The New York Tax Appeals Tribunal rejected an attempt by the Division of Taxation to decombine a holding company and its subsidiaries for their 2002 – 2004 tax years, concluding that since the holding company was reimbursed for services provided to the subsidiaries at cost only, with no markup, separate filing would yield a distortive result. In upholding the decision of an administrative law judge, the tribunal also concluded that capital stock and unitary requirements for combination were also met. [In the Matter of the Petition of IT USA, Inc. and Manifatture Associate Cashmere USA, Inc., Tax Appeals Tribunal, Decision DTA Nos. 823780 and 823781 (4/16/14)]
The Division of Taxation is precluded from appealing determinations from the Tax Appeals Tribunal. Thus, the issue is final as to these taxpayers. Although the taxpayer won this appeal, and the decision can be referred to by taxpayers fighting forced decombination, the Division might look at the decision as a tool to force combination where the circumstances are similar. While this is a state decision, this may also be cited as precedent on similar New York City matters.