The BR State + Local Tax Spotlight: April 2021

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Note from the Editors

Welcome to the first edition of our new publication, The BR State + Local Tax Spotlight. We understand the unique demands of staying on top of important State + Local Tax developments, which happen frequently and across numerous jurisdictions. Staying updated on significant legislative developments and judicial decisions helps tax departments function more efficiently and improves strategy and planning. That is where The BR State + Local Tax Spotlight can help. In each edition, we will highlight for you important State + Local Tax developments that could impact your business. In this issue, we will be covering:

  • Connecticut’s recent legislation regarding the impact of telecommuting employees on nexus for the employer during the COVID-19 pandemic;
  • A recent New Jersey appellate court decision finding a local payroll tax unconstitutional;
  • An Idaho Supreme Court decision that addresses whether a passive holding company is unitary with the investment it holds; and
  • A Wisconsin Court of Appeals decision in favor of the taxpayer that required the Department to follow its own published guidance, which the Department had tried to disavow before the court.

We invite you to share The BR State + Local Tax Spotlight with your colleagues and visit Blank Rome’s State + Local Tax webpage for more information about our team. Click here to add State + Local Tax to your subscription preferences.

— Matthew F. Cammarata and Eugene J. Gibilaro


Connecticut Paves the COVID High Road
By Nicole L. Johnson

Recently, Connecticut enacted legislation providing that having an employee telecommuting from Connecticut will not create a taxable presence (i.e., nexus) in the state for the employer. H.B. 6516, Gen. Assemb., Jan. Sess., 2021 (Conn. 2021). This is a much-needed boon for companies struggling with the unexpected tax consequences of the COVID-19 pandemic, including consequences as the result of employees working from home. Read More »

New Jersey Appellate Court Finds Payroll Tax Unconstitutional
By Mitchell A. Newmark

In a precedential decision, New Jersey’s intermediate appellate court ruled that a Jersey City ordinance imposing a payroll tax was unconstitutional. Mack-Cali Realty Corp. v. State, No. A-3097-18, 2021 N.J. Super. LEXIS 21 (N.J. Super. Ct. App. Div. February 16, 2021). Jersey City, New Jersey, is home to many companies’ back office operations in the New York metropolitan area. Therefore, we suspect that many companies will have this issue. Read More »

Supreme Court Denies Review in Taxpayer Apportionment Win
By Holly L. Hyans

In a case involving whether a nondomiciliary state can apportion a gain earned by a passive holding company on the sale of an interest in a limited liability company (“LLC”), the Idaho Supreme Court found the gain was not apportionable, and the U.S. Supreme Court denied review. Noell Indus. Inc. v. Idaho State Tax Comm’n, 470 P. 3d 1176 (Idaho filed May 22, 2020), cert. denied, 209 L. Ed. 2d 130 (2021). This case is significant in that it adds clarity to the question—never addressed by the U.S. Supreme Court—of whether a passive holding company is unitary with the investment it holds. Read More »

Court Requires Wisconsin Department of Revenue to Follow its Own Pronouncement
By Craig B. Fields

While state taxing agencies generally take the high road, it is important to remember that when they do not, the courts can require them to do so. In Wisconsin Department of Revenue v. Deere and Company, No. 2020AP726, 2021 Wisc. App. LEXIS 74 (Wis. Ct. App. Feb. 25, 2021), the Wisconsin Court of Appeals held that Deere and Company (“Deere”) was permitted a dividends-received deduction for distributions received from a Luxembourg limited partnership that was treated as a corporation for federal tax purposes. Read More »


Blank Rome’s nationally prominent State + Local Tax attorneys are thought leaders in the community and are frequent guest speakers at various local and national conferences throughout the year. Our State + Local Tax attorneys believe it is necessary to educate and inform their clients and contacts about topics that will impact their businesses. We invite you to attend, listen, and learn as our State + Local Tax attorneys interpret and discuss key legal issues companies are facing and how you can put together a plan of action to mitigate risk and advance your business in accordance with state and local tax laws. Read More »

© 2021 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.