’s ability to assess fuel purchased outside state and consumed on
navigable waters in state
Significance: Application of Use Tax held to violate Commerce Clause
4
State Tax Cases
Case
Court
Tax Type
Principal Issue
Amtrak v. State of Illinois, et al
IL
Northern District
Gas Use Tax
Secure dismissal of claim for refund of gas use tax from public utility
responsible for collecting and remitting the tax
IL
Circuit Court
Income
Relationship of federal consolidated return regulations to Illinois
combined returns
IL
Appellate Court
Income
Unitary - Whether corporate partner was unitary with pipeline
partnerships; penalty relief
IL
Admin. Hearing
Income
Unitary - Computation of net operating losses when member leaves a
unitary business group
IL
Supreme Court
Income
Unitary - Whether Illinois law employed unitary method of apportionment
IL
Circuit Court
Income
N.D. Ill. 2010
AT&T Teleholdings, Inc. v. Illinois DOR
No. 2007 L 50909 (Pending)
BP Oil Pipeline & Unocal Pipeline
Company v. Illinois DOR
Nos. 2001-2364 and 2001-2365, appeal
denied, 212 Ill. 2d 528 (2004)
BP Oil Supply Co. v. Illinois DOR
IT-2000-12
Caterpillar Tractor v. Lenckos
84 Ill. 2d 102 (1981)
Cilcorp v. Illinois DOR
Significance: First case addressing unitary apportionment in Illinois
07-TX-113
07-IT-0189
City Suburban Electric Motors v. Illinois
DOR
Unitary; Business Income
Significance: Extremely favorable settlement on eve of trial
IL
Appellate Court
Service
IL
City of Chicago
Appellate Court
Transaction
Applicability to cable company converter boxes and remote controls due
to Illinois constitutional prohibition on home rule occupation taxes not
authorized by statute
IL
Circuit Court
Income
Business Income; Apportionment; Gross Receipts; Supremacy Clause
Validity of regulation limiting application of machinery exemption
Significance: Regulation held invalid
278 Ill. App. 3d 564, 663 N.E.2d 77 (1997)
Communications & Cable of Chicago v.
City of Chicago DOR
275 Ill. App. 3d 680 (1995)
Donaldson, Lufkin & Jenrette Securities
Corporation v. Illinois DOR
Unpublished decision
5
State Tax Cases
Case
Court
Tax Type
Principal Issue
Dover Resources v. Illinois DOR
IL
Circuit Court
Income
Unitary; Business Income; 80/20
IL
Circuit Court
Income
Unitary; Business Income; 80/20 Company
IL
Circuit Court
Service
Occupation
Applicability to microfiche services
IL
Supreme Court
Use
Class action regarding taxation of medical devices
IL
Appellate Court
Premium Tax
Secure dismissal, with prejudice, of proposed class action litigation
seeking a refund of premium tax.
IL
Appellate Court
Use
Applicability to aircraft refurbisher who never took title to aircraft
IL
Appellate Court
Income
Business Income - Operational nature of gain from sale of affiliate
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
Significance: Global settlement of 10 years involving 2 court cases and
multiple audits
04 CH 20459
Dover Fluid Management v. Illinois DOR
08 L 51313
Dover Corporation v. Illinois DOR
98 L 50170 (2000)
First Data v. Illinois DOR
97 L 51084
Geary v. Dominick’s
129 Ill. 2d 389, 544 N.E.2d 344 (1989)
Gore v. Indiana Ins. Co.
