TEI Files Amicus Brief Seeking Review by the U.S. Supreme Court in New Jersey Director of Taxation.

On February 24,2020, TEI filed an amicus brief seeking review with the U.S. Supreme Court in Paz v. New Jersey Director of Taxation. The case involves New Jersey's attempt to tax all of the gain arising from John Paz's sale of S-corporation stock on the grounds that it constituted nonoperational income that should be sourced to the S-corporation's commercial domicile. TEI's brief argued that the determination of whether income was apportionable or allocable must be made using constitutional tests established by the U.S. Supreme Court rather than a state statute defining nonoperational income. TEI's brief was prepared under the aegis of TEI's State and Local Tax Committee, whose chair is Michell Rodriguez. TEI Tax Counsel Pilar Mata coordinated the preparation of the brief and was its principal author.

No. 19-921 In the Supreme Court of the United States JOHN M. PAZ, Petitioner, v. DIRECTOR, NEW JERSEY DIVISION OF TAXATION, Respondent. On a Petition for Writ of Certiorari to the Superior Court of New Jersey, Appellate Division BRIEF OF AMICUS CURIAE TAX EXECUTIVES INSTITUTE IN SUPPORT OF THE PETITIONER ALICIA PILAR MATA Counsel of Record W. PATRICK EVANS ELI J. DICKER TAX EXECUTIVES INSTITUTE, INC. 1200 G Street, N.W. Suite 300 Washington, D.C. 20005-3814 202.638-5601 pmata@tei.org Counsel for Amicus Curiae Tax Executives Institute, Inc. February 24, 2020 Table of Contents TABLE OF AUTHORITIES INTRODUCTION AND STATEMENT OF INTEREST ARGUMENT I. BACKGROUND II. THE DUE PROCESS AND COMMERCE CLAUSES OF THE U.S. CONSTITUTION LIMIT STATES' ABILITY TO TAX INCOME AND GAIN RECOGNIZED BY MULTISTATE TAXPAYERS III. STATES MUST COMPLY WITH CONSTITUTIONAL STANDARDS WHEN DETERMINING WHETHER INCOME IS APPORTIONABLE OR ALLOCABLE TO A SINGLE STATE CONCLUSION TABLE OF AUTHORITIES

CASES

Allied Signal, Inc. v. Director, Division of Taxation, 504 U.S. 768 (1992)

Armco, Inc. v. Hardesty, 467 U.S. 638 (1984)

ASARCO Inc. v. Idaho Tax Comm'n, 458 U. S. 307(1982)

Container Corp. of America v. Franchise Tax Board, 463 U.S. 159(1983)

McKesson Water Products v. Director, Division of Taxation, 23 N.J. Tax 449 (Tax 2007), aff'd 408 N.J. Super. 213 (App. Div.), cert, denied 200 N.J. 506 (2009)

MeadWestvaco Corp. v. Illinois Department of Revenue, 553 U.S. 16 (2008)

Miller Brothers Co. v. Maryland, 347 U. S. 340 (1954)

Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425 (1980)

Paz v. Director, Division of Taxation, No. A-4452-16T4 (Jan. 31, 2019)

Standard Oil v. Peck, 342 U.S. 382 (1952)

Xylem Dewatering Solutions, Inc. v. Director, Division of Taxation, 30 N.J. Tax 41 (Tax Ct. 2017)

CONSTITUTION

U.S. Const, art. I, [section] 8, cl. 3 U.S. Const, amend. XIV, [section] 1

STATUTES

I.R.C. [section] 338(h)(10) I.R.C. [section] 501(c)(6) N.J. Stat. Ann. [section] 54:10A-6.1

OTHER

New Jersey Division of Taxation, NOTICE: CORPORATION BUSINESS TAX LEGISLATION ADJUSTS AND CLARIFIES CERTAIN STATE TAX COMPLIANCE STANDARDS AND RESTRICTS CERTAIN STATE TAX BENEFITS (P.L. 2014, c. 13), available at https://www.state.nj.us/treasury/ taxation/corp_business_tax.shtml (accessed Feb. 14, 2020)

INTRODUCTION AND STATEMENT OF INTEREST

Amicus curiae Tax Executives Institute, Inc. ("TEI") respectfully submits this brief in support of petitioner, John M. Paz. (1) Whether gain from the sale of assets used in a unitary business should be apportioned among all states in which the business conducted activity or allocated solely to the state of the business' commercial domicile must be determined using the standards mandated by the Due Process and Commerce Clauses of the U.S. Constitution, not a state statute. The Appellate Division of the Superior Court of New Jersey ("Appellate Division") failed to conduct this critical analysis and, as a result, Mr. Paz was subjected to double tax on the gain he recognized from selling his business. TEI urges...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT