In an order released in July 2021, the Illinois Tax Tribunal denied a taxpayer’s motion for summary judgment in a “unitary business” case, finding that there were disputed issues of fact as to whether the taxpayer was engaged in a unitary business with a company that the taxpayer sold. See Christopher v. Illinois Dep’t of Rev., 19 TT 131 (Ill. Tax Trib. Nov. 24, 2020, released July 2021). The taxpayer, T. Christopher Holding Company (“Holding Company”), claimed that it was not unitary with Vogue International, LLC (“Operating Company”), and thus its gain from the sale of Operating Company could not be included in Holding Company’s Illinois business income under U.S. constitutional principles and Illinois law. However, the Tribunal found that the Illinois Department of Revenue (“Department”) had presented sufficient evidence to establish a disputed issue of material fact that rendered summary judgment on this issue inappropriate.
On April 7, 2021, the New York Legislature passed the New York Budget Bill for fiscal year 2022 (S2509–C/A3009-C) (the “Enacted Budget”), ushering in a slew of tax increases for businesses and high-income earners. As of the time of publication of this post, New York Governor Andrew Cuomo had not yet signed the Enacted Budget, but has indicated that he will do so. The Enacted Budget is the result of a months-long negotiation process that…
In groundbreaking news, the Texas Third Court of Appeals has withdrawn its earlier opinion and issued a new opinion in the Hegar v. El Paso Electric Co. case. In the case, which has attracted widespread attention, El Paso Electric filed a refund claim with the Texas Comptroller for sales taxes that it had paid on transactions involving “telemetry units that are related to step down transformers,” which are pieces of equipment used to transmit electricity. In its initial redetermination request, which is required in Texas to challenge a denied refund claim, El Paso Electric cited the Texas sales tax manufacturing exemption as one of its grounds for challenging the refund denial. Specifically, El Paso Electric cited Texas Tax Code section 151.318(a)(4), which includes the term “telemetry units that are related to the step-down transformers” among a list of around fifty different items that are exempt from sales tax when used as part of the manufacturing process in Texas. The Texas Comptroller argued that, because El Paso Electric did not explicitly tie the telemetry units related to step-down transformers directly to the code section citation, El Paso Electric was barred from raising those claims during its administrative hearing. The administrative law judge agreed and overruled El Paso Electric’s claim that its telemetry units were exempt under Texas Tax Code section 151.318(a)(4). El Paso Electric then sued in Texas District Court, which overruled the administrative law judge and granted El Paso Electric’s refund claim. The Texas Comptroller later appealed, and the Texas Third Court of Appeals once again overturned the district court, ruling for the Texas Comptroller. This latest opinion withdraws the earlier Third Court of Appeals opinion and issues a new opinion.
New York lawmakers recently introduced two bills to expand the application of the New York State False Claims Act (“FCA”). The first intends to require the FCA to apply to non-filers, the second to remove the scienter element (i.e., no longer imposing a “knowing” requirement). Although both bills are retroactive and concerning, removing the scienter element should put all businesses on high alert as enforcement of the tax laws could now be in the hands…