ACCT 570: MULTISTATE TAXATION FALL 2015 Tuesdays & Thursdays 4:30pm – 5:45pm MBEB 4003 “The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite….The powers reserved to the several States will extend to all objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.” —THE FEDERALIST NO. 45 (James Madison, writing under the name Publius). Why study multistate taxation? Consider the following excerpts from David Brunori, Teaching State and Local Tax . . ., STATE TAX NOTES, June 2, 2008 (emphasis added): Corporations now pay more in total state and local taxes than they do in federal taxes. The increased costs of doing business resulting from state taxes have prompted corporations to pay closer attention to state tax planning. *** At the same time, state tax agencies, ever in need of revenue, have become more aggressive in audits and collections. *** Besides providing job opportunities and benefiting the profession, there is another reason for adding state and local taxation to the curriculum. It is a fascinating subject to study. It involves thinking about the convergence of such diverse subjects as substantive tax, constitutional law, and business planning. *** Constitutional limitations on state tax authority are, of course, an important part of the study of state taxation. And that aspect of the field provides a rich environment in which to study. It involves more than knowing the definition of substantial nexus. It requires an understanding of how and why states compete. It requires thinking about how business takes advantage of the limitations on state taxing authority. It requires thinking about Congress's role in regulating the economy and the relationship of that role to the basic concepts of federalism. More importantly, the study of state taxation involves an interdisciplinary approach that encompasses business, politics, and economics. One cannot know state taxation without a fundamental understanding of business operation[s], the revenue needs of government, and the political influences on tax policy. The effects of state taxation on real-world events constitute an important, and provocative, aspect of study in the field. In short, state and local tax law can provide . . . students with immense intellectual challenges. Regardless of whether they ever practice in the field, their . . . education will be enhanced by the effort. The following sets forth how we will face the “immense intellectual challenges” of the “fascinating subject” of multistate taxation.
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ACCT 570: MULTISTATE TAXATION
FALL 2015
Tuesdays & Thursdays 4:30pm – 5:45pm
MBEB 4003
“The powers delegated by the proposed Constitution to the federal government are few
and defined. Those which are to remain in the State governments are numerous and
indefinite….The powers reserved to the several States will extend to all objects which, in
the ordinary course of affairs, concern the lives, liberties, and properties of the people,
and the internal order, improvement, and prosperity of the State.”
—THE FEDERALIST NO. 45 (James Madison, writing under the name Publius).
Why study multistate taxation? Consider the following excerpts from David Brunori,
Teaching State and Local Tax . . ., STATE TAX NOTES, June 2, 2008 (emphasis
added):
Corporations now pay more in total state and local taxes than they do in
federal taxes. The increased costs of doing business resulting from state
taxes have prompted corporations to pay closer attention to state tax
planning. *** At the same time, state tax agencies, ever in need of
revenue, have become more aggressive in audits and collections. ***
Besides providing job opportunities and benefiting the profession, there is
another reason for adding state and local taxation to the curriculum. It is a
fascinating subject to study. It involves thinking about the
convergence of such diverse subjects as substantive tax, constitutional
law, and business planning. ***
Constitutional limitations on state tax authority are, of course, an
important part of the study of state taxation. And that aspect of the field
provides a rich environment in which to study. It involves more than
knowing the definition of substantial nexus. It requires an
understanding of how and why states compete. It requires thinking
about how business takes advantage of the limitations on state taxing
authority. It requires thinking about Congress's role in regulating the
economy and the relationship of that role to the basic concepts of
federalism.
More importantly, the study of state taxation involves an interdisciplinary
approach that encompasses business, politics, and economics. One cannot
know state taxation without a fundamental understanding of business
operation[s], the revenue needs of government, and the political influences
on tax policy. The effects of state taxation on real-world events constitute
an important, and provocative, aspect of study in the field. In short, state
and local tax law can provide . . . students with immense intellectual
challenges. Regardless of whether they ever practice in the field, their
. . . education will be enhanced by the effort.
The following sets forth how we will face the “immense intellectual challenges”
of the “fascinating subject” of multistate taxation.