st
2007 WL 2493435 (1 Dist. 2007)
Gulfstream v. Illinois DOR
Unpublished decision (2002)
Hercules Inc. v. Illinois DOR
324 Ill. App. 3d 329 (2001), appeal denied,
197 Ill. 2d 560 (2001)
Illinois v. Amway Corporation
Significance: Taxpayer victory in leading “operational test” case
11 L 9019 (Pending
Illinois v. Anthropologie.com and
FreePeople.com
11 L 9544 (Pending)
Illinois v. Audiovox Corporation
11 L 9549 (Pending)
6
State Tax Cases
Case
Court
Tax Type
Principal Issue
Illinois v. Books-A-Million, Inc., et al
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Appellate Court
Use Tax/Internet
Nexus
Secure dismissal of company named in state false claims act litigation
accused of fraudulently failing to collect and remit use tax on Internet
sales
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
07 L 12274 (Pending)
Illinois v. Burlington Coat Factory
st
860 N.E.2d 423 (1 Dist. 2006)
Illinois v. Casual Male
11 L 12910 (Pending)
Illinois v. Creative Labs
11 L 12933 (Pending)
Illinois v. Delivery Agent
12 L 99 (Pending)
Illinois v. Electrolux Home Care
Products
11 L 10079 (Pending)
Illinois v. 4sure.com, Inc.
04 L 002072 (Pending)
Illinois v. Fox Broadcasting Company
03 L 011683
Illinois v. Guess?, Inc. and Guess.com,
Inc.
02 L 1442
Illinois v. Hallmark Cards, Inc.
07 L 12270
Illinois v. Hammacher Schlemmer
11 L 10081 (Pending)
7
State Tax Cases
Case
Court
Tax Type
Principal Issue
Illinois v. Hobby Lobby Companies, Inc.,
et al
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
03 L 014703
Illinois v. J. Crew
11 L 8288 (Pending)
Illinois v. Jo-Ann Stores, Inc. and
Ideaforest.com, Inc.
Unpublished decision
Illinois v. Kohler
12 L 1484 (Pending)
Illinois v. Major League Soccer
03 L 011652
Illinois v. New Balance
Unpublished decision
Illinois v. NB Web Express
11 L 10328 (Pending)
Illinois v. Nike, Cole Haan and Converse,
Inc.
11 L 9022 (Pending)
Illinois v. Omaha Steaks International
Unpublished decision
Illinois v. Panasonic Corporation of
North America
11 L 8765 (Pending)
Illinois v. QVC & LMC Right Start
11 L 8533 (Pending)
8
State Tax Cases
Case
Court
Tax Type
Principal Issue
Illinois v. Ritz Camera Centers
IL
Circuit Court
Appellate Court
Supreme Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Use
Qui tam/Nexus - Illinois whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales.
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Circuit Court
Sales/Use
False Claims Act case alleging fraudulent failure to collect and remit tax
on shipping and handling charges
IL
Supreme Court
User Fees
Constitutionality of raising general revenue from user fees
834 N.E.2d 912 (2005); 878 N.E.2d 1152
(2007) (Pending)
Illinois v. Samsonite
11 L 12920 (Pending)
Illinois v. Stuart Weitzman, Inc.
07 L 12284
Illinois v. The New York Times Company
03 L 15387
Illinois v. Tupperware.com, Inc.
07 L 12279
Illinois v. Urban Outfitters, Inc., et al
Unpublished decision
Illinois v. Viking Office Products
Unpublished decision
Illinois v. Vitamin World
Unpublished decision
Illinois v. Whirlpool
11 L 12909 (Pending)
Illinois v. World Kitchen
11 L 9546 (Pending)
Illinois State Chamber of Commerce v.
John Filan
Significance: Illinois Appellate Court limits whistleblower statute
applicability to use tax issues
216 Ill. 2d 653 (2005)
(Pending on remand)
9
State Tax Cases
Case
Court
Tax Type
Principal Issue
In re Orbitz Taxes and Fees Litigation
(Cook County)
City of Fairview Heights v. Orbitz, Inc.
City of Chicago v. Hotels.com, L.P.
IL
District Court
Circuit Courts
Hotel Occupancy
Applicability to internet travel companies
John Hancock Life Ins. Co. v.
Department of Financial & Prof. Reg.
