Opinion ID: 3156371
Heading Depth: 2
Heading Rank: 4

Heading: Other State Reporting

Text: ¶ 42. On appeal, the Department argues that unitary operations should be assumed in this case based on the fact that AIG included MMC in its unitary combined reporting in its 2006 tax returns for each of the other fifteen states that use unitary combined income tax reporting. The Department asserts that by including MMC in the AIG unitary group in those states, AIG has admitted that its operations are unitary with MMC. ¶ 43. In support, the Department cites to some cases where courts have made unitary findings and noted the parent’s inclusion of a subsidiary in its tax filings in other states. In those cases, however, the fact that the entity was included in other states’ reporting as part of the unitary group was not determinative, but in addition to other factors showing a unity of operations. See, 19 e.g., Gannett Co., Inc. v. State Tax Assessor, 2008 ME 171, ¶¶ 6, 20-27, 959 A.2d 741 (concluding that entities, which had centralized tax, legal, audit, financial and risk management services, shared operational expertise, and had interlocking directors and officers were part of unitary group and noting admission by parent that entity part of unitary group in filing in other states); Russell Stover Candies, Inc. v. Dep’t of Rev., 665 P.2d 198, 201-02 (Mont. 1983) (concluding subsidiary part of unitary reporting group based on centralization of management and unity of operations, and indicating that parent “admitted” fact of integration by including subsidiary on other states’ tax forms). ¶ 44. We acknowledge that an entity’s representations in other states can be a factor, but it cannot create a unitary operation where it does not otherwise exist. Here, as explained above, the evidence demonstrates a lack of unitary operations. Therefore, regardless of the reporting AIG made in other states, Vermont is still precluded from taxing AIG’s operations outside the state by constitutional limitations. See Container Corp., 463 U.S. at 164 (stating that Due Process and Commerce Clauses of U.S. Constitution limit state’s ability to tax value earned outside state). ¶ 45. Because AIG has met its burden of demonstrating that MMC is a discrete entity and not part of the AIG unitary group, we affirm the decision of the superior court. We do not reach the question of whether the 2011 assessment was barred by the statute of limitations. Affirmed. FOR THE COURT: