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1
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OPINION
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EXTRACTED KEY WORDS
INCOME REUTERS YORK BUSINESS ENTERPRISE APPORTIONMENT WORLDWIDE UNITED STATES TREATY NET INCOME FRANCHISE TAX CLAUSE TAXATION APPELLATE DIVISION COURT FOREIGN UNITED KINGDOM APPORTIONMENT FORMULA FOREIGN COMMERCE DEFICIENCY BRANCH OFFICE NONDISCRIMINATION CLAUSE DISCRIMINATION OPERATING DETERMINATION COMMISSIONER JUDGE UNITARY BUSINESS SUPREME COURT |
IN THE MATTER OF REUTERS LIMITED, APPELLANT, v. TAX APPEALS TRIBUNAL ET AL.,
RESPONDENTS.
82 N.Y.2d 112, 623 N.E.2d 1145, 603 N.Y.S.2d 795 (1993).
October 12, 1993
3 No. 186 (1993 NY Int. 185)
Decided October 12, 1993
_________________________________________________________________
This opinion is uncorrected and subject to revision before publication
in the New York Reports.
Steven Alan Reiss, for Appellant.
Daniel Smirlock, for Respondents.
_________________________________________________________________
BELLACOSA, J.:
In this article 78 proceeding, petitioner-appellant Reuters Limited
challenges a corporate franchise tax deficiency assessment. At issue
is whether New York State's calculation of petitioner's franchise tax
on the basis of the worldwide net income apportionment method violates
the nondiscrimination clause of the United States-United Kingdom Tax
Treaty (Convention Between United States and United Kingdom for
Avoidance of Double Taxation, Dec. 31, 1975, 31 UST 5668). We agree
with the conclusion of the Appellate Division that application of New
York's apportionment formula to the worldwide net income of a single
multijurisdictional business enterprise, operating internationally,
does not violate the Treaty's nondiscrimination clause. The Appellate
Division judgment, confirming the determination of the Tax Appeals
Tribunal and the Commissioner of Taxation and Finance, should be
affirmed.
Reuters Limited, a corporation organized in the United Kingdom, does
business in approximately 80 countries. During taxable years 1977
through 1979, it maintained a branch office in New York City, which
served as its principal United States office. Although Reuters earned
profits abroad during the tax years in question, its New York branch
incurred losses. Reuters computed its corporate franchise taxes for
the tax years 1977 through 1979 on the basis of United States income
only, and paid no franchise tax for those years because it also
claimed losses on its United States operations. In 1983, the
Department of Taxation and Finance performed an audit using the
worldwide net income apportionment method and issued notices of
deficiency totalling $1,280,000 for the tax years 1977 through 1979.
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