IL
Circuit Court
Retaliatory Tax
Could Illinois impose its retaliatory tax on a foreign insurer who provided
insurance to state employees.
IL
Circuit Court
Hotel Occupancy
Applicability to private conference facility
IL
Appellate Court
Income
Alternative Apportionment
IL
Supreme Court
Premium Tax
Represented group of insurance companies raising constitutional
challenge to Illinois premium tax
IL
Supreme Court
Use
Applicability to refinery fuels
IL
Circuit Court
Sales
Exemption - Applicability of regulation limiting sales tax exemption to
graphic arts process
Significance: Coordination of multistate defense against actions
pending nationwide
05 CH 50458
McDonald’s Corp. v. Illinois DOR
94 L 510015
Miami Corporation v. Illinois DOR
212 Ill. App. 3d 702 (1991)
Milwaukee Safeguard Ins. Co. v. Selcke
179 Ill.2d 94 (1997)
Mobil Oil v. Johnson
93 Ill. 2d 126, 442 N.E.2d 846 (1982)
R.R. Donnelley & Sons v. Illinois DOR
00 L 050459
Significance: Rare instance of taxpayer victory in alternative
apportionment
Significance: Regulation held invalid
Roche Holdings v. Illinois DOR
10 L 51542 (Pending)
Roche Holdings v. Illinois DOR
IL
Circuit Court
Income
Business Income; Unitary
IL
Circuit Court
Income
Business Income
06 L 50326
Shell Oil v. Johnson
117 Ill. App. 3d 1049, 453 N.E.2d 125
(1983)
Significance: Complete concession by State prior to trial
IL
Appellate Court
Use
Applicability of pollution control exemption to oil refinery
10
State Tax Cases
Case
Court
Tax Type
Principal Issue
SpaceCom Systems v. Illinois DOR
IL
Circuit Court
Telecommunications
Constitutionality of tax; Sale for Resale; Definition of Retailer
IL
Appellate Court
Use
Applicability to aircraft moving in interstate commerce
Sun Life Assurance Co. of Canada v.
DOR
IL
Supreme Court
Retaliatory Tax
Challenged imposition of retaliatory tax on alien insurance company
TV Guide v. Illinois DOR
IL
Circuit Court
Income
Apportionment for satellite property
IL
Admin. Hearing
Income
Unitary - Whether affiliates were engaged in a unitary business
IL
Circuit Court
Income
Business Income - Cessation of business
IL
Circuit Court
Income
Unitary; Business Income - Treatment of pension reversion as
business/nonbusiness income and unitary group issues
IL
Appellate Court
Use
Applicability of exemption to medical appliance
IL
Admin. Hearing
Income
Unitary - Whether affiliates were engaged in a unitary business
IL
Appellate Court
Use
Applicability to taxpayer with no in-state solicitation
IL
Appellate Court
Use
Validity of state regulation limiting exemption for medical appliances
Unpublished decision
Square D Co. v. Illinois DOR
233 Ill. App. 3d 1070, 599 N.E.2d 1235
(1992)
00 L 50616 (2002)
Technology Company
IT 04-7 (2003)
Tektronix v. Illinois DOR
04 CH 20458 (2005)
The Goodyear Tire & Rubber Company
v. Illinois DOR
Significance: Redefined IL unitary definition to exclude same line of
business requirement
00 L 50060
Therakinetics v. Illinois DOR
Unpublished decision
Toronto Dominion Bank v. Illinois DOR
IT 00-5
Town Crier v. Illinois DOR
733 N.E.2d 780 (2000)
Travenol Laboratories v. Johnson
195 Ill. App. 3d 532, 553 N.E.2d 14 (1990)
Significance: Regulation held invalid
Significance: Regulation held invalid
11
State Tax Cases
Case
Tyson Foods v. Illinois DOR
st
312 Ill. App. 3d 64 (1 Dist. 2000), appeal
denied, 188 Ill. 2d 584 (2000)
Veritude Holdings Corporation, et al v.
