Solix Inc. v. Director, Division of Taxation, 011113-2019

Solix, Inc., a Delaware corporation headquartered in New Jersey, served as a third-party administrator for governmental subsidy programs, with most of its clients and service recipients located outside New Jersey.
For tax years 2011 and 2012, Solix computed its New Jersey Corporation Business Tax (CBT) allocation on a market-based (customer destination) methodology, later amending returns to use the cost of performance (COP) and then market-based methods again, seeking a refund.
The New Jersey Division of Taxation denied Solix’s market-based allocation and insisted the COP or possibly the 25-50-25 method should apply, basing this on payroll and service performance location in NJ.
The matter was litigated after administrative appeals, with Solix arguing its primary revenue-generating activities directly benefited out-of-state customers, largely effectuated by a non-New Jersey workforce out of state.
The court’s analysis focused heavily on the statutory and regulatory framework governing CBT apportionment, statutory silence on the precise method, and economic realities of Solix’s business model in the relevant years.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Proper method to allocate receipts for CBT apportionment	Market-based sourcing best reflects economic reality; majority of clients and benefit are out-of-state	COP method required for services done in NJ; market-based sourcing unavailable until 2019	Market-based sourcing permitted pre-2019; Solix’s approach appropriate
Whether regulatory/statutory language barred market-based sourcing	Regulation allows any reasonable method reflective of economic realities, including market-based	Law/statute/regulation only permits COP (before 2019); no allowance for market-based	Regulation allowed reasonable methods; no statutory bar pre-2019
Relevance of payroll and service location in receipts allocation	Majority of payroll in NJ but most service performed by out-of-state employees; location of customers matters most	NJ location and payroll figures justify COP and NJ receipts share	Out-of-state work for out-of-state customers was main revenue, so payroll location not dispositive
Availability of alternative relief under Section 8	Sought adjustment via amended returns; regulation, not Section 8, governs here	Solix should have requested relief under Section 8 if dissatisfied	Unnecessary—Solix properly pursued adjustment; Section 8 not prerequisite in these circumstances

Bank of Am. Consumer Card Holdings v. State Div. of Taxation, 29 N.J. Tax 427 (N.J. Tax Ct.) (establishing that allocation of receipts for services may be based on where benefit is received, not where performance happens)
Mayer & Schweitzer v. Director, Div. of Taxation, 20 N.J. Tax 217 (N.J. Tax Ct.) (emphasizing fair apportionment principles and the need to reflect business realities in receipts allocation)
Brunswick Corp. v. Director, Div. of Taxation, 11 N.J. Tax 530 (N.J. Tax Ct.) (explaining receipts factor reflects the contribution of a state’s marketplace, not just situs of services or property)