Idaho State Tax Commission v. Noell Industries, Inc.

Previously, this Court considered whether a unitarybusiness relationship could be determined from the superficial aspects of a corporation. Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U.S. 425, 439, 100 S. Ct. 1223, 1232, 63 L. Ed. 2d 510 (1980). This Court answered that superficial attributes were not determinative of unity. Id. Instead, this Court ruled that a unitary relationship is presumed unless the corporation proved by affirmative evidence that it was a “discrete business enterprise.” Id. at 439–442, 100 S. Ct. at 1232–1234. Today, State courts are wrestling with nearly the same question: should superficial aspects of a passthrough entity’s business determine unity? Courts in Idaho, New Jersey, and Tennessee have wrestled with this question. See Noell Industries Inc. v. Idaho State Tax Commission, 167 Idaho 367, 470 P.3d 1176 (2020), reh’g denied (Aug. 14, 2020) at App. 1-46; BIS LP, Inc. v. Dir., Div. of Taxation, 26 N.J. Tax 489 (Super. Ct. App. Div. 2011); and Blue Bell Creameries v. Roberts, 333 S.W.3d 59 (Tenn. 2011). These decisions have produced a split among the states: the Tennessee court extended the Mobil ruling to pass-through entities while the Idaho and New Jersey courts have not. This split in state court cases prompts the question of this case, which is: Does this Court’s ruling in Mobil apply to pass-through entities?