Illinois DOR
10 L 51721 (Pending)
Waste Management v. Illinois DOR
98 L 050263
MBNA v. Indiana
Dkt. No. 49T10-0506-TA-53 (Pending)
Orbitz, LLC v. Indiana Department of
Revenue
Lake County Convention and Visitors
Bureau v. Sabre Holdings Corp.
Marshall County v. Hotels.com, L.P.
Louisville/Jefferson County Metro
Government v. Hotels.com, L.P.
City of Bowling Green v. Hotels.com,
L.P.
Mayor and City Council of Baltimore v.
Priceline.com, Inc..
County Commissioners of Worcester
County v. Priceline.com, Inc..
Montgomery County v. Priceline.com,
Inc.
Baltimore County v. Priceline.com, Inc..
Court
Tax Type
Principal Issue
IL
Appellate Court
Income
P.L. 86-272
IL
Circuit Court
Income
Apportionment - cost of performance
IL
Circuit Court
Use
Scope of pollution control exemption as applied to turbine powered by
landfill methane
IN
Appellate Tax
Board
IN
District Court
Tax Court
Income
Nexus - Non-physically present credit card issuer
Hotel Occupancy
Applicability to internet travel companies
KY
Federal Court of
Appeals
District Court
Court of Appeals
Circuit Court
Hotel Occupancy
MD
District Court
Hotel Occupancy
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
12
State Tax Cases
Case
Court
Tax Type
Principal Issue
NCR Corp. v. Comptroller of the
Treasury
MD
Court of Appeals
Income
Foreign-Source Income; Apportionment
MA
Appellate Tax
Board
MI
Circuit Courts
Income
Nexus - Non-physically present credit card issuer
Hotel Occupancy
Applicability to internet travel companies
MN
Supreme Court
Income
MN
Supreme Court
Income
Whether the taxpayer properly excluded from gross income royalties
paid by licensees and dividends and interest received from foreign
subsidiaries
City of Branson v. Hotels.com, L.P.
St. Louis County v. Prestige Travel, Inc.
City of Jefferson v. Hotels.com, L.P.
MO
Circuit Courts
Hotel Occupancy
Applicability to internet travel companies
State of Mississippi v. Priceline.com,
Inc.
MS
Chancery Court
Hotel Occupancy
Montana Department of Revenue v.
Priceline.com, Inc.
MT
State District Court
Hotel Occupancy
Northwest Farm Credit Services v.
Montana DOR
MT
Supreme Court
Income
Significance: Issues of significance for multinational companies
313 Md. 118, 544 A.2d 764 (1988)
MBNA v. Massachusetts
Dkt. No. 265986 (Pending)
Kent County v. Hotels.com, L.P.
County of Genesee v. Hotels.com, L.P.
MBNA America v. Minnesota
Dkt No. A04-1826 (2005)
NCR Corp. v. Commissioner of Revenue
438 N.W.2d 86 (1989)
Dkt. No. DA 07-0581
Significance: Coordination of multistate defense against actions
pending nationwide
Statute of limitations nonapplicability due to Taxpayer Bill of Rights
Significance: Rare victory at state Supreme Court under Taxpayer Bill
of Rights for taxpayer that missed a S/L deadline
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Statute of Limitations - Whether the taxpayer’s failure to report a federal
refund claim prior to finalization keeps the statute of limitations open for
unrelated issues
13
State Tax Cases
Case
Court
Tax Type
Principal Issue
Pitt County v. Hotels.com, L.P.
Wake County v. Hotels.com, L.P.
Cumberland County v. Hotels.com, L.P.
Dare County v. Hotels.com, L.P.
Buncombe County v. Hotels.com, L.P.
Mecklenburg County v. Hotels.com, L.P.
