E.I. DU PONT DE NEMOURS & CO. v. STATE TAX ASSESSOR.
Supreme Judicial Court of Maine.
Argued Nov. 3, 1995. Decided April 9, 1996.
675 A.2d 82
John S. Kaminski, Jerrol A. Crouter, Drummond, Woodsum & MacMahon, Portland, for amicus curiae Tambrands.
Paull Mines, Washington, DC, for amicus curiae Multistate Tax Commission.
Andrew Ketterer, Attorney General, Clifford B. Olson (orally), Assistant Attorney General, Augusta, for Respondent.
LIPEZ, Justice.
This case is on report from the Superior Court (Kennebec County, Alexander, J.) pursuant to M.R.Civ. 72(a) and (c). We are asked to revisit our decision in Tambrands, Inc. v. State Tax Assessor, 595 A.2d 1039 (Me.1991) and determine whether the apportionment formula adopted by the State Tax Assessor in response to our decision in Tambrands, the so-called “Augusta Formula,” violates either the Maine Tax Statutes or the United States Constitution‘s Due Process Clause or Foreign Commerce Clause1 to the extent that it continues to permit Maine to include foreign-source dividends in the computation of the taxable income of a Maine-nexus corporation. We conclude that the apportionment formula does not violate the statutes or the Constitution.
E.I. Du Pont de Nemours and Company (Du Pont) is a multinational unitary business2 qualified to conduct business in the state of Maine. From 1985 through 1987 Du Pont excluded from its apportionable income on its Maine corporate income tax return dividends received from its foreign subsidiaries.
Maine determines what portion of a multijurisdictional corporation‘s income is apportionable to the corporation‘s business activity in Maine by using what is commonly referred to as the “water‘s edge combined reporting method.” See
Du Pont requested administrative reconsideration of the assessment pursuant to
The Assessor developed the “Augusta Formula” to satisfy our instruction in Tambrands “to include additional factors in the apportionment formula that would fairly represent Tambrands’ business activity.” Id. at 1045. Under the Augusta Formula, the Assessor
(A) Determines the Taxpayer‘s taxable income using Maine‘s statutory water‘s edge method with foreign source dividends included in the taxpayer‘s apportionable business income.
(B) Determines the Taxpayer‘s taxable income using the worldwide combined reporting method (the “worldwide leg“).
(C) Determines the Taxpayer‘s taxable income using Maine‘s statutory water‘s edge method without foreign source dividends included in the taxpayer‘s apportionable business income (the “dividend exclusion leg“).
The result of calculation A becomes a cap, the result of calculation C becomes a floor, and the Assessor determines taxable income in the following manner: if
B>A: The taxpayer pays the amount calculated under Maine‘s water‘s edge statute with foreign subsidiaries dividends included and no factor relief;
B<C: The taxpayer pays the amount calculated under Maine‘s water‘s edge reporting method with the foreign subsidiaries dividends excluded and no factor relief;
A>B>C: The taxpayer pays the amount calculated under the worldwide reporting method and the Assessor provides factor relief, i.e. adjusts the denominators of the payroll, sales, and property factors to account for the inclusion of the foreign subsidiaries’ dividends to reach this result.
In practice the Augusta Formula computes tax liability by using the worldwide reporting method as a way of checking the fairness of the Assessor‘s assessment of tax liability on the income of a multijurisdictional unitary business. When foreign dividends are included in a unitary business‘s income, the amount owed by the business will not exceed the amount computed under the worldwide combined reporting method. Because the Assessor determined that the worldwide re-
After the Assessor upheld his assessment, Du Pont sought de novo review in the Superior Court of the Assessor‘s determination pursuant to
The Assessor argues that we must vacate the court‘s grant of summary judgment, contending that the court erred in its analysis and application of the United States Supreme Court‘s decision in Kraft General Foods v. Iowa Dep‘t of Revenue, 505 U.S. 71, 112 S.Ct. 2365, 120 L.Ed.2d 59 (1992) and our decision in Tambrands. Du Pont asks us to affirm the court‘s grant of summary judgment and hold that exclusion of foreign dividends is the only statutorily and constitutionally permissible treatment of foreign dividends paid to a multijurisdictional unitary business.
