State and Local Taxation


By William J. Kolarik, II

On April 25, 2017, State Representative Sam Jones requested that the Louisiana House Committee on Ways and Means voluntarily defer HB628, which would have imposed a commercial activity tax upon many business organizations doing business in Louisiana.  The Committee’s vote to voluntarily defer the bill means that the proposed commercial activity tax is likely dead for the 2017 legislative session.  The proposed commercial activity tax was the centerpiece of Louisiana Governor Edwards’ tax package and the deferral of the proposed bill means that Governor Edwards and Louisiana legislators will need to resolve Louisiana’s current budget crisis through other means.  The Kean Miller State and Local Tax team is reviewing proposed Louisiana tax legislation and will update its blog when our review is complete.

la house of reps

By William J. Kolarik, II

On April 17, 2017, the legislation that composes the centerpiece of Governor Edwards’ proposed tax reforms was filed in the Louisiana House of Representatives.  House Bill 628, introduced by state Rep. Sam Jones, contains the legislation that would establish the commercial activity tax.  The Kean Miller State and Local Tax team is reviewing the proposed legislation and will update its summary of the proposed Louisiana tax reform package after our review is complete.



By Jaye A. Calhoun, Jason R. Brown, and William J. Kolarik, II

On March 29, 2017, Louisiana Governor John Bel Edwards released the broad outlines of his Louisiana tax reform proposal (the “Tax Reform Proposal”), which he promoted as a comprehensive plan to stabilize Louisiana’s budget and avoid future mid-year budget cuts. The Governor’s plan includes individual income tax, sales and use tax, corporate tax, and tax expenditure proposals designed to, if enacted, replace the revenue generated by the “fifth-penny” of sales and use tax (that expires in 2018) and generate revenue to sustain Louisiana’s current budget structure. Governor Edwards announced the proposal alongside Kimberly Robinson, Secretary of the Louisiana Department of Revenue, during a press conference at the Louisiana State Capitol. And, while he did not provide a draft of legislation proposed to implement the tax plan or discuss many specific details, he did provide an overview of the Tax Proposal.

The Governor made an effort to tie the Tax Reform Proposal to the Final Report issued January 27, 2017, by the Task Force on Structural Changes in Budget and Tax Policy (the “Task Force”), but many who have studied the report were unconvinced. Indeed, while some of the sales tax changes were discussed in the Final Report, the commercial activity tax, the most significant and controversial aspect of the Governor’s tax reform proposal did not appear in the Task Force’s Final Report. An overview of the Governor’s Tax Reform Proposal follows.

Corporate Tax Proposals

The Governor’s plan would implement a number of changes impacting corporate taxpayers, including: (1) phasing out the corporation franchise tax; (2) repealing the corporation income tax deduction for federal income taxes; (3) reducing the corporation income tax rate; and (4) enacting a commercial activity tax (i.e., a gross receipts tax). Essentially, the Governor proposes to eliminate the franchise tax, over time, and retain the corporation income tax, but also impose a gross receipts tax to serve as a type of alternative minimum tax. Until the franchise tax is phased out, a corporate taxpayer would compute its liability under all three taxes, but would only owe franchise taxes and the greater of the corporation income or the commercial activity tax.

Phase-Out of the Corporation Franchise Tax

Under the Tax Reform Proposal, the corporation franchise tax would be phased out over a ten-year period. The Governor did not provide specifics on the phase-out but, presumably, it would occur in equally incremental annual reductions over a ten-year period. The Governor Edwards was unsure of the cost of phasing-out the franchise tax. The effective date of this reform was not specifically mentioned, but, because it was discussed in conjunction with the proposed commercial activity tax (discussed below), the Edwards Administration is likely considering beginning the phase-out in the 2019 franchise tax year (2018 filing period).

Repealing the Federal Income Tax Deduction

Currently, corporate income tax filers may deduct their federal income taxes paid when computing their Louisiana taxable income. Because the federal income tax deduction is constitutionally protected, repealing the deduction requires passage of a constitutional amendment supported by (a simple majority of) voters. Governor Edwards indicated at his press conference that the reduced corporate income tax rates, discussed below, would be contingent upon passage of such a constitutional amendment.

In 2016, the Governor proposed to collapse the tiered corporation income tax brackets into a flat six-and-one-half-percent (6.5%) corporate income tax rate to help resolve the 2016 budget shortfall. That proposal was similarly contingent upon the repeal of the federal income tax deduction through a constitutional amendment, which Louisiana voters rejected by a fifty-six to forty-four percent (56-44%) margin. Governor Edwards did not indicate at his press conference when the proposed constitutional amendment would be put to voters, but the most likely date would be November, 2017.

