good morning may it please the court counsel i'm david hughes and i represent the petitioner irwin industrial to accompany this case concerns whether the illinois department of revenue may impose a  tax on an airplane that was hangared and based in the brassica now despite the fact that the illinois department of revenue is a party to this case and despite the fact that the tax in question is  illinois use tax this case is really about nebraska and i say that for two reasons the first is that nebraska has chosen as a matter of tax policy not to tax common or contract carriers and financial reason the aircraft that is an issue in this case was never subject to the brass attacks but for that reason the state of illinois it was only illinois an opportunity and they have attempted to try to tax the full value of this airplane the other reason then to brassica is is critical to this case is that the owner of the aircraft in question is a real nebraska business this is a business with employees in nebraska assets in nebraska books and records in nebraska this is not a situation where we have an illinois business that is trying to hang or its plane or park its plane in nebraska simply to avoid illinois use tax this is the any significant years i don't think so just some of us know it was it was really a scrivener's error an oversight and even though the bill of sale in the registration does list illinois the hoffman estates address as the address for the know there is there is disagreement on that we have looked at the flight logs and we have determined that the airplane spent four percent of its time in illinois and we arrived at the numbers actually a bit less than four percent yet the ten  days they were like the lights last right we used actually what we used was ground time we looked at the amount of times the plane spent on the ground in illinois and we compare that to the total that the airplanes own or own the airplane and we came up with a figure that was less than four percent of the time in illinois what the defense has suggested is you need to look at the total number of flights that were made into illinois as appellate court in addressing the substantial nexus question did look at the number of flights yes that the airplane ticket to illinois but we're suggesting either from a substantial nexus standpoint or what we call the apportionment issue which i will address later but either way if you look at the number of flights into illinois it doesn't really accurately represent the amount of use are we considered to be the absence of use of the airplane in illinois because again this was not a plane that was hanged in illinois this plane was never maintained in illinois this plane never spend consecutive days in illinois this is a plane that on seventy percent of its trips into illinois spends less than an hour in the state this is a plan that would arrive drop people off pick people up and then leave and for that reason we don't see that there is a substantial sure i think the missouri case is different because there you had an airplane that even though it was hangared outside missouri when it went into missouri it often stayed there for consecutive days at a time in fact that the court notes the missouri supreme court notes that it might spend up to nine days in missouri our airplane did not our airplane arrived and it left it did spend some nights in illinois but only only single nights and over this two year period only twenty five nights on average about once a month so the presence in illinois is not as continuous as the presence as you would have in the superior craft case for missouri i think what's also important is that you're out of limited  concluded in earlier decisions in the archer daniels midland case in the square d case from one thousand nine hundred two and there's a whole host of cases from other states holding that if an airplane is hangared in a state then that state has the constitutional authority to tax the airplane i think short of that i think if you have a situation where the plane is not hangar in the state and spends a nominal amount of time in the state then i think at worst the tax should be proportionate to the amount of time that the airplane spends in the state and i think the facts that we have in this case are interesting if you contrast them to the facts that this court addressed in the brown's furniture  illinois and the question was whether there was a substantial nexus between brown's furniture in illinois we have the same substantial nexus inquiry that we have in this case in browns though the retailer was making up to nine hundred deliveries into illinois in a ten month period that works out to about ninety deliveries a month here is the appellate court noted there were one hundred thirty flights into illinois over a two year period that's about five to six times a month this court in brown's furniture concluded that brown's had a continuous presence in illinois because of the number of deliveries that it was making but brown's was here ninety days a month he was here about three times a day here this airplane is here at my most five or six times a month and when it's here it's not here very long i think the other important point on substantial nexus is that the focus has to be on the activity that the state is seeking to tax the activity is the use of the airplane in the state the issue here is not whether the airplanes own or this company called a t c air the issue is not whether a t c air itself or its corporate parents are somehow generally subject to tax in the state of illinois so the fact for example that a t c errors parent has an office in  or the fact that e t c air might have some officers in illinois that doesn't really affect the proper analysis of the proper analysis or the real question is whether or not there's a connection a nexus if you will between the activity the use of the airplane in the state of illinois or it serves a couple of different purposes one purpose traditionally is to protect local retailers  to ensure that if in illinois a resident were to go to another state to buy an item of property that illinois retailers are not harmed by that because the concern is that if a bordering state were not to a particular type of property then illinois retailers might might be harmed because illinois residents would go to other states so they