The Augusta Formula and The Maine Tax Statutes
Du Pont claims that the Assessor‘s use of the worldwide combined reporting method violates the second sentence of
In fact, the legislative history of section 5244 supports the converse of Du Pont‘s contention. Section 5244 was adopted as part of “An Act to Limit Preferential Taxation Within a Unitary Business.” L.D. 1764 (112th Legis.1986). The bill‘s statement of fact states in pertinent part that “[t]he bill . . . clarifies the reporting requirements of corporations engaged in a unitary business.” L.D. 1764, Statement of Fact (112th Legis.1986) (emphasis added). Additionally, section 5244 appears in that chapter of the Maine Tax Statutes sub-headed “Information Returns.” Section headings in a statute may serve as an intrinsic aid to interpreting a statute and ascertaining the intention of the Legislature. See SUTHERLAND STAT. CONST. §§ 47.03, 47.14 (1992). Section 5244‘s legislative history and its appearance in the statutory chapter dedicated to the general and specific requirements for reporting of income belie the broader significance which Du Pont attempts to assign to this provision. Section 5244 simply sets forth the type of information that a corporation must provide on its combined report and does not limit the information that the Assessor may consider in determining appropriate factor relief for a corporation that claims its business activity was not accurately reflected by the standard three factor formula.
The Foreign Commerce Clause and Kraft General Foods
In Kraft General Foods, Inc. v. Iowa Dep‘t of Revenue and Finance, 505 U.S. 71, 112 S.Ct. 2365, 120 L.Ed.2d 59 (1992), the Supreme Court held that Iowa‘s tax treatment of dividends received by a domestic parent corporation from foreign subsidiaries unconstitutionally discriminated against foreign commerce in violation of the Foreign Commerce Clause. The taxing scheme at issue in Kraft was similar to the one currently used in Maine in that Iowa used the federal tax system‘s calculation of corporate income as its starting point for determining a corporation‘s apportionable income. Id. at 74, 112 S.Ct. at 2367-68.
Pursuant to the federal tax statutes, a parent corporation is permitted to deduct from gross corporate income the dividends it received from domestic subsidiaries.
Iowa included the foreign subsidiary‘s dividends in a corporation‘s gross income and permitted no corresponding deduction or credit for foreign taxes paid. Kraft, 505 U.S. at 76, 112 S.Ct. at 2368-69. Based on this scheme, the Supreme Court concluded that “the only subsidiary dividend payments taxed by Iowa are those reflecting the foreign business activity of foreign subsidiaries,” and that the Iowa tax scheme violated the For-
Like Iowa, Maine includes the foreign subsidiary‘s dividends in Du Pont‘s gross income and permits no corresponding deduction or credit for foreign taxes paid. Maine, however, uses a combined reporting method, while the Iowa system used a single entity reporting system.9 Courts and commentators are divided on the significance of the taxing authority‘s use of the combined reporting method on the applicability of the Supreme Court‘s holding in Kraft to a challenged tax scheme. In the immediate wake of the Supreme Court‘s decision, commentators identified Maine‘s tax scheme as one of the taxing schemes subject to challenge as a result of Kraft. See Wary States, Refund Claims, Uncertainties Seen After Supreme Court‘s Kraft Ruling, Daily Rep. for Executives (BNA) (Monday, June 22, 1992); James R. Potts, State Taxing Schemes Discriminating in Violation of the Foreign Commerce Clause: Kraft General Foods, Inc. v. Iowa Dep‘t of Revenue and Finance, 46:2 TAX LAW. 555 (1993). The highest courts of two states have addressed the applicability of Kraft to challenges to their taxing methods, and have reached opposite conclusions. Most recently, in Dart Industries, Inc. v. Clark, 657 A.2d 1062 (R.I.1995), the Rhode Island Supreme Court struck down that state‘s corporate taxing scheme, concluding that Rhode Island‘s tax statutes10 contained the same “fatal flaw” that was present in the Iowa statute, i.e., a facial preference for domestic commerce over foreign commerce. Id. at 1066. In Appeal of Morton Thiokol, 254 Kan. 23, 864 P.2d 1175 (1993), the Kansas Supreme Court found Kansas’ use of a domestic combined reporting method11 dispositive in its determination that Kraft was inapplicable to a taxpayer‘s challenge that Kansas‘s taxing scheme unconstitutionally discriminated against foreign commerce. Id. at 1186.