Reducing the Corporation Income Tax Rate

The Tax Reform Proposal would reduce the number of corporate income tax brackets from five (5) to three (3) and would reduce the corporation income tax rate upon repeal (via constitutional amendment) of the federal income tax deduction. Currently, Louisiana has five corporate income tax brackets – four percent (4%), five percent (5%), six percent (6%), seven percent (7%), and eight percent (8%). The Tax Reform Proposal would reduce the number of corporation income tax brackets to three (3) brackets at three percent (3%), five percent (5%), and seven percent (7%).

The Commercial Activity Tax

The Governor suggested that enacting a commercial activity tax would offset the costs of allowing the fifth-penny (of sales and use tax, discussed below) to expire on schedule, reducing the corporate and individual income tax rates, and phasing-out the franchise tax. The Governor did not provide many details of the proposed commercial activity tax, but did indicate that the tax was modeled upon similar taxes in use by other states. Based on the details released by the Governor and information provided by Secretary Robinson in meetings with trade groups around the state, it appears that the commercial activity tax would be similar to the commercial activity tax levied by the state of Ohio.

The commercial activity tax would be assessed upon any legal entity doing business in Louisiana. The tax base would be the entity’s gross receipts after deductions for (1) cash discounts allowed and taken; and (2) returns and allowances that are attributable to Louisiana. The proposed tax rate is thirty-five hundredths of one percent (0.35%).

The proposed commercial activity tax would apply as follows:

Entities subject to tax Entities exempt from tax
Partnerships Non-profit organizations
Limited liability companies Governmental entities
Limited liability partnerships Certain public utilities
Corporations Certain financial institutions
Subchapter S corporations Certain insurance companies
Joint ventures Businesses with $1.5 million or less of taxable gross receipts
Disregarded entities

While not specifically stated, it appears that sole proprietorships would also be subject to the commercial activity tax.

The proposed tax would apply at the full rate to businesses with $1.5 million or more in gross receipts.[1] All other businesses would be subject to a minimum commercial activity tax. The proposed minimum tax rates and commercial activity tax computation follow:

Taxable Gross Receipts Minimum Commercial Activity Tax Commercial Activity Tax
Less than $500K $250 No additional tax due
$500K – $1M $500 No additional tax due
$1M-$1.5M $750 No additional tax due
$1.5M to $3M N/A (0.35% x Taxable Gross Receipts) – [5,250 x ($3M – Taxable Gross Receipts)/$1.5M]
Greater than $3M N/A 0.35% x Taxable Gross Receipts

As noted above, the proposed commercial activity tax would only apply to gross receipts attributable to Louisiana. According to the proposal, the determination of gross receipts attributable to Louisiana would be identical to the determination of the numerator of the Louisiana sales apportionment ratio (for purposes of calculating the corporation income tax). The Tax Reform Proposal notes that gross receipts attributable to Louisiana would include:

  1. Gross rents attributed to real property located in Louisiana;
  2. Gross royalties from real property located in Louisiana;
  3. Gross receipts from the sales of tangible personal property received by the purchaser in Louisiana;
  4. Gross receipts from the sales of all other services if the purchaser or recipient of the service receives the benefit in Louisiana.

Because the determination of gross receipts attributable to Louisiana would be identical to the determination of the numerator of the Louisiana sales apportionment ratio, it appears the guidance related to sourcing sales for Louisiana corporation income tax purposes would also apply to the commercial activity tax.

For a corporation or a limited liability company that has elected to be taxed as a corporation, the commercial activity tax would function similar to an alternative minimum tax. For those taxpayers, the amount of tax liability would be the greater of: (1) the minimum commercial activity tax; (2) the commercial activity tax; or (3) the net corporation income tax due after the application of all credit carryforwards, nonrefundable credits, and (available) refundable credits. For a pass-through entity that is not subject to the corporation income tax with more than $1.5M in taxable gross receipts, the amount of tax liability would be the greater of: (1) the top-tier minimum commercial activity tax (i.e.,$750); or (2) the commercial activity tax.

Governor Edwards also noted that the administration intends to present an additional plan that would mitigate the impact of the commercial activity tax on low-margin businesses. The Governor did not provide specific details on the low-margin business plan, but he indicated that it would create a separate calculation designed to ensure that a business does not pay more than its “fair share.” The Governor did not indicate when he would provide details on his low-margin business plan.

The commercial activity tax proposal is projected to raise approximately $800-900M in revenue, which taken together with the other tax reforms would replace the revenue from the expiring fifth penny. Because the commercial activity tax is intended to replace the revenue from the expiring fifth penny, the proposed effective date is July 1, 2018.

Tax Expenditure Proposals

The Tax Reform Proposal would make permanent the temporary reductions to certain credits and incentives enacted in 2015 and currently set to expire in 2018. The proposal would also allow certain credits and incentives to sunset or expire as scheduled. The reductions to credits and incentives are expected to raise $192.5M in revenue based on fiscal notes from other legislative sessions.

