SCOTUS, SALT & the Road Ahead St. Petersburg, FL June 10, 2014

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1 SCOTUS, SALT & the Road Ahead St. Petersburg, FL June 10, 2014 Panelist: Bruce Fort, MTC Fred Nicely, COST Marshall Stranburg, FL DOR Greg Turner, COST

2 2008 Term Polar Tankers 1/83 cases 2009 Term Levin v. Commerce Energy 1/92 cases 2010 Term AZ Christian School v. Winn CSX Transportation v. AL 2/85 cases 2011 Term - Armour v. Indianapolis 1/78 cases 2012 Term - [None] 0/79 cases 2013 Term - [Thus Far None] - 0/53 cases 5/470 cases = 1% of SCOTUS Cases over past 6-years

3 Comptroller of Maryland v. Wynne Docket , cert. granted 5/27/14 (from MD Court of Appeals, 431 Md. 147) Question Presented: Does the U.S. Constitution prohibit a state from taxing all the income of its residents-wherever earned-by mandating a credit for taxes paid on income earned in other states? - Can individual residents of a state be taxed on their full income without the state apportioning or providing credit for taxes paid to other states? - How far does this apply sales/use taxes, piggyback and nonpiggyback local income taxes, etc.?

4 Tesoro Docket , cert. denied 6/2/14 (from AK Sup. Court, 312 P. 3d 830) - What constitutes a unitary business? - Internal consistency w/apportionment Amazon.com/Overstock.com Docket & , cert. denied 12/2/13 (on Cyber Monday, from NY Court of Appeals, 20 NY3d 586) - Was New York s click-through provision facially unconstitutional? Mobility Medical Docket , cert. rehearing pet. denied 5/19/14 (from Sup. Court of Miss., No CA SCT) - Could Mississippi s sales/use tax apply to insurance carriers when federal law prohibits direct or indirect tax on federal employees health plans (FEHBP) - Mississippi held its tax was not preempted because it was not the insurance carrier tax legally fell on it as a retailer not on the purchaser

5 McLane Southern Docket , cert. denied 1/27/14 (from LA Sup. Court, 110 So. 3d 1262) - Does the Commerce Clause allow tax on goods distributed by out-of-state wholesaler to be taxed more heavily than goods distributed by in-state wholesaler? Capra Docket , cert. denied 1/27/14 (from 7 th Circuit, 819 F. Supp. 2d 727) - Does the Comity doctrine prevent access to federal court on alleged 42 U.S.C damages stemming from allegations that an IL state representative offered property valuation reductions in exchange for campaign contributions?

6 Alabama DOR v. CSX Docket , writ filed 10/30/13 (from 11 th Cir. Ct. of Appeals, 720 F.3d 863) - Question Presented: Does a state discriminate against a rail carrier in violation of the 4-R Act when the state generally requires businesses to pay a sales/use tax, but grants exemptions from the tax to competitors of the railroads? - Several states subject motor fuel not subject to the state s motor fuel excise tax to the state s sales/use tax - 1/27/14: Solicitor General asked to file brief - Brief filed 5/27/14: Sol. Gen. states taking case is a close call; however, the Court should deny cert. to review a more suitable case out of the 6 th Circuit [IL Cent. R.R. v. Tenn. Dep t of Rev. oral arguments scheduled 6/19/2014)] - On Court s conference calendar for 6/26/2014

7 DMA v. CO DOR Docket , writ filed 12/16/13 (from 10 th Cir. Ct. of Appeals, 735 F.3d 904) - Question Presented: Does the TIA bar federal court jurisdiction over a suit brought by nontaxpayers to enjoin the informational notice and reporting requirements of a state law that neither imposes a tax, nor requires the collection of a tax, but serves only as a secondary aspect of state tax administration? - Colorado s State District Court issued a preliminary injunction (2/18/14) based on the regulation discriminating against interstate commerce - Court requested Colorado to file response brief, Court granted extension and response brief was due 6/6/14

