For those who are closely following the physical presence / nexus tax cases, Tom Goldstein reports in the Legal Times on a case that has been called “the single most important constitutional issue in state taxation of the last four decades”:
Can the state tax man cometh even for companies that dont actually come to the state? In its private conference Thursday, the Supreme Court will consider whether to grant review in No. 06-1228, MBNA America Bank N.A. v. Commissioner of the State of West Virginia, addressing the constitutionality of a state law that imposes income and franchise taxes on out-of-state companies that have customers — but not a physical presence — in the state.Banking giant MBNA America issues and services Visa and Mastercard credit cards for customers throughout the United States, including West Virginia. During 1998 and 1999, its gross receipts attributable to West Virginia customers totaled over $8 million per year, resulting in income and franchise tax bills for those years of over $200,000. After paying its bills, MBNA — arguing that the state lacked jurisdiction over it — unsuccessfully sought a refund from the state tax commissioner.