We find the reasoning of the Kansas Supreme Court persuasive. Indeed, as Kansas‘s high court points out, “Kraft does not address the taxation of foreign dividends by domestic combination states.” Id. In Kraft, the Supreme Court considered the constitutionality only of Iowa‘s single entity reporting system. Kraft, 505 U.S. at 74 n. 9, 112 S.Ct. at 2367 n. 9. Pursuant to this taxing method Iowa directly taxed neither the income nor dividends of a domestic subsidiary if the subsidiary did not do business within the state. Iowa, however, did tax the dividends paid by the foreign subsidiary to the domestic parent. Cf. Kraft, 505 U.S. at 74, 112 S.Ct. at 2367-68 (stating that Iowa is not a state that taxes an apportioned share of the entire income of a unitary business nor does it directly tax the income of a subsidiary unless the subsidiary itself does business in Iowa). In contrast, the combined reporting method by definition includes within the amount apportioned to Maine part of the income earned by the unitary business‘s domestic subsidiaries. With the taxpayer‘s federal tax figures as the starting point, Maine effectively captures some of the value of the business activity of the domestic subsidiaries by directly taxing an apportioned part of the domestic subsidiary‘s income. Having captured this value, the Assessor does not add the domestic subsidiary‘s dividends back into the parent‘s apportioned income. With respect to the dividends of foreign subsidiaries, however, Maine‘s use of the water‘s edge combined reporting method limits the State to the nation‘s boundaries in calculating corporate income, and hence no income of foreign subsidiaries is apportioned to Maine. The Assessor adds the dividends paid by the foreign subsidiaries to the domestic parent because these dividends represent value
Far from discriminating against foreign commerce, Maine‘s water‘s edge combined reporting method provides a type of “taxing symmetry” that is not present under the single entity system. Although the dividends paid to parent corporations with domestic subsidiaries are not taxed, the apportioned income of the domestic subsidiaries is subject to tax. Because the income of the unitary domestic affiliates is included, apportioned, and ultimately directly taxed by Maine as part of the parent company‘s income, the inclusion of dividends paid by foreign subsidiaries does not constitute the kind of facial discrimination against foreign commerce that caused the Supreme Court to invalidate Iowa‘s tax scheme in Kraft. Thus, Maine‘s use of a water‘s edge combined reporting method distinguishes Maine‘s taxing scheme from the scheme invalidated by the United States Supreme Court in Kraft.
Tambrands Revisited
Having determined that the Augusta Formula does not discriminate against foreign commerce, we must now determine whether the tax assessed against Du Pont under the Augusta Formula violates the Due Process Clause. To withstand constitutional scrutiny the challenged taxing method must, among other things, be “fairly apportioned.” Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326 (1977). To determine whether the Augusta Formula results in a “fair” apportionment, we must necessarily revisit the Supreme Court‘s internal consistency test and our application of that test in Tambrands v. State Tax Assessor, 595 A.2d 1039 (Me.1991).
In Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 169, 103 S.Ct. 2933, 2942, 77 L.Ed.2d 545 (1983), the Supreme Court observed that the Due Process Clause and Commerce Clause require that the states be “fair” in applying apportionment formulas to determine how much of the business‘s income they may tax. A fair apportionment formula demonstrates both internal and external consistency. Id. With respect to internal consistency the Court declared: “The first, and . . . obvious, component of fairness in an apportionment formula is what might be called internal consistency—that is, the formula must be such that, if applied by every jurisdiction, it would result in no more than all of the unitary business’ income being taxed.” Id. A formula ceases to be internally fair when, if theoretically applied across all taxing states, it inevitably would subject a multijurisdictional enterprise to taxation of more than 100% of its tax base. See Oklahoma Tax Comm‘n v. Jefferson Lines, 514 U.S. 175, 115 S.Ct. 1331, 1338, 131 L.Ed.2d 261, 271 (1995) (the internal consistency test “asks nothing about the degree of economic reality reflected by the tax, but simply looks to the structure of the tax at issue to see whether its identical application by every State in the Union would place interstate commerce at a disadvantage as compared with commerce intrastate.“). See also Goldberg v. Sweet, 488 U.S. 252, 261, 109 S.Ct. 582, 588-89, 102 L.Ed.2d 607 (1989) (“[T]o be internally consistent a tax must be structured so that if every state were to impose an identical tax, no multiple taxation would result. Thus, the internal consistency test focuses on the text of the challenged statute and hypothesizes a situation where other states have passed an identical statute.“); Armco Inc. v. Hardesty, 467 U.S. 638, 644-45, 104 S.Ct. 2620, 2623-24, 81 L.Ed.2d 540 (1984) (internal consistency test requires that tax at issue be evaluated on its own merits without regard to taxes that may or may not actually be imposed by other jurisdictions); Container Corp., 463 U.S. at 188, 103 S.Ct. at 2952 (finding that taxing scheme that resulted in multiple taxation was not internally inconsistent where such double taxation was not inevitable) (citing Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 447, 99 S.Ct. 1813, 1820-21, 60 L.Ed.2d 336 (1979)).
