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Abstract:
States that conclude that double taxation of corporate profits unacceptably distorts the choice of business form, the debt and equity capitalization of companies, and the character and timing of profits distributions may adopt integrated corporate tax regimes, but states almost always limit such regimes to domestic dividends¿those paid by a corporation taxable in the state to a shareholder also taxable in the state. In contrast, states generally deny double tax relief to cross-border dividends. Failure to extend relief to cross-border dividends distorts locational investment decisions. Although restricting double tax relief to domestic dividends does not violate international tax nondiscrimination rules, more stringent nondiscrimination rules govern state taxation in the European Union and the United States. Member states of those common markets may not constitutionally prefer domestic commerce over cross-border commerce, and that constitutional constraint limits EU and U.S. states' ability to confine double tax relief to domestic dividends. This symposium paper establishes the basic framework for taxation of cross-border dividends, closely analyzes and compares constitutional challenges to states' failure to extend double tax relief to cross-border dividends in Europe and the United States, and identifies the principal policy considerations emerging from the nascent cross-border dividend jurisprudence in the European Court of Justice.

Corporate tax integration, United States, European Union, cross-border dividends, DRD, imputation, capital export neutrality, locational neutralituy

Abstract:
Under the internal consistency doctrine articulated by the U.S. Supreme Court under the dormant Commerce Clause, a state tax must be structured so that if every state were to impose an identical tax, interstate commerce would fare no worse than intrastate commerce. Although a relatively recent addition to the Court's Commerce Clause jurisprudence, the doctrine has played a significant role as the basis for the judicial invalidation of a wide array of state and local taxes. In American Trucking Associations, Inc. v. Michigan Public Service Commission, 545 U.S. 429 (2005), however, the Court sustained an admittedly internally inconsistent $100 per truck tax over Commerce Clause objections. The case marked a retrenchment - and arguably an abandonment - of the internal consistency doctrine as a constraint on state taxation. This article explores the implications of this decision for internal consistency analysis against the background of the doctrine's evolution over the past two decades. While observing that the decision has reconfigured internal consistency doctrine and requires a rethinking of its more expansive applications, the article concludes that the doctrine remains a significant structural restraint on state and local taxation, and it identifies the types of taxing regimes that remain vulnerable to internal consistency attack.

Internal consistency, Taxation, Dormant Commerce Clause

Abstract:
In Jefferson Lines (1995), the U.S. Supreme Court may appear to have retreated from the economic-substance test articulated in Complete Auto (1977). In Jefferson Lines, the Court upheld an Oklahoma sales tax on the full sales price of bus tickets for interstate trips. At the same time, the Court reaffirmed Central Greyhound Lines, Inc. v. Mealey, which struck down a New York gross receipts tax on the full sales price of bus tickets for interstate trips. Jefferson Lines and Central Greyhound are essentially identical from an economic standpoint. The case is significant because the Court has recognized explicitly for the first time that the application of Complete Auto's Commerce Clause criteria can¿and should¿depend to a critical extent on the nature of the tax under scrutiny, a position that runs counter to the assumed universality of the Complete Auto standard that underlies the Court's earlier opinions.

The Court's new tax-by-tax approach is notable for many reasons, not the least of which is its implications concerning the role of economic analysis in resolving Commerce Clause issues. Although economic considerations clearly have an important role to play in Commerce Clause adjudication of state tax cases, the establishment of uniform constitutional rules for economically equivalent exactions is not the only goal of Commerce Clause analysis of state taxation, as the Court correctly concluded in Jefferson Lines.

Despite reaching a proper result, Jefferson Lines is significantly flawed in its reasoning. The Court fails to ground its opinion in the normative and structural considerations. Instead, it appears to have engaged in the type of ad hoc decision making that has substantially reduced the predictive power of its dormant Commerce Clause jurisprudence and has weakened the claims of that jurisprudence to legitimacy.

This Article analyzes Jefferson Lines and its implications for Commerce Clause adjudication of state taxation. Section II examines the Court's opinion in Jefferson Lines, discusses the flaws in the Court's analysis and presents a better justification for the result reached in that case. Section III considers the opinion's ramifications for the existing pattern of state sales and gross receipts taxation and, in particular, for state taxation of services. Section IV takes a broader look at Jefferson Lines' impact on the Court's Commerce Clause jurisprudence in state tax cases.

