State income and franchise tax

Transcription

1 Third quarter 2016 State income tax developments State income and franchise tax Quarterly update To our readers: The following provides a summary of the significant legislative, administrative and judicial actions that affected state and local income/franchise taxes during the third quarter of 2016, for the period of 1 July 2016 through 15 September Connect with us Follow us on Twitter Key developments Page 2 Page 2 Page 3 California amends its market-based sourcing regulations for revenues from interest, dividends, securities, other intangibles New York sustains penalty after determining that combined reporting, not add-back of royalty payments, is required Proposed IRC Section 385 debt-equity regulations have state income tax implications Other noteworthy developments Page 3 Page 4 Page 4 Page 5 Page 5 Page 6 Legislative developments in District of Columbia Legislative developments in Missouri, North Carolina and Pennsylvania Judical developments in Louisiana, Maryland and Massachusetts Judicial developments in Michigan and Oregon Administrative developments in Alabama, Arizona and California Administrative developments in Indiana, New York, North Carolina, North Dakota, Oregon, South Carolina and Texas Developments to watch Page 7 Developments to watch in California, Louisiana, New Jersey, Oregon, South Carolina and Texas

2 Key developments California amends its market-based sourcing regulations for revenues from interest, dividends, securities, other intangibles On 15 September 2016, the California Office of Administrative Law approved amendments proposed by the California Franchise Tax Board (FTB) to Cal. Code Regs. (CCR) tit. 18, Section (the Amendments) relating to the sourcing of revenues from sales other than sales of tangible personal property. The Amendments change the state to which revenues derived from dividends, interest, securities and other intangible property are assigned for purposes of determining the California sales factor. Coupled with California s bright-line nexus standards, companies that are not currently filing tax returns in California may now be subject to California taxation, including the state s $800 minimum tax. As of 1 January 2015, any taxpayer with more than $536,446 of revenues assigned to the state (with such sales assigned based upon California s own market-based sourcing regulations) is deemed to be doing business in California and is obligated to file a corporate franchise tax return. These nexus provisions apply not only to corporations, but also to all other types of legal entities (e.g., partnerships, LLCs, S corporations). Moreover, since California is not bound by international tax treaties and does not respect the internationally recognized concept of permanent establishment, foreign taxpayers that believe they are protected from all US taxation under their nation s tax treaties with the US may be subject to California taxation under the new rules. The amendments to these regulations are retroactively effective to tax years beginning on or after 1 January 2015, although taxpayers can elect to apply those changes to all open years for which market-based sourcing was required. Generally, taxpayers can make such an election for all tax years beginning on or after 1 January Taxpayers that made a timely filed election to use the Single Sales Factor for tax years beginning on or after 1 January 2012 also may elect to apply the Amendments to those years as well. Business entities that report income from securities and other types of intangible property (e.g., interest, dividends and gains or losses) for the 2015 year but have not filed California returns may need to take action before 17 October Ernst & Young LLP s insights The majority of taxpayers that already file returns in California will generally see little impact from the Amendments; however, those California taxpayers may want to consider filing amended California tax returns to reflect the new sourcing rules under the Amendments, as these changes could alter their California tax liability. All companies that derive revenue from intangible property, including those receiving dividends, interest and gains or losses on sales of securities, should consider whether the Amendments may require them to file in California if they haven t already been doing so. Moreover, some may want to consider the state s authority to impose its taxes through such limited contacts under various legal theories. New York sustains penalty after determining that combined reporting, not add-back of royalty payments, is required In Whole Foods Market Group, 1 the New York Division of Tax Appeals (DTA) held that a corporation operating