used tax that is used as sort of a buttress or a compliment if you will to the sales tax in those situations but i started my argument by making that that point which is this is not a situation how would the proportionate valuation if if somebody were to go to another state and bring the property into illinois you we have certain information about where this plane is that there needs to be a comparison between the amount of time ground time if you will that the airplane spent in illinois versus the amount of time the airplanes own or own the plane and based on our calculations that comes out to just less than four percent so we argue that the used tacks here should be equal to approximately four percent range you made that measurement of the number of flights that was that was not our approach our approach was basically understand that measuring the flights would be better for you that measuring life here well i think if you measure the flights with all due respect the percentage increases because if you simply compare the number of flights into illinois as compared to flights everywhere the percentage is closer to two forty five fifty percent so the percentage actually does increase well we have suggested is that approach again is misleading because it doesn't really accurately account for the fact that this plane when it was here spends very little time here it just came drop people off pick people up and left here we look at air time how much time that's it's possible i mean if there's a way if there's a way to measure then again what we're dealing with here is a use tax and certainly within the definition of use is storage and so to the to the extent that the plane is on the ground it's not being stored per say here but i think what the use tax tries to capture is actual use within the state and that in that vein owsley airplanes i mean to be flown not  s supreme court said in jefferson lines is that in evaluating a tax to determine whether or not it is as we say fairly apportioned what you have to look at is two things you have to look at what the supreme court called internal consistency but then you also have to take a look at what the court calls external consistency and i think the problem with the appellate court decision below and i think the problem with a number of the state decisions on this issue is that courts haven't really come to grips with this concept of extra consistency because what accidental consistency is supposed to do is it's supposed to measure the economic activity in the state there has to be some type of economic justification for the t and i think the concern here is that if you look at the activity in the state it's fleeting it's brief it's momentary yet the state is seeking to ten x one hundred percent of this aircraft and and from the perspective i played it was used pretty much as it ruined his management it was it was used by the company generally was owned by a special purpose area but it was used in hearts to transport officers in other other company executives who were based in hoffman estates he was also used though to transport employees it was used to trance  transport costumers it was used to transport friends it was used for a whole host of purposes but all related well be open it was use for corporate purposes this was not we're not suggesting at all that this was some type of common carrier that made itself available to the public i mean this was an airplane this was a corporate jet if you will that was used by company i would also suggest though that if you look at the substantial nexus cases including this court's decision  brown's furniture what you're going to find is less of a focus if any focus at all on purpose and intent which you're going to find instead is a focus on what the courts refer to as physical presence how much time how much presence did either an asset or a company have any given state so from their perspective you know despite the fact that this the airplane might have been used for corporate purposes if you will again at the end of the day what's really important here is the fact that the airplane spent very little time i would also suggest that if you take a look at the decisions from other states you're going to find  vast majority of those cases that the airplanes were hangared in the taxing state new york has had a policy in place for over thirty years that it will not tax airplanes that come into the state that are hangared outside the state so that illinois residents do not purchase an item somewhere else and somehow avoid the use tax what i was suggesting is that that's not what we have here again this is not in illinois business that went somewhere else to buy its airplane and then put the plane in nebraska simply to avoid illinois use tax this is a business and if you want to look at it come at it collectively is the entire business this is a business that has been manufacturing tools in nebraska for over one hundred years so they if you will i mean they got lucky nebraska chose not to tax this airplane but it was a nebraska business they did not put the plane in nebraska to avoid the tax they just happen to be there and they happen to be in a state that chose not to tax the plane now the appellate court spends a significant amount of time in its decision addressing credits and this idea that a full on a portion to use tax in this case is appropriate simply because if the taxes own to illinois the airplane owner can simply claim a credit in another nate the concern the problem that i have with that approach is that it it avoids or it ignores this extra accidental consistency test tries to measure economic activity in this state it has nothing to do with credits the internal consistency test which again is the alternative task recognized by the supreme court has everything to do with credits we have not suggested in a number briefing that this tax somehow violates internal consistency but from an accidental consistency standpoint the credits that might or might not be available in other states will not save this tax and that's another concern that we raise with credits is that snow any state credit statutes apply only to purchases or only to tax me in the purchasing state so that if a tax is paid in another state which here would be illinois because illinois is not the state of purchase there are many state credit provisions that