Orbitz, LLC v. Hoyle
NC
Federal Court of
Appeals
District Court
Superior Courts
Business Court
Hotel Occupancy
Applicability to internet travel companies; validity of legislation targeting
online travel companies
Atlantic City Showboat, Inc. v. Director,
Division of Taxation
NJ
Superior Court,
Appellate Division
Sales/Use
Taxability of electricity distribution services.
NJ
Tax Court
Income
Constitutionality of “throwout” rule.
NJ
Tax Court
Income
P.L. 86-272 - Whether in-state activities of employees were limited to
those activities protected by the statute
NJ
Tax Court
NJ
Tax Court
Income
Deductibility of interest paid to affiliate
Income
Apportionment
NJ
Tax Court
Income
(Pending)
DeVry Educational Development Corp v.
Director, Division of Taxation
Sales Tax
Significance: Coordination of multistate defense against actions
pending nationwide
(Pending)
Gillette v. New Jersey
Dkt. No. 002480 (2001)
Helme Tobacco v. New Jersey
Norfolk Southern v. New Jersey
2005 WL 1531329 (2005)
Pfizer Inc. v. Director, Division of
Taxation
Significance: Important nationwide issue with implications for many
industries
NJ Tax Ct. Dkt. 000055-2006 (Pending)
Constitutionality of “throwout” rule, which increases a taxpayer’s
apportionment percentage based on whether the taxpayer is subject to
net income tax in other states
Significance: Important nationwide issue with throwback implications
San Mar v. Director, Division of Taxation
(Pending)
Sodexho v. Director, Division of
Taxation
23 N.J. Tax 167 (2004)
NJ
Tax Court
Income
Constitutionality of “throwout” rule.
NJ
Superior Court
Appellate Division
Sales/Use
Purchases as agent for tax exempt entity.
14
State Tax Cases
Case
Court
Tax Type
Principal Issue
Township of Lyndhurst v. Priceline.com,
Inc.
NJ
Federal Court of
Appeals
District Court
Hotel Occupancy
Applicability to internet travel companies
City of Gallup v. Hotels.com, L.P.
NM
District Court
Hotel Occupancy
NY
Supreme Court
Appellate Division
Court of Appeals
Income
NYS
Tax Appeals
Tribunal
NY
Supreme Court
Appellate Division
Sales
Purchases of electricity for use in exempt aircraft maintenance
New York City
Hotel Room
Occupancy Tax
Whether the permanent resident exception to the New York City Hotel
Room Occupancy Tax applies to all rooms rented by a person while that
person qualifies as a permanent resident or to only those rooms rented
for 90 consecutive days.
NYS
Division of Tax
Appeals
Franchise
Whether deductible reimbursements constitute “premiums.”
NYS
Tax Appeals
Tribunal
NYS
Tax Appeals
Tribunal
NYS
Tax Appeals
Tribunal
NY
Supreme Court
Appellate Division
Banking
Taxpayer seeking netting of assets and liabilities for tax on gross assets
Sales
Sales tax on purchases of chilled and heated water at airport
Income
Whether utility companies were entitled to the investment tax credit as a
result of their construction and use of certain property in the state.
Income
Deductibility of management fees
Allied-Signal v. NYS
645 N.Y.S.2d 895, 229 A.D.2d 759 (1996)
Allied-Signal v. NYC
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Transactional Nexus; Apportionment - Inclusion in tax base of gain from
sale of nonunitary affiliate
Significance: Pre- and post- U.S. Supreme Court decisions under same
facts, but NY courts refused to follow Supreme Court’s approach
580 N.Y.S.2d 696 (1991)
American Airlines
Dkt. No. 819514 (2005)
American Airlines
Dkt. No. 3353 (2010)
American Zurich Insurance
Dkt. Nos. 822840, 822841, 822842,
822843, 822849, 822906 (2010)
Barclays Bank
Dkt. No. 818789 (2005)
British Airways
Dkt. Nos. 818259 & 818429 (2004)
Brooklyn Union Gas Co.
