Constitution: Due Process Clause

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The Alabama Court of Civil Appeals affirmed the trial court’s decision and held that retroactive application of the 2014 revisions to the “prepaid telephone calling card” provision of the Tax Code were unconstitutional as applied to the taxpayer. Taxpayer, an authorized dealer for Boost Mobile (“Boost”), sold Boost prepaid wireless-service plans to customers, but did…

The Alaska Supreme Court found that Alaska’s combined reporting statute requiring taxpayers to include certain foreign affiliates in its income tax return was constitutional. The court rejected the taxpayer’s arguments that Alaska’s tax haven corporation reporting statute was (i) void for vagueness as it violated the Due Process Clause, (ii) discriminated against interstate commerce in…

On October 23, 2020, the Massachusetts Appellate Tax Board ruled that capital gain from a Florida S corporation’s sale of a subsidiary Massachusetts LLC was subject to Massachusetts corporate excise tax and nonresident composite tax. The taxpayer contended that the U.S. Constitution’s Due Process and Commerce Clauses forbade Massachusetts from taxing the income because the…

The New York State Tax Appeals Tribunal struck down the retroactive application of legislative amendments to a taxpayer who reasonably relied on a precedential decision of the Tribunal that was final and irrevocable at the time the taxpayer sold his shares in an S corporation.

On July 31, 2009, the non-resident taxpayer sold shares in…

On March 2, 2020, the Oregon Tax Court held that the application of the state’s E911 Tax to a provider of interconnected VoIP services (“Taxpayer”) did not violate the Due Process and Commerce Clauses of the U.S. Constitution. The E911 Tax is imposed on each person with access to Oregon’s emergency communications system, whether through…

New York’s highest court dismissed taxpayers’ appeal of an Appellate Division ruling that the payment of tax on intangible income to New York as statutory residents, without a credit for tax paid to Connecticut as domiciliaries, determining that the appeal did not raise a “substantial constitutional question.” Edelman v. New York State Dep’t of Taxation …

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 outside of the state – perhaps an expected result for a services company based in…

The New York City Tax Tribunal held that an out-of-state corporate taxpayer, with an indirect interest in a limited liability company investment fund engaged in business in New York City, had nexus with the City and was subject to tax on capital gain from its sale of the fund. The taxpayer had no property, employees,…