a multistate grocery store chain and a related intangible holding company organized as a limited partnership that elected to be treated as a corporation for federal income tax purposes should have filed tax returns on a combined basis for the audit period (consisting of the 2008, 2009, and 2010 tax years), instead of adding back the related-party royalty payments. Starting in 2007, New York s related-party add-back provisions were amended to provide an exception where the taxpayer was included in a combined report, and modified its combined reporting provisions to require combination where there are substantial intercorporate transactions (SIT) among the related corporations. The New York Department of Taxation and Finance (the NYDOTF) issued guidance which generally provided that a SIT exists when, during the taxable year, 50% or more of a corporation s receipts included in the computation of entire net income were from one or more related corporations. Here, the parties stipulated that the intangible holding company received more than 50% of its total receipts from the corporation for each of the years in the audit period. Thus, under the NYDOTF s guidance, the DTA concluded that combined filing was required rather than merely adding back the related-party royalty payments. The DTA, however, concluded that the taxpayer was not entitled to abatement of the substantial understatement tax 2 State income and franchise tax quarterly update

3 penalty because its interpretation of the statute after the 2007 amendment at issue was not reasonable. The DTA reasoned that the taxpayer did not make a good-faith effort to determine its proper tax liability, since the taxpayer failed to disclose such an effort and did not obtain professional advice, informal advice or an advisory opinion from the NYDOTF. Ernst & Young LLP s insights The DTA s ruling, although not precedent, provides guidance on how members of a unitary group may compute the SIT test for New York combined reporting purposes, which was in effect for tax years 2007 through Critically, according to this ruling, taxpayers must assess the application of the SIT test and combined reporting before considering any New York intercompany modifications (e.g., the related-party royalty add-back). Accordingly, taxpayers may wish to reconsider their separate return or combined reporting filing position as well as computation of the SIT test for such years based upon this ruling. In addition, the decision provides insight into when the DTA will enforce penalties on an ambiguous and disputed tax issue. Accordingly, taxpayers should address and document the above criteria on all New York corporate franchise tax positions in order to withstand the imposition of this penalty. Proposed IRC Section 385 debt-equity regulations have state income tax implications On 4 April 2016, the Treasury Department and the Internal Revenue Service (IRS) released proposed regulations (REG ) under Internal Revenue Code (IRC) Section 385 (the Proposed Regulations). If the Proposed Regulations are finalized in their current form, they would: Treat certain related-party debt as stock for federal income tax purposes Allow the IRS to treat certain related-party interests as part debt and as part stock for federal income tax purposes Require extensive documentation be prepared and maintained in order for certain related-party interests in a corporation to be treated as debt for federal income tax purposes The Proposed Regulations would not apply to related-party debt when the parties are members of the same federal consolidated group the consolidated group exception. The Proposed Regulations would affect state income tax because they affect the determination of the tax base. Critically, there is uncertainty whether the states could enforce the debt reclassification provisions separately from the IRS, most notably the expansive documentation requirements. For instance, if the states do not conform to the consolidated group exception in the regulations or attempt to independently apply the Proposed Regulations, it could create significant cross-equity ownership issues within a federal consolidated group and possibly dilute stock ownership in some members below the 80% threshold for state income tax purposes only. Doing so could create enormous non-conformity problems in M&A transactions, subsidiary liquidations, distributions (including ineligibility for state dividends received deductions) and internal reorganizations, among other provisions where concentrated ownership above certain thresholds is required. Ernst & Young LLP s insights While the Treasury Department and IRS initially indicated that the Proposed Regulations could be finalized