While the tax reform proposal does not discuss specific credits and incentives, legislation enacted in 2015 reduced several corporate income and franchise tax credits for tax returns filed on or after July 1, 2015, and before June 30, 2018. The reduced tax credits included the jobs credit, the corporation income tax credit and credits paid by economic development corporations, regardless of the taxable year to which the return relates.

During the press conference, there was no substantive discussion of the tax expenditure proposals, but the Governor did note that he anticipated changes to the motion picture tax credit in the future. Specifically, Governor Edwards indicated a desire to replace the $180 million/year cap on motion picture tax credit payments with a $180 million/year cap on motion picture tax credits granted. The intention of this proposal is to align the granting and payment of motion picture tax credits so that credits are paid in the same year they are issued. The Governor indicated these changes to the motion picture tax credit would likely be phased-in over time. In informal meetings, Secretary Robinson has suggested that some of the 2015 and 2016 cuts would likely be made permanent.

Sales and Use Tax Proposals

The Governor’s Tax Reform Proposal contains three substantial sales and use tax proposals: (1) removing the “fifth-penny” enacted in 2016; (2) “cleaning” the two remaining “dirty pennies”; and (3) broadening the sales and use tax base to include certain services.

For those unfamiliar with Louisiana’s current state sales and use tax regime, currently, the cumulative state sales and use tax rate is five-percent(5%) and consists of the following components:

  1. The “basic rate” (two percent (2%));[2]
  2. Additional tax (one percent (1%));[3]
  3. Additional tax (ninety-seven hundredths of one percent (0.97%));[4]
  4. Louisiana Tourism Promotion District Tax (three-hundredths of one percent 0.03%);[5] and
  5. Effective for the period April 1, 2016 through June 30, 2018, a one percent (1%) additional tax, referred to as the “fifth-penny”.[6]

At present, Louisiana only levies the sales and use tax on the sale of eight specific services, including, notably, repair and maintenance services and the furnishing of hotel rooms. In addition, the current Louisiana sales and use tax regime contains approximately two hundred (200) sales and use tax exclusions and exemptions. But many of those exemptions and exclusions only apply to the two-percent (2%) basic rate. Those portions of the overall state sales and use tax rate to which all exemptions and exclusions apply do not apply are often referred to as “clean pennies,” although that term is misleading since many exemptions and exclusions still apply.

Removing the Fifth-Penny

To resolve the most recent Louisiana budget shortfall, in 2016, the Louisiana Legislature enacted “La. R.S. Sec. 47:321.1, which increased the cumulative state sales and use tax rate from four percent (4%) to five percent (5%). The so-called fifth-penny is currently set to expire on June 30, 2018. The tax reform proposal would allow the fifth-penny expire, as scheduled, at a cost of approximately $880 million.

“Cleaning” the Two Pennies That Comprise the Basic Rate

As noted above, the two pennies that compose the basic rate are subject to approximately 200 exclusions and exemptions. Governor Edwards’ Tax Reform Proposal would “clean” those two pennies, such that the exemptions and exclusions that apply to those pennies would be identical to those that apply to the other two pennies (that comprise the remainder of the full four percent (4%) sales and use tax rate, after the fifth-penny expires).

As a result of this proposal, certain Louisiana businesses may see an increase in the sales tax they pay on utilities and other business inputs. However, Governor Edwards hinted that certain business inputs, such as utilities used to power manufacturing equipment and related facilities, may remain exempt from the two percent (2%) basic rate. He also indicated that sales and use tax would be imposed upon certain manufacturing machinery and equipment, but that a new rebate may be available for taxes paid on those purchases. Finally, the Governor noted that existing agricultural exemptions and exclusions would be retained.

Cleaning the two “dirty pennies” is projected to raise approximately $180 million in revenue. The permanent repeal of certain sales and use tax exclusions and exemptions to the two pennies would be effective October 1, 2017.

Broadening the Sales and Use Tax Base to Include Additional Services

The Tax Reform Proposal would expand the sales and use tax base by subjecting additional services to tax. According to Governor Edwards, this aspect of the proposal would expand the sales and use tax to services currently taxed in Texas (with the exception of internet access fees). Services currently taxed in Texas that are not subject to tax in Louisiana include cable and satellite television services; credit reporting services; data processing services; information services; insurance services; non-residential real property repair, restoration, or remodeling services; real property services; and security services.

Similar to cleaning the two pennies that compose the basic rate, this expansion of the sales tax base has the potential to levy sales and use tax on certain business inputs, particularly real property and non-residential real property repair services, data processing services, and information services. According to Governor Edwards, expanding the sales tax base to include additional services is expected to generate approximately $200 million in revenue and would be effective October 1, 2017.

