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On May 14, 2021, the Indiana Tax Court upheld a pharmacy benefit management company’s sourcing of its receipts under Indiana’s costs of performance rules applicable to receipts from services. The court rejected the Indiana Department of Revenue’s position that the receipts should instead be sourced according to the rules for sales of tangible personal property.…

On April 14, 2021, the Oregon Tax Court issued a ruling on cross motions for summary judgment in a case involving the inclusion of receipts from commodity hedging activities in the taxpayer’s sales apportionment factor. Chevron filed amended Oregon corporation excise tax returns including its gross hedging receipts in its Oregon sales apportionment factor, and…

The Michigan Supreme Court held that revenue from the performance of services must be sourced to the location where the service provider’s employees performed the work, not where the services were delivered, for purposes of the City of Detroit’s income tax. Detroit imposes an income tax under the Uniform City Income Tax Ordinance (“UCITO”), which…

On February 28, 2020, the Oregon Tax Court held that multiple airlines operating as a unitary business should aggregate not only transportation revenue but also other metrics, such as departure ratios, that are factored into the apportionment formula used by Oregon for airline taxpayers. Oregon regulations provide a modified single sales factor apportionment rule for…

The Texas Supreme Court held that a defense contractor was entitled to a refund of franchise tax because it had incorrectly sourced certain sales of military aircraft made to foreign governments to Texas on its originally-filed returns for the 2005 through 2007 tax years. The contractor produced military aircraft in Texas, which it sold to…

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 and thus the majority of such receipts were properly sourced to New Jersey for purposes…

The California Office of Tax Appeals held that pursuant to market-based sourcing rules, a nonresident individual did not derive California sourced income and was not required to file a California return or pay personal income tax. The taxpayer resided in Texas and worked as an independent contractor for Christopher Konrad Consulting, LLC (Konrad), a company…

On October 3, 2019, California’s Office of Tax Appeals (OTA) held that value-added tax (VAT) imposed on the provision of services is included in the sales factor of California’s apportionment formula. The taxpayer, filing on a worldwide unitary basis, included VAT in its sales factor denominator that it billed, and collected, to its customers in…

In a letter of finding, the Indiana Department of Revenue concluded that a pharmacy benefit management provider was required to include in its sales factor receipts from prescription drugs sold to Indiana customers. The taxpayer contracted with insurance companies, retail pharmacies and drug manufacturers to provide health benefit plans and beneficiaries access to discounted prescription…