8 Missouri Gas Energy v. Kansas DOR Docket , writ filed 4/7/14 (from Sup. Ct. of KS, 313 P.3d 789) - Question Presented: Can a state, consistent with the dormant Commerce Clause, impose an ad valorem tax on natural gas that is being transported through interstate commerce but temporarily stored in the state by a common carrier, even though the taxpayer has no control over where the gas is stored and no other connection with the state? - Conflicts with Texas decision holding gas was not subject to tax because it was still in the stream of interstate commerce (in contrast with Oklahoma case that affirmed tax) - Thus far, U.S. Solicitor General has not been asked to opine on this case (as he was in the Oklahoma case) response brief requested and filed 5/29/14 - On Court s conference calendar for 9/29/2014

9 Equifax v. Miss. DOR Docket , writ filed 2/19/14 (from Sup. Ct. of Miss., 125 So.3d 36) - Question Presented: Does a state violate the Due Process Clause s guarantee of an opportunity to receive a fair opportunity to challenge the accuracy and legal validity of an assessment for taxes and penalties, when the taxpayer must present its administrative appeals to employees of the state s revenue department without learning the complete basis for the assessment or having the opportunity to present witnesses or to cross-examine the state s representatives, and the subsequent judicial appeal is not de novo but one in which the judge can only reverse the assessment or abate the penalties under a highly deferential standard of review? - Response brief in opposition filed 5/23/14 - On April 1 (no fooling), Miss. Legislators passed HB 799 addressing many of the issues pending in this appeal

10 India Lynch v. Alabama Docket , writ filed 4/10/14 (from 11 th Circuit Ct. of Appeals, 739 F.3d 1273) - Main Question Presented: Do black public school children and their parents have standing to challenge the validity under the Equal Protection Clause of state constitutional provisions adopted for the purpose of limiting the imposition on whites of property taxes that would be used to educate black public school students? - Response brief in opposition extended to 8/12/14

11 MTC Compact Cases pending on whether equally-weighted three-factor election is mandatory (binding compact ) for MTC Compact Member States or discretionary (CA, MI, OR, TX) MTC Factor Nexus Sales Factor Nexus - Ohio has case pending before the Ohio Supreme on its Commercial Activity Tax (GRT) LL Bean v. Testa

12 Jock Tax Earn Income w/out Physical Presence Can an Ohio municipality impose its income tax on a football player that was not present in the city due to an injury based on where the games the team played in the city? Two former NFL players, Hillenmeyer (Bears) and Saturday (Colts) argue it is unfair for Cleveland to tax them differently than other workers (per day) versus professional athletes (per game not duty days) Eight cities impose this type of tax: Cincinnati, Cleveland, Columbus, Detroit, Kansas City, Philadelphia, Pittsburgh, and St. Louis

13 Tax Credits Can a state provide direct relief from the imposition of an income tax for investment in the state or must it be done via a separate credit mechanism? CDR v. Oklahoma Tax Comm. Motor Fuel Tax on Native Americans Can a state tax Native Americans for fuel purchased off reservation but used on the reservation? FL DOR v. Seminole Tribe.

14 Cure for Unconstitutional Tax Arguably unconstitutional, NV imposes a sales/use tax on coal used to generate electricity that was extracted outside of NV; however, coal extracted in the state is subject to an alternative minerals tax (not a complementary tax a tax imposed pursuant to NV s Constitution) NV District Court held tax was unconstitutional and struck exemption for coal extracted within the state What is the cure/remedy (McKesson Corp., 496 U.S. 18)? No commercial grade coal is extracted in NV. Are the electric generation companies entitled to a sales/use tax refund? NV Energy v. NV Dep t of Taxation.

2016 Colorado Case Law Update

FEATURED ARTICLES 2016 Colorado Case Law Update Tyler Murray, Esq. 1 The following contains a summary of the most significant tax cases decided by Colorado courts during 2016 organized by subject. I. Sales