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SCOTUS Asked to Hear Appeal Involving Constitutionality of Retroactive Tax Legislation

by McDermott Will & Emery | Oct 18, 2016 | Constitutional Issues, Income Tax, Nationwide Importance, Washington

The Supreme Court of the United States has been asked to hear an appeal in a case involving the circumstances in which retroactive tax legislation will be constitutional.

In Dot Foods, Inc. v. State of Washington Department of Revenue, 372 P.3d 747 (Wash. 2016), the Washington State Supreme Court upheld legislation retroactively removing a corporate income tax exemption. Although the legislature, in justifying its action, said that the retroactive legislation was intended to reflect the legislature’s initial intent, the facts did not bear that out. The exemption was consciously adopted by the legislature and, indeed, upheld by the Washington Supreme Court when the Department of Revenue attacked Dot Foods’ use of it in an earlier case. (more…)

Washington ALJ Upholds B&O Assessment on German Company’s Royalty Income

by Arthur R. Rosen and Eric D. Carstens | Jun 16, 2016 | Constitutional Issues, Nexus, Transaction Taxes, Washington

On May 31, 2016, the Washington Department of Revenue (DOR) Appeals Division released a Determination (No. 15-0251, 35 WTD 230) denying a German pharmaceutical company’s business and occupation tax (B&O) protest. The administrative law judge (ALJ) ruled that while the nondiscrimination provisions contained in Article 24 of the US-Germany Income tax Treaty (Treaty) “may apply,” the B&O does not discriminate against non-US businesses because it is imposed on any business deriving royalty income from Washington sources and applies equally to foreign and US companies. The ALJ also found that the company could avoid double taxation of the royalty income by excluding income taxed by Washington from its German tax base. While the company also challenged the constitutionality of the 2010 B&O economic nexus law, the ALJ declined to entertain it—citing a lack of authority to rule on the constitutionality of Washington statutes.

(more…)

Focus on Tax Controversy – December 2015

by McDermott Will & Emery | Jan 4, 2016 | Income Tax, Insurance Tax, Local Tax, Michigan, New Jersey, New York, Sales Tax, Tax Base, Virginia, Washington

McDermott Will & Emery has released the December 2015 issue of Focus on Tax Controversy, which provides insight into the complex issues surrounding U.S. federal, international, and state and local tax controversies, including Internal Revenue Service audits and appeals, competent authority matters and trial and appellate litigation.

Mark Yopp authored an article entitled “Waiting for Relief from Retroactivity,” which discusses how courts are expanding the ability of state legislatures to retroactively change taxpayer liability going back many years.

View the full issue (PDF).

SCOTUS Asked to Hear Appeal Involving Constitutionality of Retroactive Tax Legislation

Washington ALJ Upholds B&O Assessment on German Company’s Royalty Income

Focus on Tax Controversy – December 2015

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