as early as Labor Day 2016, final adoption did not occur on that date. It is now widely anticipated that the Proposed Regulations will be adopted in October Consequently, it is important for taxpayers to understand the Proposed Regulations and quickly consider their possible state income tax implications. If the states directly or indirectly conform to the Proposed Regulations, it is unclear whether all or most states also must conform to the consolidated group exception. As a result of such uncertainty, and in an effort to minimize state tax risk, taxpayers may want to consider meeting the documentation and information requirements as a leading practice for debt instruments between members of the consolidated group even if they are not required to do so for federal income tax purposes, among other actions. Debt instruments could include cash pooling and intercompany treasury sweeps, regardless of whether they are interest bearing under the Proposed Regulations. Taxpayers should closely monitor when the Proposed Regulations are finalized, as some action may have to be completed within 30-days of finalization. Other noteworthy developments Legislative District of Columbia: Emergency law (B21-812, enacted 20 July 2016) delays when a combined group whose net deferred tax liability was increased as a result of the enactment 3 State income and franchise tax quarterly update

4 of the combined reporting provisions can deduct a portion of the net increase. Under the amended provisions, the deduction may be claimed by an eligible taxpayer for a 7-year period, beginning with the 10th year (formerly 5th year) of the combined filing. As emergency legislation, which is effective for a 90-day period, B will expire on 18 October A bill (B21-669) that would enact these changes on a permanent basis is pending before Congress for a mandatory review period. Missouri: Provisions of HB 2030 (enacted 14 September 2016) allow a taxpayer, which includes a corporation, to deduct from its federal adjusted gross income an amount equal to 50% of the net capital gain from the sale or exchange of employer securities of a Missouri corporation to a qualified Missouri stock ownership plan if upon completion of the transaction, the qualified Missouri employee stock ownership plan owns at least 30% of all outstanding employer securities issued by the Missouri corporation. The deduction is allowed for all tax years beginning on or after 1 January This provision will automatically sunset in six years, unless reauthorized, in which case it will sunset 12 years after the effective date of the reauthorization. North Carolina: HB 1030 (enacted 14 July 2016) contains proposed market-based sourcing statutory provisions for sales of non-tangible personal property and services and requires the North Carolina Department of Revenue to adopt rules regarding the implementation and administration of the proposed market-based sourcing principles by January These provisions, however, would not become effective unless and until the North Carolina General Assembly passes further legislation enacting market-based sourcing rules. Pennsylvania: HB 1198 (enacted 13 July 2016) changes the rate of and the manner in which the Bank Shares Tax is calculated, including allowing a taxpayer to change its apportionment election provided that it receives permission from the Pennsylvania Department of Revenue (PA DOR). HB 1198 also authorizes a tax amnesty program, which will allow taxpayers that are delinquent on any tax administered by the PA DOR as of 31 December 2015 to come forward in exchange for forgiveness of liabilities incurred prior to 2011, abatement of half of the interest and waiver of penalties. The amnesty program is set to run 21 April 2017 to 19 June Judicial Louisiana: A medical diagnostic testing company is entitled to a refund of corporate income tax because its receipts from testing Louisiana patient specimens at its Texas facility is sourced to Texas, not Louisiana. In reaching this conclusion, the Louisiana Court of Appeals held that the company is subject to the general three-factor apportionment formula under La. R.S. 47:287.95(F); the income from testing services qualifies as gross apportionable income, not net sales as asserted by the Louisiana Department of Revenue; a service business apportioning its income under the general apportionment formula must determine its gross income attributable to the state by sourcing its service income in the same manner as a service business apportioning its income using the two-factor apportionment formula under La. R.S. 47:287.95(D) using the location-of-performance sourcing rule as opposed to the market-based sourcing rule. Thus, under the location-of-performance sourcing rule only income from services performed in Louisiana are attributable to the state. In this case, the services were performed in Texas and, as such, the income from these services is attributable to Texas. It should be noted, that effective for taxable periods beginning on and after 1 January 2016, Louisiana has adopted a single sales factor apportionment formula for most businesses and market-based sourcing rules for sourcing sales of non-tangible property and services. 2 Maryland: In Branch Banking and Trust Co., 3 the Maryland Tax Court (MD Tax Ct.) held that the Maryland Comptroller of the Treasury s (Comptroller) policy of not allowing a carryforward of unsubtracted exempt federal obligation interest discriminates against holders of federal obligations in favor of similarly situated holders of Maryland obligations. After the ruling was issued, the MD Tax Ct. granted the Comptroller s motion to withdraw this ruling. In its motion, the Comptroller argued that the decision only addressed the legal issue in the case and not the factual issue of whether the taxpayer met its burden of substantiating the amount of refund claimed. The Comptroller s motion did not address the legal question that was resolved by the MD Tax Ct. Massachusetts: On remand from the U.S. Supreme Court (USSC), the Massachusetts Supreme Judicial Court (MSJC) affirmed its earlier decision that the Massachusetts Commissioner of Revenue properly treated the loans of an out-of-state holding company as being located wholly in Massachusetts and, therefore, included in the numerator of its property factor, because the company failed to rebut the presumption that the loans should be sourced to its commercial domicile, which was Massachusetts. In doing so, the MSJC found that Massachusetts statutory provisions, as applied to the company, did not violate the internal consistency test (in light of the USSC s recent ruling in Wynne, 4 the issue for which the USSC remanded the case back to the MSJC) or the dormant commerce clause. The MSJC concluded that if the Massachusetts tax provisions at issue were in effect in every 4 State income and franchise tax quarterly update

5 state, no more than 100% of the company s income would be subject to tax (since only one state could be the commercial domicile of the taxpayer under the Massachusetts rule) and that the company would not be disadvantaged from operating in interstate commerce as opposed to wholly intrastate commerce. 5 In another matter, the MSJC also held that a large bank, in its capacity as a corporate trustee of several inter vivos trusts, qualifies as a Massachusetts inhabitant for the purposes of fiduciary income tax because the trustee: (1) maintains an established place of business in Massachusetts where it conducts its business in the aggregate for more than 183 days of a taxable year; and (2) conducts trust administration activities within Massachusetts that include material trust activities relating specifically to the trust or trusts whose tax liability is at issue. 6 Michigan: The Michigan Court of Appeals (COA) held that the Michigan Court of Claims did not have the authority, on reconsideration, to rule that legislation enacted in September 2014 to retroactively repeal the Multistate Tax Compact (Compact) to 2008 applied to the taxpayer (preventing the taxpayer from receiving refunds), rather than entering summary judgment in favor of the taxpayer s right to elect the Compact s equally weighted three-factor apportionment formula, as ordered by the Michigan Supreme Court (MSC). The COA further held that its earlier ruling 7 upholding the retroactive repeal of the Compact does not overrule or reverse the MSC earlier ruling, which applied to the taxpayer s 2008 tax year only. Accordingly, the taxpayer is entitled to make an election to use the Compact s apportionment formula for tax year All other years fall under the scope of the Compact s repeal. 8 The MSC will not review the 15 March 2016 decision of the COA upholding the 2014 retroactive repeal by the Michigan Legislature of the Compact, provisions of which taxpayers had argued allowed them to elect to use the Compact s equally weighted three-factor formula instead of the statutory heavily weighted sales factor formula. 9 Previously, in June 2016, the MSC denied a group of taxpayers applications for leave to appeal the COA s decision upholding the Compact s repeal. 10 Oregon: On remand from the Oregon Supreme Court, the Oregon Tax Court (Court) held that a multistate power company s receipts from its sales of electricity that are shipped outside Oregon are not included in the company s Oregon apportionment formula, because state law requires shipments of tangible personal property (such as electricity) to be treated as a sale at the location of the purchaser. Thus, receipts from shipments of electricity that terminated in states other than Oregon are sourced outside the state. 