• New Model Regulations for Taxing Services May Lead to Lawsuits
  • March 9, 2017 | Author: Todd A. Lard
  • Law Firm: Eversheds Sutherland (US) LLP - Washington Office
  • Law360

    Full article

    Eversheds Sutherland (US) Partner Todd Lard is quoted in this Law360 article regarding practitioner concerns surrounding the Multistate Tax Commission’s (MTC) new model regulations for determining how businesses should allocate their income to different states. The article mentions that one method adopted by the MTC is to apportion sales by state population. However, Todd notes that “this method seems arbitrary because it cannot always accurately determine business activity in a region.”

    He added, “There are certain instances where they say you can rely on a state’s population, and that just seems troublesome because it assumes that your business activity is essentially [in] lockstep with the population ... and we know that that’s not true. That could lead to litigation over what is the accurate way to measure business activity.”

    Todd went on to say, “In addition, a ‘throw-out’ rule, under which a state can disregard receipts that cannot be assigned to any particular state, can unfairly assign a higher proportion of sales to a state that uses the ratio of business activity in a state to total activity everywhere, in violation of the U.S. Constitution’s commerce clause.”