Page 2 of 22
Syllabus Contents
I. Instructor Contact Information .............................................. 3
II. Required Course Materials ..................................................... 3
III. Course Description and Learning Objectives ........................ 4
IV. Grading ................................................................................... 5
V. Adopt-a-State Project Details ................................................. 7
VI. Homework Assignments & Tentative Schedule .................... 8
VII. Specific Assignments ........................................................... 12
VIII. Advice for Doing Well ......................................................... 20
IX. Other Information .................................................................. 21
Page 3 of 22
I. Instructor Contact Information
Instructor: Mark J. Cowan, JD, CPA (Connecticut)
Office: MBEB 3102 (3rd floor, South Wing, near the Dean’s office and
c. Read “Amazon’s Dirty Little Secret” (Online Supplemental Readings)
4. Complete the Assignment #13 Quiz
Page 18 of 22
Assignment #14
1. Read selected part of Chapter 10, as follows:
a. Read pages 10-1 thru top of 10-29
b. Skip middle of page 10-29 thru top of 10-32
c. Read top of page 10-32 thru top of 10-36
d. Skip top of page 10-36 thru bottom of 10-37
e. Read bottom of page 10-37 thru 10-41
f. Skip pages 10-42 thru 10-55
g. Read top of page 10-56
h. Skip bottom of page 10-56 thru middle of 10-62
i. Read middle of page 10-62 thru top of 10-74
j. Skip middle of page 10-74 thru top of 10-81
k. Read middle of page 10-81 thru 10-101
l. Skip the rest of the chapter; but we will refer to some of it in class
2. P.L. 86-272:
a. Read Comment 1, which is the text of P.L. 86-272, on the bottom of page 11-
12 thru top of page 11-14
b. Read Wisconsin Department of Revenue v. Wrigley Co. (pages 11-1 thru 11-
12) and summarize the case
3. Complete the Assignment #14 Quiz
Assignment #15 1. Allocation & Apportionment
a. Read Hans Rees’ Sons, Inc. v. North Carolina (pages 11-31 thru 11-33)
i. Summarize the case
ii. Answer Question 1 (page 11-33)
b. Read Moorman Manufacturing Co. v. Bair, Director of Revenue of Iowa
(pages 11-42 thru 11-51)
i. Summarize the case
ii. Answer Question 17 (page 11-52)
2. Complete the Assignment #15 Quiz
Assignment #16
1. Read Mobil Oil Corp. v. Commissioner of Taxes of Vermont (pages 11-57 thru 11-
69)
a. Summarize the case
b. Answer Questions 1 & 8 (pages 11-69 thru 11-70)
2. Read Container Corporation of America v. Franchise Tax Board (pages 11-105 thru
11-122)
a. Summarize the case
b. Answer Question 5 (page 11-122)
3. Read Allied-Signal, Inc. v. Director, Division of Taxation (pages 11-178 thru 11-186)
& summarize the case
4. Complete the Assignment #16 Quiz
Page 19 of 22
Assignment #17
1. Read “How Apple Sidesteps Billions in Taxes” (Online Supplemental Readings)
2. Read Geoffrey, Inc. v. South Carolina Tax Commission (pages 11-210 thru 11-213)
a. Summarize the case
b. Did the court do a good job of analyzing the Commerce Clause?
3. Read the Sherwin Williams Company v. Commissioner of Revenue (Online
Supplemental Readings) and summarize the case
4. Read Syms Corp. v. Commissioner of Revenue (Online Supplemental Readings) and
summarize the case
a. What are the key differences between the holding company operations in
Syms and Sherwin Williams?
5. Read KFC Corporation v. Iowa Department of Revenue (pages 11-231 thru 11-240)
a. Summarize the case
b. What are the factual differences between the Geoffrey case and the KFC case?
6. Complete the Assignment #17 Quiz
Assignment #18
**Note: We are returning, for old times’ sake, Volume I of the Pomp
book** 1. Read Comptroller of the Treasury of Maryland v. Wynne (pages 1-243 thru 1-266)
2. Complete the Assignment #18 Quiz
Assignment #19
1. Read the article, “Anatomy of a State/Tribal Tax Dispute: Legal Formalism, Shifting
Incidence, Potatoes, and the Idaho Motor Fuel Tax” (Online Supplemental Readings)
2. Complete the Assignment #19 Quiz
Page 20 of 22
VIII. Advice for Doing Well
Multistate taxation can be difficult because of the amount and difficulty of the reading.