Dkt Nos. 822692 & 822693 (2012)
Colt Industries v. NYC
484 N.Y.S.2d 551, 106 A.D.2d 59 (1985)
15
State Tax Cases
Case
Court
Tax Type
Principal Issue
Disney Enterprises
NYS
Tax Appeals
Tribunal
Income
Apportionment - Inclusion of nontaxpayer’s numerators in combined
apportionment formula
NYS
Tax Appeals
Tribunal
NY
Federal Court of
Appeals
District Court
Supreme Court
Income
Business Income - Characterization of income from stock options under
prior regulations as business income, not investment income.
Hotel Occupancy
Applicability to internet travel companies
NYS
Tax Appeals
Tribunal
NY
Court of Appeals
Income
Taxability of extraterritorial income
Sales
Bad debts
NYS
Tax Appeals
Tribunal
Income
Penalty - Reasonable cause grounds for abatement of penalty
NY
Supreme Court
Appellate Division
Personal Income
Residency
NYS
Division of Tax
Appeals
Income
Allocation of expenses to tax-exempt income
NY
Supreme Court
Appellate Division
Utilities
Dkt. No. 818378
(Pending)
Dominion Textile
Dkt. No. 812248 (1997)
Expedia, Inc. v. City of New York
County of Nassau v. Hotels.com, L.P.
Fairchild Industries
Dkt. No. 815543 (2000)
General Electric Capital v. NYS
810 N.E.2d 864 (2004)
Grace Co.
Dkt. No. TSB-D-90(9)C (1980)
Richard Gray v. NYS
651 N.Y.S.2d 740, 235
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Established precedent regarding abatement of late filing
penalties
A.D.2d 641 (1997)
Grumman
Dkt. No. 813147 (1996)
GTE Spacenet v. NYS
638 N.Y.S.2d 29, 224 A.D.2d 283 (1996)
Significance: First case rejecting taxing authority’s discretion to disallow
expenses
Nature of income received by corporate partner from utility partnership
Significance: Taxpayer victory; groundbreaking decision with numerous
implications
16
State Tax Cases
Case
Court
Tax Type
Principal Issue
GTE Spacenet v. NYS
NY
Supreme Court
Appellate Division
NYS
Tax Appeals
Tribunal
Excise
Applicability of telecommunication excise tax to wireless provider
Income
Combination
NY
Court of Appeals
Personal Income
Challenged New York’s “convenience of the employer” rule for
nonresidents
New York City
Tax Appeals
Tribunal
NYS
Division of Tax
Appeals
NYC
Tax Appeals
Tribunal
NY
Supreme Court
Appellate Div.
Income
Whether HMOs are insurance companies and thus, exempt from the
New York City general corporate tax.
Income
Whether certain taxes are eligible for the retaliatory tax credit under the
NYS franchise tax imposed on insurance companies.
Unincorporated
Business
Availability for exemption for taxes paid by partner
Income
Combination - Forced combination of manufacturer/marketer of apparel
and consumer goods with its factoring company
NYS
Tax Appeals
Tribunal
Insurance
NYS
Tax Appeals
Tribunal
NYS
Division of Tax
Appeals
Personal Income
Whether a nonresident’s gain on the sale of restricted stock was taxable
for NYS personal income tax purposes
Income
Calculation of net operating loss carryovers for income tax purposes
607 N.Y.S.2d 677, 201 A.D.2d 429 (1994)
Heidleberg-Eastern
Dkt. Nos. 806890 & 807829 (1994)
Huckaby v. NYS
829 N.E. 2d 276 (2005)
Insurance Company
(Pending)
Insurance Company
(Pending)
Lazard Freres v. NYC
Dkt. No. TAT (E) 93-107 (UB) (1996)
Kellwood Company v. Tax Appeals
Tribunal
Dkt No. 513812 (Pending)
Municipal Bond Investors
Dkt. No. 811060 (1994)
Nielsen
Dkt. No. 818817 (2004)
New York Funeral Chapels
Dkt. No. 818854 (2003)
Significance: Taxpayer victory and leading precedent for taxpayersought combination
Significance: Taxpayer victory that led to change in statute
Significance: First NY case concerning the validity of a factoring
subsidiary
Retaliatory Tax
Significance: Represented a consortium of insurance companies and
successfully argued that a company did not have to litigate a tax issue in
another state to get a credit against its NY retaliatory tax for taxes paid to
the other state
17
State Tax Cases
Case
Court
Tax Type
Principal Issue
New York State Association of Enrolled
Agents v. New York State Dep’t of
Taxation & Finance
NYS
Supreme Court
NY County
Non-tax case
Constitutionality of annual tax return preparer fee and registration
requirement as applied to enrolled agents.
