Pa. Violates Uniformity Clause In Sourcing Dispute, Court Told
Jennifer Karpchuk is quoted in a Law360 article commenting on a dispute between Synthes USA HQ and the Commonwealth of Pennsylvania in which the taxpayer alleges a uniformity violation related to the Department of Revenue’s interpretation and application of the cost-of-performance sourcing method. The article explains that Synthes USA HQ is claiming that it deserves a refund of more than $2 million for taxes paid in 2011 using the Department of Revenue’s interpretation of the cost-of-performance method, which more closely resembles the market-based method, and which the commonwealth opposes as contrary to the statute.
According to Jennifer, “Cost-of-performance complaints are not uncommon in Pennsylvania but are typically settled. That this one is going to trial is unusual and may be a first.”
“The department would tell you they are using cost of performance but interpreting income-based activities to occur where the customer is, which is essentially market-based sourcing,” Jennifer said. “The taxpayer is arguing that they want to follow the department’s interpretation of cost of performance.”
To read the full article, click here.