 Individual Income Tax Proposals

The Tax Reform Proposal would reduce Louisiana’s individual income tax rates for each of the three tax brackets from two percent (2%), four percent (4%), and six percent (6%) to one percent (1%), three percent (3%), and five percent (5%). However, like the corporation income tax proposal (described above), the reduction in individual income tax rates would be contingent upon Louisiana voters passing a constitutional amendment that would repeal the deduction for federal income taxes paid by the individual. According to Governor Edwards, this part of the proposal would cost the state approximately $42 million in revenue and would reduce the individual income tax liability for ninety-percent (90%) of filers. Nevertheless, Governor Edwards also noted that the inability to deduct federal income taxes would likely increase the Louisiana tax liability for individuals with incomes greater than $140,000.

It is not certain whether voters will approve a constitutional amendment to repeal the federal income tax deduction. As discussed above, in 2016, the last time such a change was put to the voters, the proposed constitutional amendment was handily rejected. Governor Edwards did not indicate when the proposed constitutional amendment would be put to voters but the likely date is November, 2017.

Going Forward

As with any legislative proposal, the “devil is in the details.” While the Governor announced at his press conference the broad outlines of his Tax Reform Proposal, detailed legislation has yet to be filed. Though non-fiscal bills must be pre-filed by March 31, 2017, the deadline for filing fiscal-related bills is April 18, 2017. Though it is likely one or more members of the Louisiana House of Representatives will author and introduce the Governor’s Tax Reform Proposal as a bill prior to the April 11, 2017 convening of the 2017 Regular Session, it is unclear at this time when that bill will be filed.


As noted above, the Edwards Administration did not provide copies of draft legislation or extensive details on the proposed tax reform package. Therefore, the implications of the proposal are not entirely clear. Nevertheless, it is possible to speculate on some of the most significant potential impacts of the tax reform proposal.

Implications of the Corporate Tax Proposals

The Edwards Administration, citing the Louisiana Department of Revenue, stated that, in 2015, there were 149,000 corporate tax filers in the state and that 129,000 of those filers paid no taxes to the state of Louisiana.[7] According the Governor Edwards, the commercial activity tax is designed to ensure that those 129,000 taxpayers with no corporate income tax liability pay their fair share. What the Edwards Administration did not discuss is the reason why certain taxpayers had no corporate income tax liability.

Due to the slump in the oil and gas industry and other factors, many corporate income tax filers are likely in net operating loss positions. Under the proposed tax reform package, those taxpayers would now pay the greater of: (1) the minimum commercial activity tax; (2) the commercial activity tax; or (3) the net corporation income tax due. It appears this proposal would allow the net operating losses of certain taxpayers, which are reflected as deferred tax assets on their financial statements, to expire unused. The expiration of net operating losses (or the proposed decrease in the tax rate) could reduce the value of deferred tax assets and immediately reduce a taxpayer’s earnings for financial statement purposes. A taxpayer with significant deferred tax assets should model the potential financial statement consequences of the proposed corporate tax reforms and determine the extent to which those consequences may impact its operations.

In addition, there is significant uncertainty in Louisiana about how the Department of Revenue will apply recent changes to the recently-enacted market-based corporate income tax sourcing rules for services. In October 2016, the Department issued proposed regulations related to the new market-based sourcing rules but, as of this writing, it has yet to issue final regulations. Therefore, it is not clear how gross receipts from services will be sourced for purposes of the proposed commercial activity tax.

The proposed commercial activity tax appears to rely on Louisiana’s ultimate destination rule for sourcing sales of services. Strict application of this rule would appear to benefit a corporate income taxpayer that manufactures goods in Louisiana for out-of-state export. In contrast, goods imported into the state for consumption, may be subject to multiple levels of the commercial activity tax. As a result, the proposed tax reforms appear to reallocate the tax burden among industry sectors. When modeling the proposed corporate tax reforms, a taxpayer should carefully consider its supply chain and whether its business inputs may bear one or more levels of commercial activity tax.

Finally, Ohio, upon which the proposed commercial activity tax appears to be modeled, attempts to mitigate commercial activity tax pyramiding by permitting certain related parties to eliminate intercompany transactions. The Tax Reform Proposal gives no indication that Louisiana intends to provide similar relief. Therefore, a taxpayer should assume that any intercompany transactions it engages in may be subject to commercial activity tax. This may result in a significant impact on certain supply chain structures, such as centralized procurement companies, leasing companies, and the reliance on other related parties.[8]

Implications of the Sales and Use Tax Proposals

As noted above, the proposed sales and use tax reforms have the potential to result in the taxation of a substantial amount of business inputs. The taxation of business inputs has the potential to result in tax pyramiding and may adversely impact certain business that cannot pass the cost of the tax through to consumers. Louisiana taxpayers should review the sales and use tax exemptions and exclusions that they rely upon and determine whether the tax reform proposal with repeal those exemptions and exclusions. In addition, a service industry taxpayer should determine whether the services it provides would be subject to tax under Texas sales and use tax law and, if so, how the proposed taxation of services, to be based on the Texas model, would affect their Louisiana business. Affected taxpayers may also want to consider whether they should be proactive and become involved in the legislative process at this time.