11 Administrative Alabama: The Alabama Department of Revenue repealed Ala. Reg , Deductions Allowed Corporations, and replaced it with Ala. Reg , Federal Income Tax (FIT) Deduction. Under the new rule, FIT attributable to Alabama may be deducted in the year paid or accrued, according to the accounting method used in computing taxable income. The regulation also enumerates how FIT is attributable to Alabama for: (1) an accrual basis taxpayer that does not file as a member of a federal consolidated income tax return group and that apportions or allocates income within and outside Alabama, (2) an accrual basis taxpayer that files as a member of a federal consolidated income tax return group, and (3) a cash basis taxpayer. The former regulation is repealed as of, and the new regulation takes effect on, 29 August Arizona: The Arizona Department of Revenue (AZ DOR) tax recovery program runs from 1 September 2016 to 31 October In exchange for paying the tax due, the AZ DOR will abate or waive all penalties and interest due. California: In FTB Notice (issued 9 September 2016), the California Franchise Tax Board (FTB) advised that it will not seek to terminate the water s-edge election of a water s-edge combined reporting group that is unitary with a foreign affiliate that becomes a taxpayer because of the addition of the brightline nexus standard that took effect in In Information Letter No (issued 4 August 2016), the FTB provided general information on California elections related to the federal repair regulations. For personal income tax and corporate income and franchise tax purposes, California generally follows the repair regulations. If the Internal Revenue Service approves a taxpayer s request to change an accounting method for federal income tax purposes, the change applies for California corporate franchise and income tax purposes provided that California law conforms to, or is substantially similar to, the underlying law which is being applied. For example, California has not adopted most methods of accelerated depreciation and thus, taxpayers must make adjustments in applying the repair regulations that reflect the California differences. To obtain treatment other than that elected for federal income tax purposes, a separate election must be made for California tax purposes. In Chief Counsel Ruling (issued 5 July 2016), the FTB advised a multistate company that designs, markets and distributes name-brand goods that it: (1) must aggregate the proceeds from sales of tangible personal property with 5 State income and franchise tax quarterly update

6 royalties received to determine whether it has nexus with California, and (2) should not throwback to its California sales factor the sales of tangible personal property from states where it has nexus and its activities exceed the protections of Public Law In Legal Ruling (issued 14 July 2016), the FTB determined that for purposes of calculating California s limited liability company (LLC) fee the cost of goods sold (COGS) includes the adjusted basis of real property held for sale to customers in the ordinary course of business. Thus, LLCs that are dealers in real property must add the COGS (based on real property) back to gross income in calculating the LLC fee. If the property is held for investment purposes rather than for sale to customers in the ordinary course of business, the adjusted basis in the sale will not be added back to the LLC s gross income for purposes of calculating the LLC fee. Indiana: In Letter of Findings Nos and (both issued 31 August 2016), the Indiana Department of Revenue (IN DOR) determined that a multistate retailer was not required to reapportion its gross operating margin between itself and its related purchasing entity to more fairly reflect its Indiana-source income, because the IN DOR s audit did not provide sufficient grounds for rejecting the retailer s transfer pricing study under which the retailer decreased its federal adjusted gross income. In Directive #57 (issued July 2016), the IN DOR issued guidance on the treatment of state and local income tax refund claims filed based on the USSC s ruling in Wynne, indicating that it will allow a credit for out-of-state local income taxes against pre-2015 county economic development income tax liabilities, because Indiana did not provide a credit for out-ofstate local income taxes before 1 January New York: On 5 August 2016, the New York Department of Taxation and Finance (NYDOTF) updated its instructions for the 2015 Article 9-A tax forms on its website to provide additional comments highlighting the NYDOTF s position on other financial instruments. The updates state that in determining whether other financial instruments should be treated as qualified financial instruments and how they should be treated under the mark-to-market apportionment section, taxpayers should not view the entire other financial instruments bucket of NY Tax Law Section 210-A.5(a)(2)(H) as one broad type of financial instrument. Rather, taxpayers must narrowly review each financial instrument on an instrument-by-instrument basis. North Carolina: On 4 August 2016, the North Carolina Department of Revenue notified taxpayers that the corporate income tax rate will be reduced from 4% to 3% for tax years beginning on or after 1 January 2017, since the state s revenue collections met the rate reduction thresholds established in earlier law. North Dakota: In July 2016, Regulations through were adopted to provide guidance on the new sales factor weighting election provisions, which allow taxpayers to elect to weight their sales factor 50% for tax years 2016 and 2017, 75% for tax year 2018, and 100% for tax years 2019 and thereafter. The new regulations took effect 1 July Oregon: Regulation (O) was amended to make apportionment provisions related to the sourcing of a public utility s sales of commodities (e.g., electricity, water, steam, oil products, and gas) applicable to all periods open to examination. Under the regulation, a public utility s sale of commodities delivered or shipped to a purchaser with a contractually specified point of physical delivery in Oregon, is sourced to Oregon. The change took effect 1 July South Carolina: The South Carolina Department of Revenue (SC DOR) in Revenue Ruling No (issued 27 July 2016) updates its guidance on nexus creating activities for income tax purposes. While this new revenue ruling largely is intended to update previously issued guidance, it does provide a new section addressing certain activities for computer and internet-based transactions. The associated questions in this section appear to suggest a broad interpretation of nexus for such activities. For example, the revenue ruling states that nexus could exist for an out-of-state business with no physical presence if it (1) has a substantial number of customers with billing addresses in South Carolina, or (2) earns a substantial amount of revenue from customers in South Carolina. In SC Revenue Ruling # 16-7 (issued 6 July 2016), the SC DOR provides an overview of the state s net operating loss (NOL) rules, the application of IRC Section 382 limitations on South Carolina NOL carryforwards, and the application of Section 382 limitations and other NOL use limitations on South Carolina consolidated returns. Texas: In Letter Ruling No L (issued 8 September 2016), the Texas Comptroller of Public Accounts (Comptroller) stated its policy on whether a taxable entity may include empty miles in the apportionment formula for transportation receipts. Under the Comptroller s policy, a taxable entity may either include or exclude empty or deadhead miles (i.e., miles traveled without goods or passengers) in both the numerator and denominator of the apportionment formula for transportation receipts. A taxable entity, however, may not 6 State income and franchise tax quarterly update

7 exclude empty miles from the numerator but include those miles in the denominator. This policy applies to all open tax report years. In Private Letter Ruling No L (issued 26 August 2016), the Comptroller determined that when liquefied natural gas (LNG) is loaded into a vessel in a Texas port, and the vessel is chartered by the LNG purchaser under a time-charter agreement with industry-standard terms, the LNG is delivered in Texas and the sale of the LNG results in Texas receipts. In Letter Ruling No L (issued 11 August 2016), the Comptroller provides guidance on the treatment of vendor funded incentives (e.g., volume-based purchase price adjustments, sales-based incentives, product placement incentives, new store allowances, depletion allowances) in computing the cost of goods sold under the Texas revised franchise (Margin) tax. In Letter Ruling No L (issued 22 July 2016), the Comptroller advises on the proper apportionment of gross receipts resulting from the sale of substantially all of the assets of a Texas company to an out-of-state corporation. The company s sale of tangible personal property (TPP) that was located in Texas at the time of sale results in Texas receipts, while its sale of TPP deployed in a foreign jurisdiction at the time of the sale does not result in Texas receipts because the TPP was not delivered or shipped to a buyer in Texas. The company s sale of contract rights is the sale of an intangible asset, the gross receipts from which are apportioned to the purchasing corporation s state of incorporation, in this case Delaware. Developments to watch California: It is anticipated that in the first half of October 2016, the US Supreme Court will consider the taxpayer s petition and decide whether to review the California Supreme Court s ruling in Gillette. 