In Tambrands, Tambrands and its foreign affiliates conducted a horizontally and vertically integrated unitary business. 595 A.2d at 1040. Tambrands received dividends from the earnings of the portion of the unitary business conducted by its foreign affiliates. Id. The Assessor assessed an income tax against Tambrands based on the inclusion of
Two of the leading authorities in the area of state taxation have criticized our application of the internal consistency test in Tambrands.
The error in the Maine court‘s application of the internal consistency test was that it was applied to taxes imposed on two different sets of taxpayers—Tambrands and its subsidiaries—not merely to a tax imposed on Tambrands. If there is an objection to such taxation, it is that the same income is taxed twice, once to the corporation and again to the stockholder. The internal consistency test deals, however, only with taxes that may be imposed on the same taxpayer by various States. The Maine court thus improperly applied the test of that State‘s taxation of Tambrands’ dividends and the tests of other jurisdictions on the foreign source income of the subsidiary.
See 1 JEROME R. HELLERSTEIN & WALTER HELLERSTEIN, STATE TAXATION ¶ 9.13[3][a] (2d. ed. 1993 & Supp.1994). It is now clear to us that in applying the internal consistency test in Tambrands, we improperly applied the test to two different taxpayers—Tambrands and its subsidiaries—rather than to just Tambrands. Moreover, by misidentifying the taxpayer in our application of the internal consistency test in Tambrands we insured that no apportionment method other than complete exclusion of the foreign subsidiaries’ income and dividends would satisfy the test. In Tambrands we unnecessarily injected the issue of “internal consistency” into a dispute which, much like the present one, was not a question of “multiple taxation,” but rather a question of the taxation of extraterritorial value. As the Hellersteins concluded:
Considering the case from a broader constitutional and policy point of view, taxation by one State of the income of a subsidiary doing business within its borders and taxation by another State of its parent company that does business within that State on dividends paid by the subsidiary out of its earnings are part of a long-accepted and established practice in State corporate taxation. Such taxation does not constitute the type of multiple taxation that is prohibited by the Commerce Clause, and there is no Supreme Court decision, including the cases dealing with the internal consistency doctrine, that invalidate such levies.
Id. Thus, our discussion of the internal consistency test in Tambrands was superfluous. We therefore abandon the internal consistency analysis set forth in Tambrands.
At the same time, we reaffirm the ultimate conclusion in Tambrands that the Assessor‘s failure to adjust a taxpayer‘s apportionment factors to reflect the taxpayer‘s activities both within and without the state of Maine may result in the taxation of extra-territorial value and, therefore, may run afoul of the fairness principles of the Due Process Clause. Thus, we review the Assessor‘s Augusta Formula to determine whether it ensures that Du Pont‘s tax liability “fairly represents” its business activity in the state of Maine consistent with constitutional due process. Id.
The Assessor developed the Augusta Formula pursuant to the discretionary authority afforded him by
A state is faced with an almost impossible task in assuring that a multijurisdictional business shoulders its fair share of the burden of taxation. The United States Supreme Court has noted that arriving at precise territorial allocations of “value” is often an elusive goal both in theory and in practice, Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 182, 103 S.Ct. 2933, 2949, 77 L.Ed.2d 545 (1983), and hence, rough approximation rather than precision is sufficient as a matter of practical tax administration. International Harvester Co. v. Evatt, 329 U.S. 416, 422, 67 S.Ct. 444, 447, 91 L.Ed. 390 (1946). Indeed, “[e]very method of allocation devised involves some degree of arbitrariness.” Barclays Bank v. Franchise Tax Bd., 512 U.S. 298, 114 S.Ct. 2268, 2269, 129 L.Ed.2d 244, 253 (1994).
The Augusta Formula simply adopts the worldwide reporting method as a means of verifying the fairness of the tax liability of the unitary business as established by the tax assessor. The worldwide reporting method is widely acknowledged as a fair and accurate method of estimating a multijurisdictional corporation‘s taxable business activities in the state, and the Supreme Court has repeatedly upheld the constitutionality of this method of accounting. See e.g. Barclays Bank v. Franchise Tax Bd., 512 U.S. 298, 114 S.Ct. 2268, 129 L.Ed.2d 244 (1994); Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983). Pursuant to the worldwide reporting method, the state takes into account the property, payroll, and sales for the unitary business in the taxing jurisdiction as fractions of the total worldwide property, payroll, and sales. The sum of these fractions is then averaged and multiplied against the unitary business‘s total income producing an apportioned amount of taxable income. See generally, Irene Cannon-Geary, Note, State Worldwide Unitary Taxation: The Foreign Parent Case, 23 COLUM.J.TRANSNAT‘L L. 445 (1985).