It should also be noted that the Governor did not propose streamlining the sales and use tax laws, or taking other action to make the laws more uniform, such as centralized collection for the state and its localities. Therefore, it does not appear that the proposals will remedy some of the most onerous features of the current Louisiana sales and use tax regime.

Implications of Considering Both the Corporate and Sales and Use Tax Proposals Together

At a minimum, the Governor’s proposals create significant additional compliance burdens for some taxpayers. Further, commercial activity taxes are sometimes referred to as “turnover taxes” because the tax burden is imposed on revenues generated by all transactions preceding the ultimate sale to the consumer. Turnover taxes tend to increase the costs of goods and services for businesses which, in turn, increases the cost of goods and services to consumers, and presumably sales and use tax collections on the final sales. As a result, the Governor’s commercial activity tax has the potential to make it more expensive to do business in Louisiana with whatever correlative impact that may have on economic development. Nevertheless, much is still unknown about the Governor’s plan. The Kean Miller State and Local Tax Team will provide additional information when more is known.

For questions or additional information, please contact: Christopher J. Dicharry at (225) 382-3492, Jaye Calhoun at (504) 293-5936, Phyllis Sims at (225) 389-3717, Jason Brown at (225) 389-3733, Angela Adolph at (225) 382-3437, or Willie Kolarik at (225) 382-3441.


[1] According to Governor Edwards, there are approximately 414,000 businesses in the state. Of those businesses, 389,000 “make less than $1.5 million annually” and “would be assessed a flat $250 tax, rather than the calculation for gross receipts.” Gov. Edwards Unveils Reforms to Stabilize Louisiana’s Budget.

[2] La. R.S. § 47:302.

[3] La. R.S. § 47:321.

[4] La. R.S. § 47:331.

[5] La. R.S. § 51:1286.

[6] La. R.S. § 47:321.1.

[7] Gov. Edwards Unveils Reforms to Stabilize Louisiana’s Budget.

[8] When modeling the impact of intercompany transactions, a taxpayer should also consider whether the purchaser is located in a foreign trade zone because, under current corporation income tax sourcing rules, a taxpayer selling corporeal movable property to a customer who receives the property in a foreign trade zone may exclude the sales from the numerator of its sales factor.


By Jill Gautreaux

The City of New Orleans (“the City”) has amended and re-enacted a gallonage tax on alcoholic beverages of low and high alcoholic content. A “gallonage tax” is a tax on alcoholic beverages based upon the amount, calculated in gallons, of alcoholic beverages sold. The current ordinance became effective on January 1, 2017, but industry members have sought to enjoin the implementation of this “new” tax. The ordinance closely follows the wording of the State gallonage tax statutes, which causes the tax to apply to wholesalers or Louisiana manufacturers because they are the first parties to come into possession of the alcoholic beverages in the State of Louisiana. The City ordinance does not have the effect that it apparently intended, and is worded as follows:

Section 10-511 – Who is liable for tax.

The taxes levied in sections 10-501 and 10-502 of this division shall be collected, as far as practicable, from the dealer who first handles the alcoholic beverages in the city. If for any reason the dealer who first handled the taxable alcoholic beverages has escaped payment of the taxes, those taxes shall be collected from any dealer in whose hands the taxable beverages are found.

On February 9, 2017, the City Council introduced an ordinance to amend Section 10-511, which qualified the word “dealer” in the first sentence and the first phrase of the second sentence with “wholesale”. Nevertheless, according to the current wording of the ordinance, if the wholesale dealer has “escaped” the tax, the retailer will be responsible for paying the tax to the City.

There is a strong likelihood that New Orleans alcoholic beverage retailers will end up having to pay some of this tax if the ordinance is enacted and enforced as currently written. Several large wholesale companies, including Southern Glazers, Southern Eagle, and Republic, do not have any physical presence within the City of New Orleans, and therefore should not be subject to the tax.

A few trade organizations have challenged the enforceability of the ordinance in Orleans Parish Civil District Court. The plaintiffs were successful in obtaining a temporary restraining order, but were denied a preliminary injunction. The temporary restraining order has lapsed, but, as of this date, the City has indicated that it will not collect the tax until the litigation has concluded. One City official has suggested that if the City prevails, that the tax due will be retroactive to January 1, 2017.