NYS
Tax Appeals
Tribunal
Income
NY Tax Appeals
Tribunal
Franchise Tax
Where a group of taxpayers has filed returns on a combined basis, can
the Department of Taxation decombine one “open year” member of the
group and require it to file a separate return even though the statute of
limitations for the group has expired?
NY
Supreme Court
NY County
NY
Supreme Court
NY County
Insurance
Whether payment of NYS corporate franchise tax entitles taxpayer to a
credit against its retaliatory tax liability.
NYC Corporation
Tax
Interstate commerce discrimination in depreciation schemes
NYS
Division of Tax
Appeals
Personal Income
Whether taxable income should have been allocated to various partners
from the sale of certificates authorized by Section 421-a of the New York
State Real Property Tax Law by a partnership.
NYS
Division of Tax
Appeals
NYS
Tax Appeals
Tribunal
NYS
Division of Tax
Appeals
NYS
Division of Tax
Appeals
Sales/Use
Sales tax on building management services.
Personal Income
Whether a nonresident individual’s income from patents sold to a related
corporation was nontaxable investment income
Sales/Use
Proof of nontaxable sales for resale.
Use
Sample drug packaging
Significance: Case helped prompt the legislative override of the tax
return preparer statute as applied to enrolled agents.
905 N.Y.2d 856 (2010)
New York Times
Dkt. No. 809776 (1995)
Matter of Panavision, Inc.
Dkt. No. 816660 (6/6/02)
Prudential Ins. Co. v. Wrynn
Index No. 102267/11 (2012)
RJ Reynolds Tobacco v. NYC
643 N.Y.S.2d 865, 169 Misc. 2d 674 (1996)
Real Estate Development Partnership
(Pending)
Real Estate Services Firm
(Pending)
Rozier
Dkt. No. 819958 (2006)
San Mar
Dkt. No. 822993 (2011)
Smith Kline
Dkt. No. 818583 (2004)
Combination
Significance: Taxpayer victory; important precedent for significance of
federal section 482 regulations
Significance: Taxpayer victory and oft-cited precedent regarding
interstate discrimination
18
State Tax Cases
Case
Court
Tax Type
Principal Issue
Sodexho
NYS
Tax Appeals
Tribunal
Sales/Use
Purchases as agent for tax exempt entity
NY
Court of Appeals
Personal Income
Residency and constitutionality of statutory residence test
NYS
Division of Tax
Appeals
Sales/Use
Whether check verification services constitute taxable information
services.
NYS
Tax Appeals
Tribunal
NYS
Tax Appeals
Tribunal
Use
Sample drug packaging
Income
Nexus - Whether a Canadian corporation shipping natural gas through
public pipelines had taxable nexus in NY
NYS
Tax Appeals
Tribunal
OH
Federal Court of
Appeals
District Courts
Personal Income
Statute of limitations regarding notice of federal change
Hotel Occupancy
Applicability to internet travel companies
OK
State District Court
Hotel Occupancy
OR
Tax Court
Income
Dkt. Nos. 820020; 820021; 820022;
820023; 820024 (2008)
Tamagni v. NYS
91 N.Y.2d 530; cert. denied, 525 U.S. 931
(1998)
Telecheck Services
Dkt. No. 822275 (2009)
Upjohn & Pharmacia
Dkt. No. 818583 (2004)
Wascana Energy
Dkt. No. 817866 (2002)
Yampol
Dkt. No. 813261 (1997)
City of Columbus v. Hotels.com, L.P.