The worldwide computation includes in the denominators of the three apportionment factors the property, payroll, and sales of the dividend-paying foreign subsidiary whose dividends are included in the domestic parent corporation‘s tax base. Under the Augusta Formula, the tax assessed to a multijurisdictional corporation will exceed the amount calculated under the worldwide reporting method only in those instances when the tax calculated pursuant to the water‘s edge combined reporting method, with foreign source dividends excluded, is greater than the amount owed using the worldwide combined reporting method. Foreign dividends are included without any accompanying factor relief only in that instance when their addition yields a tax liability that is less than that calculated by the worldwide reporting method. Thus, each calculation pursuant to the Augusta Formula represents permissible means of insuring that the State in its assessment does not capture extraterritorial value, and that the assessed tax reasonably reflects the extent of a multijurisdictional taxpayer‘s
The Augusta Formula permits the Assessor to establish a level of taxation for a multijurisdictional unitary business between two constitutionally and statutorily permissible levels, and Du Pont‘s claim that its tax liability pursuant to the Augusta Formula may exceed its potential liability by some other formula does not undermine the validity of this method of apportionment. The Augusta Formula‘s use of the worldwide combined reporting method as a check on the tax assessed on the income of a multijurisdictional corporation with foreign subsidiaries was an appropriate response to our mandate in Tambrands.
The entry is:
Judgment on Counts I through IV and VI of Du Pont‘s petition for review vacated. Remanded for entry of a judgment affirming the decision of the State Tax Assessor with respect to Counts I through IV and VI.
WATHEN, C.J., and ROBERTS, GLASSMAN, RUDMAN, and DANA, JJ., concurring.
CLIFFORD, Justice, dissenting.
Because, in my view, the use of the Augusta formula does not comport with the unitary business concept on which Maine‘s statutory income tax scheme is based, and is contrary to the United States Constitution, I respectfully dissent.
The Augusta formula is inconsistent with the unitary business concept on which Maine‘s taxing scheme is based. Du Pont and its affiliates make up an integrated unitary business.
[I]f the dividends are included in the apportionable base on the ground that the payor is a component of the taxpayer‘s unitary business conducted in the state, the argument for excluding the payor‘s factors appears to us to be weak. The
J. Hellerstein & W. Hellerstein, STATE TAXATION ¶ 9.13(3)(b) (2d ed. 1993).
In Mobil Oil Corp. v. Commissioner of Taxes, 445 U.S. 425, 100 S.Ct. 1223, 63 L.Ed.2d 510 (1980), the issue of the noninclusion in the apportionment formula of the factors of Mobil‘s foreign subsidiaries and affiliates was not raised at the administrative level and therefore the majority of the United States Supreme Court did not address the issue. In a separate dissenting opinion, however, Justice Stevens did speak directly to that issue:
Either Mobil‘s worldwide petroleum enterprise . . . is all part of one unitary business, or it is not; if it is, Vermont must evaluate the entire enterprise in a consistent manner . . . .
. . . .
“Obviously, if the foreign source income is involved in the base for apportionment, foreign property, payroll and sales must be included in the apportionment factors.”
Mobil Oil Corp., 445 U.S. 425, 461 & n. 16, 100 S.Ct. 1223, 1243 & n. 16 (quoting Rudolph, State Taxation Of Interstate Business: The Unitary Business Concept And Affiliated Corporations, 25 TAX L.REV. 191, 205 (1970)).
Maine has the authority to tax only the income of Du Pont that is earned in or attributable to the State of Maine. The Assessor‘s formula taxes extra-territorial value. Even if the formula is not contrary to the commerce clause pursuant to the elusive internal consistency test, it violates the fairness principles of the due process clause.2 What we said in Tambrands is, in my view, equally applicable here:
The purpose of formula apportionment is to determine the amount of a unitary business that is attributable to Maine by comparing the business activities everywhere and apportioning the business income accordingly. Those business activities are measured from the property, sales and payroll of the unitary business, factors that have been held to be reliable indicators of business activity. . . . The Assessor, however, removes from the factors in the formula, and thus from the apportionment, the property, payroll and sales figures that measure the business activity of the [f]oreign [a]ffiliate. The ineluctable result is that more of the business activity of the unitary business is attributable to Maine than is the actual case. Thus, the income taxable by Maine under the Assessor‘s formula does not truly reflect . . . Tambrands’ connection with Maine and fails to meet the test of fairness required by the due process clause. . . .
