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cost files amici curiae brief in meadwestvaco v. illinois


Washington, DC - The Council On State Taxation (COST) in conjunction with the National Association of Manufacturers (NAM) today filed an amici curiae brief in MeadWestvaco v. Illinois Department of Revenue in support of the petitioner, MeadWestvaco Corporation.  In MeadWestvaco, the State of Illinois sought to tax a portion of the profits Mead made when it sold an investment in its affiliate Lexis/Nexis.  Mead, who was commercially domiciled in Ohio, argued that Illinois could not tax the gain.  The Illinois court below determined that Mead and Lexis/Nexis were not unitary; however, the court allowed Illinois to tax the gain based on the theory that Lexis/Nexis served an operational function to Mead.

The COST/NAM brief seeks reversal of the Illinois court decision by asking the Supreme Court to limit the application of the operational function test to a narrow set of investment scenarios where control of an entity is not at issue.  Alternatively, the brief argues that the Illinois court's application of its own factors directly conflicts with Allied-Signal, Inc. v. Director, Div. of Taxation, where the Court held that an asset is "operational" only if it is utilized directly in the selling company's business or is a short-term investment designed to raise cash for daily operating expenses.  None of the factors relied upon by the Illinois court support such a finding.

COST is a nonprofit trade association consisting of nearly 600 multistate corporations whose objective is to preserve and promote equitable and nondiscriminatory state and local taxation.

Click here to view the brief.

If you have questions regarding the brief, please contact the author, Todd Lard.