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Multistate Tax  |  March 17, 2023
State Tax Matters
State Tax Matters
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Sales/Use/Indirect:
Federal: US Supreme Court Asked to Review Case Disregarding Dilworth and Upholding Constitutionality of Taxation

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Docket No. _____, US (petition for cert filed 3/14/23). A taxpayer has petitioned the US Supreme Court to review the North Carolina Supreme Court’s decision from late last year, which held that the formalism doctrine of Dilworth has not survived the subsequent decisions of the US Supreme Court in Complete Auto and Wayfair so as to render North Carolina’s sales tax regime violative of the Commerce and Due Process Clauses. The underlying case involves an out-of-state commercial printer that sold printed materials to customers in North Carolina via common carrier and to customers who had the printed materials delivered to third-party recipients with North Carolina addresses using a common carrier. The taxpayer in the case has now petitioned the US Supreme Court (Court) to review whether:

  1. The North Carolina Supreme Court was correct that state courts and taxing authorities no longer must follow Dilworth because the Court has implicitly overruled it; and
  2. The Court should overrule or retain the holding of Dilworth that a state may not tax sales that occur outside its borders.

In its 2022 decision, the North Carolina Supreme Court had explained that Complete Auto provides the “relevant modern test” for the imposition of a state tax on interstate commerce and Wayfair applies this test to a tax regime materially identical to that of North Carolina without regard for Dilworth’s holding. Applied to the facts at hand, the North Carolina Supreme Court then held that North Carolina’s imposition of sales tax on the transactions at issue was constitutional under the relevant test provided by Complete Auto. Please contact us with any questions.

 

—

Joe Garrett (Birmingham)

Managing Director

Deloitte Tax LLP

 

Kathy Saxton (Atlanta)

Managing Director

Deloitte Tax LLP

 

Inna Volfson (Boston)

Managing Director

Deloitte Tax LLP

Ryan Trent (Charlotte)

Senior Manager

Deloitte Tax LLP



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In this issue

Florida: Service Providers Must Source Receipts Based on Costs of Performance Sourcing Methodology Montana: New Law Adopts Single-Sales Factor for Tax Years Beginning After December 31, 2024 New York: Taxpayer Must Include Royalty Payments Received from Foreign Affiliates in Tax Base Tennessee: Updated Tax Manual Reflects Treatment of TCJA Changes Involving FDII and IRC §174 Texas Comptroller Adopts Revised Franchise Tax Apportionment Regulation


Federal: US Supreme Court Asked to Review Case Disregarding Dilworth and Upholding Constitutionality of Taxation Wisconsin Tax Appeals Commission Holds Online Platform’s Secondary Ticket Sales are Taxable


California: Update on New Unclaimed Property Voluntary Compliance Program


Georgia Appellate Court Affirms Dismissal of Franchise Fee Suit Against Streaming Platform Companies


Wealth tax bills proposed in several states




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