State and Local Taxation: Nextel, Slight Reprise

PA TaxOne of the more important Pennsylvania tax cases decided last year was Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth, 129 A.3d 1 (Pa. Commw. 2015). Decided under the Corporate Net Income Tax, Nextel held that the net loss carryover provision of 72 P.S. § 7401(3)4.(c)(1)(A) violated the Uniformity Clause of the Pennsylvania Constitution because it treated taxpayers with small operating losses more favorably by permitting them to offset their losses against all of their taxable income, while taxpayers with large losses could not. Nextel, 129 A.3d at 9. Specifically, in the 2007 tax year, which was at issue in Nextel, taxpayers could deduct the greater of $3,000,000 or 12.5% of taxable income.… Read More

State and Local Taxation: Refund Awarded in Pennsylvania Uniformity Challenge

PA TaxNextel had a very happy Thanksgiving.

Just a few days before the holiday, the Commonwealth Court of Pennsylvania issued a decision awarding it a $3.9 million refund in a challenge to the structure of the net loss carryover (NLC) provision of Pennsylvania’s Corporate Net Income Tax. Nextel Comms. of the Mid-Atlantic, Inc. v. Commonwealth, No. 98 F.R. 2012, 2015 Pa. Commw. LEXIS 520 (Pa. Commw. Nov. 23, 2015). Nextel’s argument was that the structure of the NLC provision improperly treated taxpayers differently based upon their income, in violation of the Uniformity Clause of the Pennsylvania Constitution, which provides that “[a]ll taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax.… Read More