By William Kolarik

The New Jersey Tax Court’s opinion in Elan Pharmaceuticals, Inc. v. Director, Division of Taxation, Dkt. No. 010589-2010 (Tax Ct. of N.J. February 6, 2017) highlights the potential constitutional concerns related to the application of Louisiana’s recently enacted throw-out rule.

On June 28, 2016, Louisiana Governor Edwards signed H.B. 20 (Act 8) (effective June 28, 2016) into law. In addition to changing the apportionment rules for certain industries and enacting market-based sourcing for sales of services, Act 8 also contains a throw-out rule. Specifically, Act 8 amends the Louisiana apportionment rules to provide that “[i]f the taxpayer is not taxable in a state to which a sale is assigned or if the state of assignment cannot be determined or reasonably approximated pursuant to [the Louisiana apportionment rules contained in La. R.S. 47:287.95 and its related regulations], the sale shall be excluded from the numerator and the denominator of the sales factor.”[1] The throw-out rule applies to all taxable periods beginning on or after January 1, 2016.

A throw-out rule is an, oftentimes controversial, alternative to a “throw-back” rule. A throw-back rule is a rule that sources a taxpayer’s sales that are not taxable in the state of destination to the state of origin. From a policy perspective, the proponents of throw-back rules assert that it is appropriate to redistribute non-taxed sales to the state of origin because the state of origin is ostensibly connected to the non-taxed sales in some manner. In contrast, a throw-out rule redistributes income derived from sales made to a state where a taxpayer is not subject to tax to another state where a taxpayer is subject to tax by removing the non-taxable sales from both the numerator and the denominator of the taxpayer’s sales factor. The proponents of throw-out rules justify the rule by asserting that a taxpayer’s entire taxable income should be subject to state income tax. As Elan Pharmaceuticals and its related cases demonstrate, a throw-out rule becomes problematic and raises constitutional concerns when a tax administrator attempts to apply the rule in a manner that taxes income earned in another state that the other state’s legislature has jurisdiction to tax but chooses not to tax.

Elan Pharmaceuticals is the latest in a series of New Jersey cases in which the New Jersey Courts prohibited the New Jersey Division of Taxation (the “Division”) from applying New Jersey’s, now repealed, throw-out rule in an unconstitutional manner. Elan Pharmaceuticals (“Elan”), the taxpayer, was a Delaware company headquartered in California. Elan had property in 39 states, inventory in seven states, and payroll in 48 states. Elan only filed tax returns in six states because the other states in which it did business chose not to tax Elan’s in-state business activity. In at least 17 of the states in which Elan did not file a corporate income tax return, Elan was not subject to state income tax by virtue of Public Law 86-272 (“PL 86-272”), a federal law that prohibits a state from levying a state income tax if a taxpayer limits its in-state business activity to the solicitation of sales orders that are accepted and filled from inventory located outside the state.[2]

On audit, the Division applied New Jersey’s throw-out rule to reduce the denominator of Elan’s sales factor to include only amounts included in the sales factor numerators of the six states in which Elan reported a sales factor numerator. Elan challenged the Division’s application of the throw-out rule and asserted that the exclusion of receipts from its sales factor denominator was arbitrary and improper because it excluded receipts that were (1) allocable to other states where Elan was taxable pursuant to a throw-back rule; or (2) allocable to states where Elan stored its inventory, an activity which is a constitutional basis for asserting nexus; and (3) allocable to California, where Elan was headquartered. In contrast, the Division asserted that its application of the throw-out rule was proper because it excluded receipts from states that lacked jurisdiction to tax due to PL 86-272.

The court began its analysis by explaining that the Division’s arguments overlooked the substance of the New Jersey Supreme Court’s decision in Whirlpool Properties Inc. v. Director, Division of Taxation, 208 N.J. 141 (2011). In Whirlpool, the New Jersey Supreme Court held that New Jersey’s throw-out rule was constitutional as applied only “when the category of receipts that may be thrown out is limited to receipts that are not taxed by another state because the taxpayer does not have the requisite constitutional contacts with the state or because of congressional action such as P.L. 86–272.”[3] In contrast, the throw-out rule violated the dormant Commerce Clause when it excluded receipts that were not taxed by another state because the state chooses not to impose an income tax.[4] Citing Lorillard Licensing Co. v. Director, Division of Taxation, 28 N.J. Tax 590 (Tax 2014), in which the Superior Court of New Jersey held that the phrase “subject to tax” under Whirlpool applied in the context of economic nexus, the court emphasized that the test for determining whether the throw-out rule was constitutionally applied is whether a taxpayer has the requisite constitutional contacts with a state to be subject to the state’s taxing jurisdiction. According to the court, the possibility that PL 86-272 was implicated did not foreclose the limitations on the application of the throw-out rule because PL 86-272 does not bar an origin state from taxing the income generated from sales of goods to a destination state that cannot tax the income.