do not apply unless the property is or unless the tax is paid in the state of purchase and so for that reason i have real doubts that a credit might be available here and i think it's also important to note that from a constitutional standpoint the test is not whether tax has in fact been paid the test is whether there is a risk or a threat of multiple taxation and there's no question that we have that threat here so for all those reasons and the reasons expressed in our briefs i would respectfully ask that this court add additional purposes one of the purposes is to protect illinois retailers from the purchase of items outside the state being brought back into the state and thereby hurting the business of illinois retailers a second purpose is obviously to maintain the revenues of the state of illinois they get the right to unlimited eternal use of that property in the state they don't and they pay it at the outset it's a one time tax not a yearly tax where we measure the amount of time the item has been used in the state in that respect it's exactly like a sales tax you pay it once you never paid again and you use that item forever in the state and because every state are virtually every state at least forty five states have have identical used tax statutes with credit provisions it's actually a tax that permits you unlimited use of your personal property anywhere almost anywhere in the united states so this one time tax which is generally assessed at the time of first  so we don't know when we assess it how often that item is going to be used in the state of illinois all we know at the time that it's assess generally speaking is that the item was used in the state of illinois so the purpose of the act is is to preserve the revenues  state by taxing items that are purchased outside the state for which no taxes were paid and then to allow those items free flow in interstate commerce without ever having to tax and again so if we were to take the the apportion ment argument that irwin makes in this appeal what we would have to do is completely change the use tax because we would have to either ask them i guess at the outset how often do you intend to use your plane in our state and then we would have to check on that periodically because or we would have to alter the use tax completely so it's not like a sales tax but instead like an income tax where every year we check on how often this property was used in our state maybe in one year it was used four percent but the following year it was used twelve percent but but that's not a use tax in essence we would be obliterated to use tax and changing it into a personal property excise tax or any compacts of some sort so that's that's why they used tax has never been a portion and when when irwin sort of complains that that x turn all consistency requires apportionment what erwin is ignoring is that the use is now it is for unlimited use so because the use tax because the taxpayer pays for unlimited use when it pays the use text the state that that allocates that tax that applies that tax is manifested by the conduct of economic activities in the taxing state performed by the taxpayers personnel so under that definition that this court put forth and brown's furniture which is derived from quill the supreme court case the corporate officers nexus the single flight of the plane satisfies the statutes definition of use and then when they pay that tax assuming they haven't paid taxes in any other state they are entitled to unlimited use of that plane forever more in the state of illinois that's what they get for the tax that they're not paying for two percent of time or forty nine flights are here because we're working retrospectively in this case we're not seeing how the use tax actually works generally  is intended to work they're paying for forevermore being able to fly the plane and on the way they could even hangar here they make one flight telling no other subject to use tax but then they can hangar here refuel it let it sit for three weeks fight back and forth that's what they states have credits and since that time i know there is a case in vermont where they struck their used tax as unconstitutional because it had no credit indiana did the same so there might be a couple of used taxes out there that are susceptible but to get to the core of your question  generally speaking where the where the item is purchased a sales taxes is assessed and that's the the one and only tax on the item where there is no sales tax generally speaking work with the first use is where that where the tax case because they they move the plane into a state that has no tax on this particular type of item they never paid there is the amount of used to tax the formular is there consistent from when these forty first tooth yes it's on the full purchase talking about credit recognized credit from other states it simply means i guess that if illinois has posed and collected use tax no other state can or some other state has already done that illinois cannot that is correct they paid six percent of the purchase price to nebraska and then the only tax man came along they could just say hey we already paid our use tax nebraska and under the illinois statute they would have to pay nothing to the state of illinois if nebraska taxed three percent of illinois tax the difference illinois can tax the difference and when it when they pay that six percent to nebraska hypothetically have said no they didn't they could then decide to hang around in illinois and i still would not assess a use tax so they got a lot more for their use tax then three percent of ground time or two hundred seventy flights they didn't use everything they got but what they got is is the eternal use of the plane going back to your premise that the parks is assessed at the outset and you really don't know how many flights are go thinking a little further on that question if i could just modify my answer of a bit the next is a requirement would be met in that circumstance and the used text actually would be satisfied but there is a fourth problem to the complete auto test which says he is the tax proportionate to the benefits that are being provided and that is not a question that's really arises here i can see it arising in that case we would argue in their case that look we're giving them unlimited use they can bring it back they can hang around here they can keep it here forever whether they want to use it that way or now i'm sure they would argue otherwise but but i would definitely say that for purposes of this case the one flate with the corporate office here would establish nexis plus sufficient used to tax they say this tax is fairly apportioned because credit is provided for use taxes paid in all other states expressly state that is of your argument that portion of the tax would not work the four percent o the forty nine percent or whatever basis reporting apportioning of whether it's based on time in illinois or number of bytes that's correct it wouldn't work for the for the for administering the use tax because generally speaking we don't know how many times somebody is going to use their property in the state when we set these taxes and we set it once and then we never look again so with this property because they sold it before we assessed the taxes you sort of have this closed system where you can look at it and say oh well they only flew it it here two hundred seventy times why don't we just doing them for each flight but that's not how our use tax works generally speaking of them and in this case obviously you do have that close system but we don't make exceptions to the statutory structure because of the lateness of the tax assessment it just does it and it's certainly no constitutional requirement that we do so which i guess is that is the issue here now how so does make the point that the purpose doesn't matter for in terms of assessing nexis and i would just like to to to dispute that assertion and say that it does and again point to the case of d h holmes for the proposition where they say where the taxpayer said we don't have sufficient nexis the facts of d h homes or there's a taxpayer with thirteen stores in louisiana and it sends catalogs from out of state to certain residents in louisiana and it has those catalogs printed it purchases them it mails them from out of state and it's only distributes them in the state of louisiana that's it's only use of the property in the state and the state of louisiana says is a used tax on each one of those catalogs for the use of distribution and they say we don't have enough nexus because all our kellogg's did they were all printed and they were produced and they were published out of state and they went by the time they got here they belong to somebody else we weren't using them anymore all we did was fly into the state and the court and the court says wait a minute you have thirteen stores in louisiana the purpose of flying those catalogs into our state was to increase your sales in louisiana we find quote nexus aplenty here so i think that that supreme court state that supreme court case sort of really refutes this argument that why did flew the plane doesn't matter and applying it here you see that the officers of the corporation were all right here in illinois as is justice this year pointed out it this was a taxi for for the corporate officers of of the company they were copied off of or one and those of a t c air the same people were the corporate officers and the purpose was to advance their business in illinois as well as other places so i think that that's just that is very relevant to the nexis assessment that's what justice gordon said in the appellate court that this was critical to their business plan and therefore that the quantity of flights and because of their integration with the corporation a stablish be the relevant proportionate analysis in superior aircraft which was the missouri case they talk about seventeen point seven percent of flight hours logged on flights to missouri now they went on to say missouri can tax the whole thing even though the corporation was principal place of business was in ohio plain was hangared in ohio flew seventeen point seven percent of its flights to and from missouri they said missouri is every right under the constitution to tax the entire value of that plane under their use tax council has suggested that cases distinguishable i think he said because the the plates spend up to nine days in missouri at a stretch here the place spent twenty five nights in illinois is council conceded i don't see why that distinction makes any difference we have the same hangared outside the state principal place of business outside the state some corporate presence within the state and some use by flights to and from the state the cases are indistinguishable whitcomb which is the case in vermont new hampshire corporation corporate headquarters principal place of business in new hampshire hangared in new hampshire seventeen percent of the flight times on trips to or from vermont in vermont tax the entire value of that plane yes they can they don't have to apportion it as long as they have a credit for taxes paid in other states it's a constitutional tax again indistinguishable from this case and obviously these cases aren't binding here they're missouri supreme court or mount supreme court but their uniform colorado supreme court taxes cars built by g m that are brought to colorado for testing spend one percent of their life in colorado and move on to other states where their road tested use tax supplied credit as long as the credit is provided to the city actually in that case and can tax the full value of those cars because because of the nexis the presence of general motors in colorado plus the use which in the colorado case was one percent as long as a credit is provided it's fully constitutional a tax that the whole amount and not only are these cases sort of uniformly on our side but there are no cases there's not a single case in which  taxpayer had a presence of physical presence in the state like a t c air does here with corporate officers here and use property in the state where in a court any court found that there was an inadequate nexus to tax the use of that property i just listed three i've got more list in my brief they have not a single case where nexus where the they can they can they can point to to show their nexus arguments correct similarly apportionment i've listed several  cases the case i just listed plus others in my brief and they have they do have one case here it's void brothers from the from the appellate court and alabama but it is truly an outlier it is a case in which the decision was made on other