By Chelsea Marmor and Open Weaver Banks

The Administrative Review and Hearings Division at the Washington Department of Revenue (the Division) determined that administrative activities qualify as business activities for purposes of applying Washington’s throw-out rule under the Washington business and occupation (B&O) tax. The taxpayer, a single member LLC, performed airplane certifications on aircraft

By Douglas Upton and Andrew Appleby

The New Jersey Tax Court determined that credit card issuers must source to New Jersey all of their interest and interchange fee receipts, and half of their credit card service fees, from New Jersey accountholders. The Tax Court concluded that the Division of Taxation’s regulations required the taxpayers to

In another taxpayer victory, the New Jersey Superior Court, Appellate Division held that an intangible holding company was not required to throw out any of its so-called “nowhere receipts” from an affiliated tobacco company in computing the denominator of its receipts factor. In Lorillard Licensing Company LLC v Dir., Div. of Taxation, the court

By David Pope and Timothy Gustafson

The New Jersey Tax Court drafted a letter to the Superior Court of New Jersey, Appellate Division, to amplify the Tax Court’s August 9, 2013, taxpayer-favorable decision applying New Jersey’s “Throw-Out Rule” in Lorillard Licensing Co. LLC v. Division of Taxation, Docket No. A-2033-13T1. In Lorillard, the

On July 28, 2011, the New Jersey Supreme Court denied a taxpayer’s claim that New Jersey’s Throwout Rule (which excludes certain sales from the denominator of the sales apportionment factor) is facially unconstitutional. Whirlpool Props., Inc. v. Div. of Tax’n, Case No. 066595 (N.J. July 28, 2011). However, the court held that the application

Sutherland’s SALT Poll, “MTC Considering Broad Throwout Rule Under Cloak of Redefining ‘Sales,’” revealed that more than 80% of those surveyed oppose narrowing the scope of the type of “sales” used to calculate the receipts factor. The vast majority of respondents were opposed to altering the sales factor because they believed all receipts used to calculate business income should be reflected in the apportionment formula. The MTC’s proposal and the poll results are not surprising based on Sutherland’s experience with escalating attempts by state auditors to “throwout” certain types of receipts from the sales factor.Continue Reading SALT Poll Results: Most Oppose MTC’s Proposal to “Throwout” Receipts

Yesterday, the New Jersey Supreme Court heard oral arguments in the Whirlpool case. Whirlpool Properties, Inc. v. Div. of Taxation, Docket A-25-10 (N.J. Supreme Court argued May 4, 2011). Whirlpool argued that the New Jersey “Throwout Rule” is facially unconstitutional because it is designed to tax extraterritorial income. The New Jersey Throwout Rule required taxpayers

Despite the overwhelming business opposition to “throwout” sales factor apportionment rules and New Jersey’s recent repeal of its “throwout” rule, Maine is now bucking the trend and adopting a new “throwout” rule. Effective for 2010 and subsequent years, Maine adopted the Finnigan methodology for computing the sales factor for a combined return and to replace its “throwback” rule with the “throwout” rule.

Under the new Finnigan methodology of Code Me. R. 810 for determining the numerator of the sales factor in a combined report, “total sales of the taxpayer” in Maine now includes sales of the taxpayer and sales of any other entity included in a combined return, regardless of whether those entities themselves have nexus with Maine. The adoption of Finnigan applies to both unitary groups that have elected to file a single combined return and those that file separate returns utilizing combined apportionment. If separate returns are filed, each taxpayer’s  return will include in the numerator of the sales factor its own Maine sourced sales as well as a portion of the Maine sourced sales of those entities in the unitary group that do not have nexus with Maine.Continue Reading Throw Out the Throwback: Maine Replaces “Throwback” with “Throwout” and Adopts Finnigan