Landmark Ruling by South Carolina Supreme Court to Impact Taxpayers Nationwide Ruling Reverses Corporate Tax Reporting Policy – Addresses Need for Fair Tax Relief

GREENVILLE, SC – June 18, 2010 – On June 14, 2010, the SouthCarolina Supreme Court issued a landmark decision regarding methods ataxpayer may request to fairly reflect its business activities on aSouth Carolina tax return filing. The ruling will have a significantimpact on taxpayers in many states – Media General, Inc., et al. v.South Carolina Department of Revenue

<http://www.judicial.state.sc.us/opinions/displayOpinion.cfm?caseNo=26828>  (see entire ruling).

In this case, the operations of the taxpayer’s various subsidiarieswere integrated to such an extent that the state’s normal method ofseparate entity taxation significantly distorted the fair determinationof South Carolina tax liability., said Geoffrey J. Christian, managingpartner at Dow Lohnes Price Tax Consulting Group LLC <http://www.dlptax.com>.

DowLohnes Price (Greenville, SC), developed an alternativeapportionment position to fairly reflect the apportionment of taxpayer’sincome to South Carolina. The firm provided legal, computational, andanalytical expertise in this case beginning with the audit phase throughlitigation, conducting the case in partnership with Burnet R. Maybank,III of the law firm, Nexsen Pruet, LLC (Columbia, SC), which representedMedia General before the Court.

The decision recognizes that statutes providing for relief from such adistortive result had no explicit limitation on the method that couldbe utilized to fairly reflect a taxpayer’s business activities.  Theruling overturns longstanding policy of the South Carolina Department ofRevenue to not allow the combination of separate entities (i.e.,corporations) in computing tax liabilities.

Relevant implications of this ruling include:

• Case expands taxing options available to taxpayers within SouthCarolina at its highest level of jurisprudence,
• Case provides guidance which all states and multistate businessescan now utilize in establishing their tax positions,
• Case gives taxpayers new opportunity to appropriately match theireconomic activities within South Carolina to any resulting taxliabilities, and
• Case is one of a few instances throughout the U.S. whereby ataxpayer has been successful in utilizing relief provisions.