Yesterday, the New Jersey Supreme Court heard oral arguments in the Whirlpool case. Whirlpool Properties, Inc. v. Div. of Taxation, Docket A-25-10 (N.J. Supreme Court argued May 4, 2011). Whirlpool argued that the New Jersey
Yesterday, the New Jersey Supreme Court heard oral arguments in the Whirlpool case. Whirlpool Properties, Inc. v. Div. of Taxation, Docket A-25-10 (N.J. Supreme Court argued May 4, 2011). Whirlpool argued that the New Jersey “Throwout Rule” is facially unconstitutional because it is designed to tax extraterritorial income. The New Jersey Throwout Rule required taxpayers to exclude (or “throwout”) receipts from the denominator of their sales factor if the sales were assigned to a state where the taxpayer was not “subject to tax.” Interestingly, New Jersey asserted that the Throwout Rule is not a tax and does not increase New Jersey tax because the rule impacts only the denominator and not the numerator. In its questioning, the court appeared to scrutinize the Throwout Rule from both an internal and external consistency perspective. While the argument related to the facial constitutional challenge, the court posed several questions relating to an as-applied constitutional challenge, which many taxpayers are in line to bring if the court holds that the Throwout Rule is not facially unconstitutional.
Sutherland filed an amicus brief on behalf of the Council on State Taxation (COST) supporting Whirlpool’s argument that the Throwout Rule is facially unconstitutional.
You can find prior Sutherland SALT coverage of the Whirlpool case here.
Eversheds Sutherland is an international law firm helping the Fortune 100, industry leaders, sector innovators and business entrepreneurs solve their biggest challenges and reach their business goals. Dedicated to unfaltering excellence in client service, we are known for our business savvy and industry intelligence, providing creative and custom solutions for each of our clients. Industry and business experience makes the difference for our clients.
Complete the fields below to send your briefcase via email. Separate multiple email addresses with semi-colons(;)