Knowledge Center

Monday, March 26, 2018

Breen Schiller Provides Insight to State Tax Notes on Virginia Supreme Court Addback Ruling

An article published by State Tax Notes discusses the Virginia Supreme Court's ruling that royalty payments by a company to an affiliate must actually be taxed by another state for Virginia's safe harbor exception to apply.

In a decision almost identical to its prior ruling in Kohl's Dep't Stores Inc. v. Virginia Dep't of Taxation, the state's high court again sided 4 to 3 with the tax department, which argued that the subject-to-tax exception found in the state's addback statute applies on a post-apportionment basis.

State and Local Tax Attorney, Breen Schiller discussed potential confusion for taxpayers.

"Theoretically, it can leave taxpayers scratching their heads, but I think more likely it will leave taxpayers frustrated and disappointed because the court reached the outcome that the department wanted and the rationale as to how it got there seems contrived," Breen Schiller of Horwood Marcus & Berk Chtd. said. "In the 'new' opinion, the court once again acknowledges the statute is ambiguous on its face and that ambiguities should be resolved in favor of the taxpayer, yet it resolves the ambiguity in favor of the department."

The full article, "Virginia High Court Again Rules for State in Addback Statute Case," was written by Jad Chamseddine and published by State Tax Notes on March 26, 2018 for its subscribers. (Subscription required)

Contact Breen Schiller with questions

NOTICE: Emailing an attorney shall not and does not create an attorney-client relationship between the attorney and users of this web site or any other party whatsoever. An attorney-client relationship is ONLY established through a written engagement, and only where doing so would comply with all applicable laws and ethical rules.

CONFIDENTIAL INFORMATION: Transmission of information on-line, over email, or through any electronic means can be unstable, unreliable and insecure. You should not send information or facts via e-mail relating to your legal problem or question. If you do not have an existing attorney-client relationship, your e-mail may not be privileged or confidential.

By clicking 'OK' below, you are agreeing to the terms of this web site.

Please fill out the form below and we'll send an email out about this page to a recipient of your choice.

Copy: Check here if you would like a copy of the email.