States continue to provide relief in response to the spread of the COVID-19 virus. This week, numerous states responded to the federal income tax filing extension, and we expect additional states to respond in the coming days. Some states are also offering relief for non-income business taxes, and much of the relief is limited to small- to mid-size businesses. Furthermore, COVID-19 is causing complications in property tax assessments, payments, and appeals.
The World Health Organization has officially declared the coronavirus outbreak to be a pandemic. In addition to the cost on human life, the rapid spread of COVID-19 has left a trail of economic damage affecting business revenues. COVID-19 has caused complete or partial shutdown of factories, supply chain disruptions, and labor shortages, and has impacted demand in certain industries. This impact will also be felt by U.S. state, and local governments.
Baker McKenzie attended the U.S. Supreme Courtâs oral arguments yesterday in South Dakota v. Wayfair, Docket No. 17-494. At issue in the case is whether the Court should abrogate the physical presence nexus standard that it first articulated in National Bellas Hess v. Depât of Revenue, 386 U.S. 753 (1967), and later affirmed in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). The Courtâs decision could have a profound impact on sales and use tax nexus in the United States by altering the limitations currently imposed on a stateâs ability to require out-of-state retailers to collect such tax.
ExxonMobil Oil Corporation, Hess Corporation, and Shell Oil Company (collectively, the âOil Companiesâ) were recently dealt another blow in their ongoing transfer pricing dispute with the District of Columbia Office of Tax and Revenue (âOTRâ). The Oil Companies are among several taxpayers that have been fighting the validity of the transfer pricing methodology employed by Chainbridge Software LLC (âChainbridgeâ), the OTRâs third-party transfer pricing consultant. Just last year, the Oil Companies unsuccessfully sought to estop the OTR from relitigating the validity of the controversial Chainbridge methodology in light of the OAHâs holding in Microsoft Corp. v. Office of Tax and Revenue (2012) that the Chainbridge methodology was arbitrary, capricious and unreasonable (for prior coverage, see DC Office of Tax and Revenue Set to Relitigate Chainbridge Methodology in Oil Company Cases).  In a January 26, 2018 Order, Office of Administrative Hearings (âOAHâ) Administrative Law Judge Bernard H. Weberman denied the Oil Companiesâ motion for summary judgment, holding that they failed to establish that the transfer pricing method employed by Chainbridge was arbitrary, capricious and unreasonable as a matter of law. Hess Corp., et. al. v. D.C. Office of Tax & Revenue, Case Nos. 2012-OTR-00027, 2011-OTR-00047, 2011-OTR-00049 (Jan. 26, 2018).Â