grounds but  really overwhelming from every jurisdiction in the federal courts that are used tax need not be apportioned it is extremely consistent because they use tax pays for unlimited use that's why it doesn't go beyond the value that the state is providing because the state is providing unlimited use and just because someone doesn't use it as much as they could that doesn't render that tax unconstitutional like for example you know a bus ticket that goes through three states and you can measure the mileage in each state and they say well one state can't can't tax the whole trip that sort of one circumstance where that application of x turn out consists in a sense in the sort of pran inherently satisfies that point of extra consistency because it's allowing unlimited use in the state and it's taxing the full purchase price but what the courts have been done is said well there's probably in the used text context maybe a more nuanced approach to external consistency where we look at is there a genuine threat of double taxation and that's where the courts have said well as long as there's a credit there's no genuine threat of double taxation and so that is so there's so there's extra consistency in that respect too and they've approved all it's all use taxes that have been adjudicated on that have credits for use taxes paid another state have been held to be constitutional and extremely consistent even though they tax the a couple of points in time in reply first as a factual matter i think it's important to remember here that a t c air own and the airplane in question but a t c air did not own or council also suggests look at some point it was never owned by a t c air you know they had no employees there they kept all their books and records back and lincoln it was their parents their parents office now council also suggests that from an administrative standpoint they were going to have a parade of horrible situation here if this court were to endorse and apportioned use tax what i would suggest and this is laid out in detail in our briefs is that other states are doing it florida has a statutory provision that permits airplane and truck owners to apportion the use tax that they might owe to the state other states are doing it for services computer services for example they're doing it it works there's ways to do it here it's possible that maybe an airplane owner pays tax on one hundred percent of their airplane at the outset and then sometime down the road whether it's after a year or two years they can go back and look at their flight logs and determine the correct amount of tax that is due but it is it's administratively feasible i'd also like to address what counsel said about the quilt case and how it might relate to this court's decision in brown essentially as it relates to the physical presence requirement and whether one flight is enough there is no question that there is a line somewhere whether it's one flight ten flights twenty flights the supreme court made it clear in quill that while a taxpayer needs a physical presence with the state that what the court called the slightest presence is not enough so you can have a presence in the state and yet not be subject to tax in the state that's exactly what we had in quill quill had some computer software in north dakota but the u s supreme court said they are not subject to tax because that computer software is not enough it's a hypothetical but i would suggest to this court that one flight is nowhere near enough that wherever we draw the line that one flight would certainly constitutes the slightest presence in the context of this case i am suggesting that the nature and number of flights that the airplane took in this case also constitutes the slightest presence also you you were speaking earlier about a t c being a separate entity from one or are you employees that flew the airplane into illinois the fact that its corporate parent might have an office here i think that's a total disconnect between the activity that the state is seeking to tax and the activities of the taxpayer here so i think the focus does have other correct it was that they did transport employees of their parents they transported some of the officers and directors and there was overlap between the two companies but they also transported customers us supreme court case involving the mailing of catalogs into louisiana it's an entirely different situation here and while the supreme court did conclude that the use tax that we see on a sought to impose was fairly apportion catalogs in louisiana in the catalogs in the d h homes case never left louisiana they stayed in the state this is an entirely different situation we have a plane that comes into illinois in leaves the tax here is not fairly apportioned under those circumstances and i think in that respect i think the jefferson lines case is really really important not only because of its discussion of accidental consistency but because of the nature of the tax what you had in jefferson mines was a sales tax it was a tax imposed on a local discrete events the sale of a bus ticket and because of that the u s supreme court said we can't apportion that tax that activity occurs locally here we don't have a discre local events the activity that the state is seeking to tax is really at the end of the day interstate activity its activity that occurs in thirty different states in multiple countries so this is completely unlike the situation in jefferson lines  as well as as the homes now and as far as the credit goes council is suggesting that it's not an absolute guarantee that every plane or every state where the plane was flown is necessarily going to provide a credit  offers examples of two states vermont and indiana that resisted providing a credit in certain situations the only thing that the constitution requires in order for a different tax to be declared unfairly apportioned is that there be a risk or a threat of multiple taxation not that there be actual multiple taxation but simply a risk or a threat and we have that here because again as i mentioned before many states provide a credit only for tax paid in the state of purchase we have cited to those states in our brief here to the extent that the hawker was flowing to any of those states there is unquestionably a risk of multiple taxation case number one on i three zero zero