Title: Sherwin-Williams Co. v. Dept. of Rev.

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed:  January 27, 2000

IN THE SUPREME COURT OF THE STATE OF OREGON

THE SHERWIN-WILLIAMS COMPANY,
an Ohio corporation,

	Respondent,

	v.

DEPARTMENT OF REVENUE,
State of Oregon,

	Appellant.

(OTC 4127; SC S46023)

	En Banc

	On appeal from the Oregon Tax Court.*

	Argued and submitted January 6, 2000.

	Marilyn J. Harbur, Assistant Attorney General, Salem, argued the cause for
appellant.  With her on the briefs was Hardy Myers, Attorney General.

	Joseph F. Timmons, Cleveland, Ohio, argued the cause for respondent.  Michael
R. Seidl, of Seidl & Rizzo, Portland, filed the brief for respondent.

	Paull Mines, Washington D.C., filed a brief on behalf of amicus curiae Multistate
Tax Commission.

	PER CURIAM

	The judgment of the Tax Court is affirmed.

	*14 OTR 384 (1998).

		PER CURIAM 

		This case is before the court on appeal from the Oregon Tax Court. 
Taxpayer, a manufacturer of paint and related products, operates in Oregon and
several other states.  Taxpayer manages its working capital, in part, by buying and
selling securities.  Its purchase and sale of working capital investment securities is
carried out in Ohio, and the parties stipulate that that method of working capital
management generates "business income."

		The business income of corporations that operate in multiple states is
apportioned between those states for tax purposes under the Uniform Division of
Income for Tax Purposes Act (UDITPA).  ORS 314.605 to 314.675.  As adopted by
Oregon, UDITPA requires apportionment using a formula that is designed to reflect the
relative levels of business activity in each state.  The apportionment formula compares
sales, property, and payroll activities within Oregon to the total sales, property, and
payroll activities of the company in all locations.  The calculation of the total sales of the
company in all locations is at issue in this case.

		During 1987 through 1992, the tax years in question,  taxpayer included
its gross receipts from the sales of its working capital investment securities, both the
return of capital and the income earned in its calculation of its total sales.  In 1994, the
Department of Revenue (department) audited taxpayer's returns.  Relying on former
OAR 150-314-665(3), the department allowed the income earned from those sales to
be included in the calculation of total sales, but excluded the return of capital.  As a
result, the department assessed additional corporate excise taxes.

		The department prevailed in taxpayer's administrative challenge to the
calculation of its tax liability.  Taxpayer appealed to the Tax Court, and both parties
moved for summary judgment.  The Tax Court granted taxpayer's motion, holding that
the term "sales," as defined by ORS 314.610(7), requires that all gross receipts from
sales of working capital investment securities be included in the calculation of total
sales of the company.  Sherwin-Williams Co. v. Dept. of Rev., 14 OTR 384 (1998).

		At issue is whether the term "sales," as used in the Oregon UDITPA
apportionment formula during tax years 1987-92, included all gross receipts from sales
of taxpayer's working capital investment securities and whether 
former OAR 150-314-665(3) required exclusion of such gross 
receipts from the calculation of total sales.(1)

		This court has considered the arguments of the department and
taxpayer's responses.  The court agrees with taxpayer.  ORS 314.610(7) defines
"sales" as "all gross receipts of the taxpayer * * *."  Taxpayer's receipts from the sale of
securities met that definition.  

		Former OAR 150-314-665(3) provides no relevant exclusions.  Therefore,
the Tax Court did not err in entering judgment for taxpayer.  A further explication of the
reasons for our decision would not benefit the public or the bar.

  		The judgment of the Tax Court is affirmed.	

1. 	In 1995, the legislature adopted ORS 314.665(6), which provides that
gross receipts arising from the sale, exchange, redemption, or holding of intangible
assets shall not be treated as "sales" for purposes of calculating the sales factor of the
apportionment formula unless the receipts were derived from the taxpayer's primary
business activity.