Tambrands, 595 A.2d at 1044 (citations omitted).
Unless the sales, payroll and property values connected with the production of the income by the payor corporation are added to the denomination of the apportionment formula, the inclusion of earnings attributable to those corporations in the apportion tax base will inevitably cause . . . [Du Pont‘s Maine] income to be overstated. Mobil Oil Corp., 445 U.S. at 460-61 (Stevens, J., dissenting).
That the Assessor tests the tax computed against a formula that insures that the tax assessed will not exceed a theoretical tax computed under a completely different formula that, in my view, is not authorized in our tax laws,2 does not cure the defect.
No. 95-123
Supreme Judicial Court of Maine.
Argued Dec. 6, 1995. Decided April 22, 1996.
Notes
8. Maine net income. “Maine net income” means, for any taxable year, for any corporate taxpayer, the taxable income of that taxpayer for that taxable year under the laws of the United States as modified by section 5200-A and apportionable to this State under [36 M.R.S.A. § 5210 et seq.]. To the extent that it derives from a unitary business carried on by 2 or more members of an affiliated group, the Maine net income of a corporation shall be determined by apportioning that part of the federal taxable income of the entire group which derives from the unitary business, except income of an 80-20 corporation.
For a more extensive discussion of the mechanics of the Maine tax scheme see Tambrands, 595 A.2d at 1041.Any person who is subject to an assessment by the State Tax Assessor or entitled to receive notice of a determination of the State Tax Assessor and who is aggrieved as a result of that action may request in writing, within 30 days after receipt of notice of the assessment or determination, reconsideration by the State Tax Assessor of the assessment or determination.
The State Tax Assessor‘s decision on reconsideration constitutes final agency action that is subject to review by the Superior Court in accordance with the Maine Administrative Procedures Act, except that Title 5, sections 11006 and 11007 do not apply. The Superior Court shall conduct a de novo hearing and make de novo determination of the merits of the case. It shall make its own determination as to all questions of fact or law. The Superior Court shall enter such orders and decrees as the case may require. The burden of proof is on the taxpayer.
The combined report required by section 5220, subsection 5, shall include, both in the aggregate and by corporation, a list of the federal taxable income, the modifications provided by section 5200-A, the property, payroll and sales in Maine and everywhere as defined in [§ 5210] and the Maine net income of the unitary business. Neither the income nor the property, payroll and sales of a corporation which is not required to file a federal income tax return or of an 80-20 corporation may be included in the combined report.
Neither the income nor the property, payroll and sales of a member corporation which is not required to file a federal income tax return shall be included in the combined report.
House Amend. A to Comm.Amend. A to L.D. 1398, No. H-412 (111th Legis.1983). This sentence was subsequently deleted from section 5220 and inserted into section 5244 at the time of section 5244‘s enactment. See P.L.1985, ch. 675 §§ 2-3.The only discussion of this sentence, which Du Pont claims was “enacted specifically to ensure that Maine did not reach worldwide income,” was the following exchange between Senator Collins and Senator Teague.
Senator COLLINS: . . . I would be interested in two further answers if they should be available from the Committee on Taxation: One is whether or not this Bill has been amended to take care of the problems of the Fraser Paper Company?
Senator TEAGUE: . . . As far as his other question, I think, was on the Fraser Paper Company. House Amendment “A” (H-412) takes care of the Fraser
Paper Company and takes care of all international subsidiaries of any national company. 2 Legis.Rec. 1357-58 (1983). While the answers of a committeeman to questions asked by members of the legislative body may be considered in construing the subsequently enacted law, it is impossible to determine with any certainty what construction was put on this amendment based on this brief exchange.If the apportionment provisions of this section do not fairly represent the extent of the taxpayer‘s business activity in this State, the taxpayer may petition for, or the tax assessor may require, in respect to all or any part of the taxpayer‘s business activity, if reasonable
A. Separate accounting;
B. The exclusion of any one or more of the factors;
C. The inclusion of one or more additional factors which will fairly represent the taxpayer‘s business activity in this State; or
D. The employment of any other method to effectuate an equitable apportionment of the taxpayer‘s income.