On September 26, 2014, TEI filed an amicus brief with the U.S. Supreme Court in a case involving the limitations imposed by the federal Commerce Clause on a state's ability to tax business income earned outside the borders of that state (Comptroller v. Wynne). In a line of cases beginning with Complete Auto Transit v. Brady, the Court has consistently held that corporate income earned in multiple jurisdictions must be apportioned, with the domiciliary state taxing only its fair share. The taxpayer in this case, however, is an individual who held interests in an S corporation that conducted a multistate business. The petitioner, Maryland, and the United States as amicus curiae have argued that states have the power to impose unlimited double taxation on their domiciliaries, taxing them a second time on interstate income that already was taxed by the state where it was earned. This position, which extends to all domiciliaries individual and corporate compromises principles of fair apportionment that are critically important to TEI's membership. The Supreme Court will hear oral arguments in this case on November 12, 2014.
TEI's brief was prepared under the aegis of TEI's State & Local Tax Committee, whose chair is Gregory Potts. Daniel B. De Jong of the Institute's legal staff is the principal author of the Institute's brief.