After explaining the constitutional limitations that applied to the application of New Jersey’s throw-out rule, the court explored the extent to which the states where Elan did not file tax returns had the ability to tax Elan’s operations. The court noted that an origin state had the authority to tax Elan’s sales from that state via a throw-back rule and that several states where Elan did business had throw-back rules. Therefore, the Division could not isolate application of the throw-out rule to New Jersey and deny that other origin states could tax Elan’s sales via a throw-back rule. Next, the court rejected the Division’s contention that Delaware’s choice not to impose an income tax required a conclusion that Elan’s sales of goods shipped from Delaware be removed from Elan’s sales factor denominator. In addition, the court also explained that an origin state or a destination state could impose a business-presence based corporate tax on Elan as long as the state had a basis to assert nexus over Elan, such as Elan’s storage of inventory, ownership of property, or payroll in the state. Because other states could constitutionally tax Elan’s sales, the court reversed the Division’s determination that only receipts reported to six states could be included in Elan’s sales factor denominator.

Louisiana Implications

The Louisiana Department of Revenue (the “Department”) has not issued guidance regarding how it intends to apply Louisiana’s throw-out rule. Nevertheless, it is important to understand that the limitations on the application of a throw-out rule described in the New Jersey cases are constitutional limitations that apply to the application of any throw-out rule by any state, including Louisiana. A taxpayer preparing its 2016 Louisiana corporation income tax return should carefully consider the extent to which the Louisiana throw-out rule applies to its out-of-state business activity in states where it does not file a corporate income tax return. When considering how the Louisiana throw-out rule applies, a taxpayer should give extra scrutiny to any state that has the ability to levy a tax on its sales but that chooses not to do so, e.g., an origin state in which a taxpayer stores inventory that does not adopt a throw-back rule. In addition, a Louisiana taxpayer affected by the throw-out rule should carefully scrutinize any guidance issued by the Department that purports to apply the throw-out rule to sales in destination states that have the ability to levy a tax on the taxpayer.

For additional information, please contact: Christopher J. Dicharry at (225) 382-3492, Jaye Calhoun at (504) 293-5936, or Willie Kolarik at (225) 382-3441.

[1] La. R.S. § 47:287.95(M).

[2] 15 U.S. Code § 381.

[3] Whirlpool Prop. Inc. v. Director, Div. of Taxation, 208 N.J. 141, 172 (2011)

[4] Id. at 172-173.


By Linda Akchin and Chris Dicharry


Louisiana law imposes a sales tax on “sales at retail.”  “Sale at retail” is defined in the sales tax law, and the definition provides that the term does not include “sales of materials for further processing into tangible personal property for sale at retail.”    This provision is commonly referred to as the “further processing exclusion.”[1]  The most recent Louisiana Supreme Court’s decision interpreting this “further processing exclusion,” Bridges v. Nelson Indus. Steam Co., 2015-1439 (La. 5/3/16), 190 So.3d 276 (the “NISCO decision”), recently became final.  The decision is significant for all taxpayer-manufacturers.  It provides an excellent explanation of applicable legal principles relating generally to interpretation of the further processing exclusion and a comprehensive explanation of the three-prong jurisprudential test for application of the exclusion.  In response to the NISCO decision, and before it became final, the Legislature passed an Act amending the further processing exclusion.[2]  The purpose of this writing is to (i) provide some general information regarding applicable rules of law to be gleaned from the NISCO decision; and (ii) identify questions arising from the recent legislative amendment to the law.


The further processing provision applies to byproducts.

The NISCO decision is the first in which the Supreme Court directly addresses the question of whether the further processing exclusion from tax applies to purchases of materials that are further processed into a byproduct of a manufacturing process.  The Supreme Court held that it does.  Noting that the exclusion applies to “tangible personal property,” and the sales tax regulation interpreting the exclusion provides that whether materials are further processed or simply used in the processing activity will depend entirely upon an analysis of the “end product,” the court reasoned that it found nothing in the law that requires the “end product” be the enterprise’s primary product, explaining:

“The plain language of the statute makes the exclusion applicable to articles of tangible personal property.  There simply is no distinction between primary products and secondary products. . . . At the end of the day, the ash [NISCO’s byproduct] is produced and sold . . . making it an ‘article of tangible personal property for sale at retail.’”[3]

The NISCO decision applies and interprets the long-established three-pronged test for application of the exclusion.