12 In that ruling, the California Supreme Court held that corporate taxpayers cannot elect to use the Compact s apportionment formula for reporting income to California in lieu of the statutorily mandated formula (e.g., double-weighted sales or single sales factor formulae). Louisiana: Starting in 2017, Act 8 (enacted 8 March 2016) would change Louisiana s current graduated tax rates to a flat 6.5% corporate income tax rate, and HB 95 (enacted 16 March 2016) would repeal the statutory provisions that authorize the deduction for federal income taxes paid by corporations. These changes, however, will take effect only if voters during the 8 November 2016 statewide election approve HB 31 s proposed Constitutional amendment that would eliminate the constitutional requirement that federal income taxes paid be deducted when computing corporate income tax liability. New Jersey: If enacted, SB 982 would implement mandatory combined reporting, while SB 1513 would prohibit the award of state contracts and development subsidies to inverted domestic corporations. Oregon: On 19 September 2016, the Oregon Supreme Court heard oral arguments in Health Net Inc., in which it will determine whether a multistate corporation can elect to use the Multistate Tax Compact s three-factor apportionment formula. The Oregon Tax Court previously held that the state s enactment of a statute requiring the use of a single sales factor apportionment formula by disabling the Compact election was valid; therefore, prohibiting the election. 14 South Carolina: The SC DOR is circulating for public comment a draft revenue ruling providing an overview of the Bank Franchise Tax. Texas: The Comptroller has issued proposed amendments to 34 Tex. Admin. Code Section regarding franchise tax reports and payments, defining previously undefined terms and implementing various laws enacted in 2011, 2013, and Among the provisions in the draft are new definitions (including a new definition of primarily engaged in retail or wholesale trade), franchise tax and information reports due dates, franchise tax calculations, taxability thresholds, electronic filing requirements, and discounts, among others. As currently drafted, the new definition of primarily engaged in retail or wholesale trade would in effect retroactively limit certain taxpayers ability to qualify for the reduced franchise tax rate. 7 State income and franchise tax quarterly update

8 Endnotes 1 In the Matter of the Petition of Whole Foods Market Group, Inc., No (N.Y. Div. Tax App. 14 July 2016). 2-Quest Diagnostics Clinical Laboratories Inc. v. Barfield, No CA 0926 (La. Ct. App. 9 September 2016). 3 Branch Banking and Trust Co. v. Comptroller of the Treas., Case No. 13-IN-OO-0076 (Md. Tax Ct. 12 August 2016), motion to withdraw opinion granted (31 August 2016). 4 Comptroller of Treasury of Md. v. Wynne, 576 U.S., 135 S. Ct (2015). 5 The First Marblehead Corp. v. Commissioner of Revenue, No. SCJ (Mass. Sup. Jud. Ct. 12 August 2016). 6 Bank of America, N.A. v. Mass. Comr. of Rev., No. SJC (Mass. S. Judicial Ct. 11 July 2016). 7 Gillette Commercial Operations North America & Subsidiaries v. Maryland Department of Treas., No (Mich. Ct. App. 30 September 2015). 8 International Business Machines Corp. v. Mich. Dept. of Treas., No (Mich. Ct. App. 21 July 2016). 9 Harley Davidson Motor Co., Inc. v. Mich. Dept. of Treas., No. SC (Mich. S. Ct. 6 September 2016) (consolidated with 14 other appeals); International Business Machines Corp. v. Mich. Dept. of Treas., No (Mich. S. Ct. 6 September 2016). 10 Gillette Comm Operations N Am & Subsidiaries v. Mich. Dept. of Treas., No (Mich. S. Ct. 24 June 2016) (consolidated with 49 other appeals); International Business Machines Corp. v. Mich. Dept. of Treas., No (Mich. S. Ct. 24 June 2016). 11 Powerex Corp. v. Ore. Dept. of Rev., No. TC 4800 (Or. Tax Ct. 1 August 2016). 12 The Gillette Co. v. Franchise Tax Board, No. S (Cal. S. Ct. 31 December 2015), petition for cert. filed, Dk. No (US S. Ct. filed 27 May 2016). 13-Health Net Inc. v. Ore. Dept. of Rev., No. TC 5127 (Ore. Tax Ct. 9 September 2015), cert. granted SC No. S (Ore. S. Ct., arguments 19 September 2016). 8 State income and franchise tax quarterly update

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