Abstract:
In its 2008 decision in Department of Revenue v. Davis, the U.S. Supreme Court dismissed Commerce Clause objections to the states' widespread practice of exempting interest from in-state - but not out-of-state - municipal bonds. However, it left "for another day" consideration of "any claim that differential treatment of interest on private-activity bonds should be evaluated differently from the treatment of municipal bond interest generally." This article argues that the day for judicial evaluation of the constitutionality of private activity bonds in light of Davis should never come. Part I of the article briefly reviews Davis. Part II describes the universe of municipal bonds in general and private activity bonds in particular. Specifically, it provides an historical overview of the municipal bond market and the federal tax exemption for such bonds; it offers an economic perspective on the municipal bond market, focusing on the market failures to which municipal bond financing often responds; and it examines the federal statutory framework governing exemption of private activity bond income. Part III considers the challenges courts will face when, as, and if they are compelled to apply post-Davis doctrine to private activity bonds in an effort to determine their constitutionality. It concludes that this judicial inquiry is a virtually hopeless task for both conceptual and factual reasons. Part IV explores nonjudicial alternatives to the resolution of the constitutionality of state tax discrimination in favor of states' own private activity bonds that would avoid the legal uncertainty that will otherwise hover over the existing state tax treatment of this multibillion dollar market for years to come.

Taxation, private activity bonds, Davis

Abstract:
There has been a pronounced change in the formulas states use to apportion the income of multistate corporations from one that placed equal weight on payroll, profits, and sales to one that places at least half the weight on sales, and eight base apportionment solely on sales. This paper, which is intended to stimulate further analysis and debate, rather than provide a definitive conclusion, suggests that sales-only apportionment may violate the provisions of the General Agreement on Tariffs and Trade (the GATT) that prohibits export subsidies.

Abstract:
The report is based on a legal analysis that Hellerstein prepared, along with W. Scott Wright and Charles C. Kearns of Sutherland Asbill & Brennan LLP, for the Florida Legislative Office of Economic and Demographic Research.

Abstract:
In this report, the authors review the interaction of the federal rules, with which most states conform, that limit the corporate capital loss deduction to capital gains for the tax year or to years to which the loss may be carried back or forward, with the constitutional and statutory rules for allocation and apportionment of income - rules that have no direct counterpart at the federal level. They focus on the recent case of General Electric Co. v. Iowa.

Abstract:
The authors look at the interaction of the rules on capital gains with allocation and apportionment rules; the interaction can raise issues of statutory construction, constitional law, and tax policy, the authors say.

Abstract:
The authors examine the treatment of coupons, rebates, and similar third-party payments, and bundled transactions in the Streamlined Sales and Use Tax Agreement. They specify when third-party payments received by the seller will be included in the "sales price." The substance of the agreement's definition of bundled transactions generally incorporates traditional approaches, although in piecemeal fashion, the authors say.

Abstract:
The authors analyze the sourcing rules in the multistate Streamlined Sales and Use Tax Agreement, explaining that although the basic rule is that sourcing is destination-based, there are exceptions. A one-size-fits-all approach would be inappropriate, the authors say.

Abstract:
The authors analyze proposals in Congress that concern a moratorium on Internet access taxes, sales tax streamlining, and business activity taxes. They also provide an overview of congressional intervention in state tax matters.

Abstract:
The author considers personal income tax issues raised by change of residence. Not only are there questions of how the taxpayer should be treated in the year that he or she changes residence, but also there are a host of issues that frequently arise in connection with the move itself or as a natural consequence of the move.

Abstract:
Despite the rapid rise in the use of pass-through and disregarded entities since the advent of the federal check-the-box regulations, states have done little to adapt their taxing regimes to address issues raised by these entities, other than generally following the federal entity classification rules. While state adoption of the check-the-box regulations is intended to simplify matters for both taxpayers and tax administrators, a simple "me too" approach to these regulations leaves some holes into which taxpayers may tumble. One of the largest, and the one currently creating the most debate, concerns the question of whether a foreign corporate owner of a pass-through or disregarded entity will have nexus in a state based solely on that ownership interest.

