Tennessee - Alternative apportionment and nexus upheld

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A Tennessee chancery court held that the Commissioner properly exercised discretion in requiring a taxpayer to use an alternative method of apportionment, similar to market-based sourcing, because the statutory cost of performance method did not fairly represent the extent of the taxpayer’s business activity in the state. Additionally, the court found that the taxpayer, a corporation with no activity in Tennessee, was doing business and had nexus with Tennessee due to its 45% partnership interest in a partnership doing business in Tennessee. The decision raises numerous questions and concerns regarding the Commissioner’s authority to impose alternative apportionment on Tennessee taxpayers. [Vodafone Americas Holdings, Inc. v. Roberts, Tenn. Chancery Court, Case No. 07-1860-IV (3/19/13)]


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