You will need to put a lot of time into both preparing for class and reviewing after class.
I suggest using a three-step process3 to succeed in this class:
1) Immersion: Read the assigned materials before class, complete the quiz, and
think about any questions that have been included in the assignment. This stage
will be frustrating, since the material will be new to you and it can be hard to
decipher court cases—especially ones written many years ago. Immersion,
however, is necessary to enable you to get the most out of our class meetings.
2) Participation: Come to class, pay attention, take good notes, and ask any
questions that you may have. A lot of the material on exams is based on class
discussions. Like with many accounting courses, the material in ACCT 570 often
builds on itself. If you miss class, you not only miss the material covered on that
day but also the foundation knowledge necessary to understand related topics that
come later in the course. Note: Even if things were unclear when you did
your reading (at the Immersion stage), they should become clear after we
have reviewed the material in class. This is especially true for the court cases
we will be discussing. If the material is not clear even after we have gone over it,
please come see me after you have completed the Assimilation phase.
3) Assimilation: Review your class notes after we have gone over them and see me
with any questions you may have. You should do this within a few days after
each class. We will cover the material thoroughly in class, but we only have the
opportunity to cover the material once. We do not have the luxury of reviewing
the material over and over. Therefore, it is critical that you keep up with the
material and review and ask questions as we go. Sometimes, a concept may
appear “easy” after we have gone over it in class. But if you don’t truly
understand the concept, you may confuse it with many other “easy” concepts that
we go over in class. And such confusion can spell trouble on the exam. THUS,
DO NOT WAIT UNTIL YOU GET THE EXAM TO LEARN THE
MATERIAL!
3 Partially inspired by, and roughly adapted from James Edward Maule’s July 2009 “Student Focus” blog postings, which give advice
to law students on studying basic tax. Basically, I have taken advice I have given in the past to accounting students on studying for tax courses and have roughly reorganized them using Maule’s terminology.
Page 21 of 22
IX. Other Information
Important Dates:
Last day to apply for December graduation Friday, August 28th
Last day to drop without a “W” Friday, September 4th
Last day to drop with a “W” Friday, October 30th
Class Website:
We will be using Blackboard in this course. It will be used to post all documents, make
announcements, and (as noted above) for online quizzes and to host the Discussion Board
part of the adopt-a-state assignment. I will also post announcements on jobs,
professional events, scholarships, etc. as I get them. All students should gain access to
Blackboard and the class website on Blackboard. For more information, log on to
Blackboard via the myBoiseState portal. Use your myBoiseState ID and password to
get into the system. Students are responsible for checking the class website for important
announcements (e.g., cancellation of class, changes in assignments, etc.).
Lecture Materials:
To save you time in taking notes, most lecture material will be provided in Word
outlines. The outlines omit certain answers to examples, key phrases, etc. that you will
need to fill in as we review the material in class. Lecture outlines will be available on the
class website in the event that you miss class. However, such outlines will not include
the answers to the examples, key phrases, etc. that were filled-in during class.
Note on Course Materials:
Materials provided or generated in this course, including (but not limited to) handouts,
notes, exams, quizzes, projects, homework answer keys, etc. are for your own personal
use and reference. You are not to pass them on to others, including future students.
Passing course materials on to others would (in some cases) violate copyright
agreements. More importantly, such materials would have a negative impact on the
recipient’s learning process and performance in the course. First, the law is always
changing, often in subtle but important ways. Second, topics emphasized and tested in
the course change from semester to semester as the business world changes. Third, and
most importantly, when students use old course materials for reference they are prevented
from doing the thinking and struggling with the material necessary to truly learn.
Accordingly, such students will not do well on the exams. For these same reasons, you
are not to refer to any course materials received from former students or other sources
(such as homework answer keys from the publisher). Doing so would negatively affect
your performance and significantly disrupt the learning process.
Reminder on Boise State’s Statement of Shared Values:
All members of the campus community are expected to adhere to Boise State’s Statement
of Shared Values (adopted Spring 2007). The common values are Academic Excellence,
Caring, Citizenship, Fairness, Respect, Responsibility, and Trustworthiness. See