There has long been debate as to whether a corporate limited partner automatically has nexus in a jurisdiction based solely on the fact that the limited partnership is doing business (and thus has nexus) in the state. Corporate limited partners have argued that a limited partner's control over a partnership is equivalent to a shareholder's control over a corporation and that limited partners and shareholders therefore should be treated similarly for nexus purposes. Now the same question is being asked with regard to corporations owning other limited liability entities that may elect to be treated as partnerships or disregarded entities for tax purposes.

There is also disagreement among the states as to whether corporate owners of entities electing partnership treatment should include their proportionate shares of the income and apportionment factors of these pass-through entities in their own tax bases and apportionment formulas when calculating state income tax or instead include only their distributive shares of partnership income. This decision often, but not always, revolves around the question of whether the partner and the partnership are engaged in a unitary business. In addition, not all states are in agreement as to how corporate owners should treat the sale of their interest in a pass-through entity when calculating income and apportionment factors (e.g., Does the gain from such a sale generate apportionable business income or allocable nonbusiness income?).

This Article will address some of the unanswered questions raised by the states' adoption of the federal check-the-box rules for state tax purposes, and it will also survey the general landscape of state taxation of corporate owners of pass-through or disregarded entities, which is often swampy and occasionally treacherous. For purposes of this Article, discussion will be limited to the treatment of corporate owners of partnerships (both general and limited) and LLCs (both single- and multi-member), although some of these same issues exist in relation to other pass-through entities (e.g., S corporations), and also to individual owners of partnerships and LLCs). Before delving into the substantive questions, the Article will provide some background into the formation and operation of partnerships and LLCs and the general federal and state tax treatment of each.

Abstract:
The authors look at whether income for corporate owners of passthrough entities is business income or nonbusiness income. The lack of guidance provided by many states on the apportionment of income received by corporate partners presents both pitfalls and planning opportunities, they write.

Abstract:
In this report, Hellerstein examines the convenience of the employer doctrine, under which New York and several other states have long taxed the compensation that nonresident employees derive from services performed outside the state for in-state employers, unless the services are performed outside the state as a matter of necessity rather than convenience.

Abstract:
The author takes a critical look at the "convenience of the employer" test that some revenue departments use to determine whether work performed outside their state is taxable in their state. The time has come to repudiate the "convenience of the employer" doctrine, he writes.

Abstract:
There has been a pronounced change in the formulas states use to apportion the income of multistate corporations from one that placed equal weight on payroll, profits, and sales to one that places at least half the weight on sales, and eight states base apportionment solely on sales. This report, which is intended to stimulate further analysis and debate, rather than provide a definitive conclusion, suggests that sales-only apportionment may violate international trade rules that prohibit export sales.

Abstract:
The authors suggest that single-sales-factor apportionment violates GATT. They say that U.S. trading partners might complain to the World Trade Organization that sales-only apportionment constitutes a prohibited export subsidy.

Abstract:
The author examines sales and use tax issues concerning multistate drop shipments.

Roughly two-thirds of the states with sales and use taxes take the position that the sale from supplier to retailer is an exempt sale for resale under all circumstances. Some states take the position that the sale from supplier to retailer is a taxable sale because they refuse to honor resale certificates issued by other states.

Abstract:
In this report, Professor Hellerstein explains why the distinction between "business" and "nonbusiness" income should be eliminated.

Abstract:
Recent Supreme Court decision taking a restrictive approach to Congress' power to regulate interstate commerce under the Commerce Clause and a broader view of states' immunity from suit under the Eleventh Amendment arguably cast doubt on Congress' power to legislate a comprehensive solution to the problems raised by state taxation of electronic commerce. A fair reading of the U.S. Supreme Court's recent decisions reveals that these concerns are unwarranted. In fact, the Court has reaffirmed
the core Commerce Clause principles that accord Congress ample power to legislate regarding state taxation of electronic commerce. Moreover, whatever limits there may be on Congress' power to create federal jurisdiction over nonconsenting states, Congress may employ a variety of methods, short of outright coercion, by which it may induce a state to adopt a legislative program consistent with federal interests.