ILNews

Economic presence meets taxing requirement

Back to TopCommentsE-mailPrintBookmark and Share

In a matter of first impression, the Indiana Tax Court has ruled that a bank didn't need to have a physical presence in the state to be subject to Indiana's Financial Institutions Tax.

In MBNA America Bank, N.A. & Affiliates v. Indiana Department of State Revenue, No. 49T10-0506-TA-53, MBNA America Bank appealed the Department of State Revenue's denial of its claims for a refund of the Indiana Financial Institutions Tax (FIT) it paid during the 1992-98 tax years. MBNA argued because its principal place of business is in Delaware and it doesn't have a place of business here nor did any of its employees come here on business, it wasn't subject to the FIT.

The bank believed under the Commerce Clause, which prohibits states from charging taxes on an out-of-state business unless it has a "substantial nexus" with the taxing state, a company has to have a physical presence in Indiana in order to be charged the FIT. The department moved for summary judgment on the issue.

Indiana Tax Judge Thomas Fisher determined the U.S. Supreme Court holdings in National Bellas Hess v. Department of Revenue of Illinois, 386 U.S. 753 (1967), and Quill Corp. v. North Dakota, 504 U.S. 298 (1992), don't control in the instant case because the U.S. Supreme Court didn't extend the physical presence requirement beyond sales and use taxes.

Because those cases don't control, it becomes a matter of first impression for the tax court to determine whether an economic presence can satisfy the "substantial nexus" requirement for purposes of the FIT. Judge Fisher relied on a Supreme Court of West Virginia case on the issue, adopted its reasoning in Tax Commissioner of West Virginia v. MBNA American Bank, 640 S.E.2d 226 (W. Va. 2006), and held an economic presence is sufficient to meet the substantial nexus requirement.

Based on the facts in the instant case, MBNA had an economic presence in Indiana and thus had a substantial nexus with Indiana for purposes of the FIT. Judge Fisher granted the department's motion for summary judgment.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Im very happy for you, getting ready to go down that dirt road myself, and im praying for the same outcome, because it IS sometimes in the childs best interest to have visitation with grandparents. Thanks for sharing, needed to hear some positive posts for once.

  2. Been there 4 months with 1 paycheck what can i do

  3. our hoa has not communicated any thing that takes place in their "executive meetings" not executive session. They make decisions in these meetings, do not have an agenda, do not notify association memebers and do not keep general meetings minutes. They do not communicate info of any kind to the member, except annual meeting, nobody attends or votes because they think the board is self serving. They keep a deposit fee from club house rental for inspection after someone uses it, there is no inspection I know becausee I rented it, they did not disclose to members that board memebers would be keeping this money, I know it is only 10 dollars but still it is not their money, they hire from within the board for paid positions, no advertising and no request for bids from anyone else, I atteended last annual meeting, went into executive session to elect officers in that session the president brought up the motion to give the secretary a raise of course they all agreed they hired her in, then the minutes stated that a diffeerent board member motioned to give this raise. This board is very clickish and has done things anyway they pleased for over 5 years, what recourse to members have to make changes in the boards conduct

  4. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  5. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

ADVERTISEMENT