Bass, Berry & Sims attorney Mike Sontag provided insight for the Tax Analysts article "News Analysis: Did the Tennessee Court of Appeals Phone It In?" The article examines the trend toward market-based sourcing instead of cost-of-performance (COP) sourcing for purposes of calculating the sales factor of an apportionment formula and, especially, the troubling use of a Commissioner's equitable authority to require such sourcing when the legislature chose the opposite method. The article was the result of a June 2014 Tennessee Court of Appeals decision that upheld a variance imposed by the Commissioner of Revenue requiring Vodafone to use market-based sourcing rather than the COP sourcing currently required by Tennessee's franchise and excise tax statutes. Michael, who represented Vodafone in the suit, was quoted as questioning the appropriateness and legality of allowing the Commissioner to override the policy decisions of the legislative branch when there was nothing unusual about the circumstances of Vodafone that justified doing so.
Subscribers to the Tax Analysts website can access the article here.