City of Findlay v. Hotels.com, L.P.
Hamilton County v. Hotels.com, L.P.
State of Oklahoma v. Priceline.com, Inc..
Cox Cablevision Corp. v. DOR
12 Or Tax Court 219 (1992)
Significance: Taxpayer victory; affirmed the continuing validity of the
principal purpose/primary function test.
Significance: Important taxpayer victory; no nexus for shipper where
title passed at border
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Unitary - Whether cable television station engaged in unitary business
with over-the-air broadcasting stations
19
State Tax Cases
Case
Court
Tax Type
Principal Issue
Crocker Equipment Leasing v. DOR
OR
Supreme Court
Income
Apportionment - Whether bank unitary group is entitled to modification of
the statutory apportionment formula
OR
Tax Court
Income
Unitary
PA
Commonwealth
Court
Income
Business Income - Nonbusiness nature of section 338(h)(10) gain
PA
District Court
Court of Common
Pleas
Hotel Occupancy
City of Charleston v. Hotels.com, L.P.
Town of Mount Pleasant v. Hotels.com,
L.P.
City of Myrtle Beach v. Hotels.com, L.P.
City of North Myrtle Beach v.
Hotels.com, L.P.
Horry County v. Hotels.com, L.P.
Town of Hilton Head Island v.
Hotels.com, L.P.
SC
District Courts
Courts of Common
Pleas
Hotel Occupancy
NCR Corp. v. South Carolina Tax
Comm’n
SC
Supreme Court
Income
Foreign-Source Income; Apportionment
304 S.C. 1, 402 S.E.2d 666 (1991)
City of Goodlettsville v. Priceline.com,
Inc.
TN
District Court
Hotel Occupancy
Applicability to internet travel companies
314 Or. 122, 838 P.2d 552 (1992)
12 OTR 16 (1991)
Maytag Corp. v. DOR
12 OTR 502 (1993)
Canteen v. PA
818 A.2d 594 (2003), affirmed by Penn.
Supreme Court
City of Philadelphia v. Hotels.com.
County of Lawrence v. Hotels.com, L.P.
Significance: First case ever decided on this nationwide issue and
important taxpayer victory
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Coordination of multistate defense against actions
pending nationwide
20
State Tax Cases
Case
Court
Tax Type
Principal Issue
State of Tennessee v. Target Corp.
TN
Chancery Court
Use
Qui tam/Nexus - Tennessee whistleblower action filed by relator alleging
failure to collect/report sales/use tax on internet sales
02-3764-III (2003)
Significance: Decision resulted in dismissal of all whistleblower cases
alleging use tax violations in TN
City of San Antonio v. Hotels.com, L.P.
City of Orange v. Hotels.com, L.P.
City of Houston v. Hotels.com, L.P.
TX
District Courts
Appellate Court
State District Court
Hotel Occupancy
Upjohn v. TX
TX
Court of Appeals
Franchise
Whether taxable capital exception to receipts factor applied to earned
surplus tax
WA
District Court
Hotel Occupancy
Applicability to internet travel companies
WV
Supreme Court of
Appeals
WI
Circuit Court
Franchise and
Income
Nexus - Non-physically present credit card issuer
Hotel Occupancy
Applicability to internet travel companies
38 S.W.3d 600 (2000)
City of Bellingham v. Hotels.com, L.P.
FIA Card Services f/k/a MBNA
220 W.Va. 163, 640 S.E.2d 226 (2006)
City of Madison v. Expedia, Inc.
Applicability to internet travel companies
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Coordination of multistate defense against actions
pending nationwide
Significance: Coordination of multistate defense against actions
pending nationwide
21