Tax Attorneys Examine Due Process Application in State Tax Cases

July 31, 2019
State Tax Notes

Tax attorneys Michael Sontag, Steve Jasper and Michael Cottone discussed due process requirements in state tax cases.Bass, Berry & Sims attorneys Michael Sontag, Steve Jasper and Michael Cottone authored an article for State Tax Notes examining the current debate over the meaning of the Supreme Court’s decision in International Harvester and, more broadly, how the Due Process Clause should be applied to state taxes. Seeking common ground in the debate, the authors suggest that, whatever International Harvester might say, there is broad agreement that it cannot be interpreted to allow a state to tax a nonresident simply because he or she has a passive ownership interest in a company doing business in the state.

With regard to the due process requirement in state tax cases more generally, the authors conclude that the appropriate analysis can be summarized with one question: “Are there sufficient connections with a state to allow the state to impose the tax at issue?  In other words, when due process issues arise in state tax cases, the controlling question is always whether it is fundamentally fair for the state to impose the tax based on a comparison of the burdens of the state tax at issue with the associated benefits provided by the state.”

The full article, “Why Can’t We Be Friends? Finding Common Ground in the Due Process Debate,” was published by State Tax Notes on July 29, 2019, and is available online (subscription required).  To read the authors’ previous article discussing due process nexus, click here.