The Louisiana Supreme Court ruled that residents who owned an S corporation and limited liability company were entitled to a credit against their Louisiana income tax liability for Texas franchise tax paid by the pass-through entities. In so holding, the Louisiana Supreme Court found that La. R.S. 47:33, which limits the credit for taxes paid to other states to those states that offer a reciprocal credit to that state’s residents for business transacted in Louisiana, was unconstitutional because it was applied to the Texas franchise tax. Further, in noting that the reciprocity requirement discriminates against interstate commerce, the Louisiana Supreme Court also suggested that the limitation on the amount of the credit by the amount of tax that would have been imposed by Louisiana also discriminates against interstate commerce. (Smith v. Robinson, Dkt. No. 2018-0728 (La. 12/05/2018)).

The New Jersey Tax Court rejected the taxpayer’s argument that the partnership filing fee, which requires a partnership with New Jersey source income to pay a per-partner fee of $150 (capped at $250,000), violated the Commerce Clause. The Tax Court held that the filing fee is not facially discriminatory because all partnerships must pay the fee regardless of the location of the partnership or partner, or the nature of the partnership’s business, provided the partnership earns New Jersey source income. The Tax Court also held that the plaintiff failed to prove that the filing fee, in practical effect, discriminates against interstate commerce. The Tax Court ruled that the filing fee did not “implicate or violate” the Commerce Clause because the fee is imposed to cover the government’s cost of processing and reviewing the New Jersey returns of partnerships and their partners, which, according to the Tax Court, is a purely intrastate activity.


Targa Resources Partners, L.P. v. Director, Division of Taxation, 010749-2015 (N.J. Tax 2018)

Ferrellgas Partners, L.P. v. Director, Division of Taxation, 007051-2014 (N.J. Tax 2018)