The Court applied the jurisprudentially-established three-pronged test for application of the further processing exclusion as it related to NISCO’s ash byproduct:  The test is:

(1) the raw materials become recognizable and identifiable components of the end products;

(2) the raw materials are beneficial to the end products; and

(3) the raw materials are materials for further processing, and as such, are purchased with the purpose of inclusion in the end products.[4]

In applying the test the Court clarifies and reinforces aspects of the application of the test that all taxpayers would be well-served to keep in mind.   Those clarifications include:

(1)       The further processing provision constitutes an “exclusion” not an “exemption” from tax, and as such, must be liberally construed in favor of the taxpayer;[5]

(2)       When the material purchased is processed into less than all of the end products produced, the analysis involves only consideration of the end product(s) into which the material is further processed, without regard to other end products.[6]

(3)       In order to satisfy the “benefit” prong of the test it is not necessary to conduct tests to determine the qualities of the material purchased or its beneficial impact on the end product.  It is sufficient that elemental components of the material purchased become integral components of the molecular makeup of the end product.  That “integration” is in and of itself of some benefit to the end product.[7]

(4)       The “purpose” prong of the test does not involve a primary purpose test; and the “purpose” test involves a “manufacturing purpose” inquiry, not a “business purpose” or “economic purpose” inquiry.  Only the manufacturing process and the physical and chemical components and the materials involved in the process are germane to the “purpose” test.[8]

(5)       There is no legal basis for an “apportionment” approach to the further processing exclusion, whether based upon the percentage of the material or some assigned value of the components that actually end up in the end product, and any such approach is impractical in application.[9]

The New Law

The 2016 Legislative amendment, effective June 23, 2016, amends the law to provide that “[t]he term ‘sale at retail’ does  not include sale of materials for further processing into articles of tangible personal property for sale at retail when all of the criteria in Subsubitem (I) of this Section are met.[10]  Those criteria consist of a re-statement of the three-pronged test:  (1) the raw materials become a recognizable and identifiable component of the end product; (2) the raw materials are beneficial to the end product; and (3) the raw materials are material for further process, and as such are purchased for the purpose of inclusion into the end product.

The amendment goes further, however, and adds a “Subitem II” to the definition of “sale at retail.”  This addition represents new law and provides, in short, that “[i]f the materials are further processed into a byproduct for sale, such purchases of materials shall not be deemed to be sales for further processing and shall be taxable.”  The term “byproduct” is defined to mean “any incidental product that is sold for a sales price less than the cost of the materials.”


Did the Legislature intend to overrule the NISCO decision?

The first question that arises is whether the clarifications to the three-prong jurisprudential test that are set forth in the NISCO decision may be applied under the amended law’s verbatim codification of the three-prong jurisprudential test.  It is a well-accepted rule of statutory construction that those who enact statutory provisions are presumed to act deliberately and with full knowledge of existing laws on the same subject, with awareness of court cases and well-established principles of statutory construction, with knowledge of the effect of their acts and a purpose in view; and that when the Legislature changes the wording of a statute, it is presumed to have intended a change in the law. [11]  Thus, legislative language will be interpreted based upon assumption that the Legislature was aware of judicial decisions interpreting those statutes, including among others, the NISCO decision.[12]  Because the amended law adopts the three-prong judicial test verbatim, we believe a strong argument may be made that there is no legislative intent to vary from the Supreme Court’s interpretations of that test, except to the extent the language of the amended law expressly varies from the Supreme Court’s prior interpretations.  The Legislature has never hesitated to expressly state its intent to legislatively overrule a Louisiana Supreme Court decision, when that is indeed its intent.  Here, no express statement of such intent was made, and we do not believe that the Louisiana Supreme Court will infer intent to overrule any aspect of the NISCO decision, except to the extent the language of the amendment is inconsistent with the court’s interpretation in NISCO.

What constitutes a “byproduct” for purposes of the new law?

In cases where a product is sold for a sales price less than the cost of its materials, questions will likely arise as to whether the product is an “incidental product.”  Because the term “incidental product” is not statutorily defined by the legislature, we must give the words their commonly-accepted meaning.  The word “incidental” means “being likely to ensue as a chance or minor consequence,” or “occurring merely by chance or without intention or calculation.”[13]  Many products sold for a sales price less than the cost of their materials are intentionally manufactured and sold.  They are not manufactured by accident; and they are not the result of chance.  Instead, a conscious decision is made to choose a process design that will in fact create certain byproducts, with the intention to sell all the products of the process – both “primary products” and “byproducts,” with an overall profit motive.  While any particular byproduct may be of minor consequence economically speaking, when viewed in a vacuum, it may not be of economic “minor consequence” to the overall finances of the taxpayer; or it may not be of minor consequence in terms of volumes manufactured and sold, or investment made to develop, manufacture, market and sell the byproduct.  In our opinion, the Legislature’s amendment – a clear intent to vary from the NISCO decision’s holding that the further processing exclusion applies to all end products – merely creates more uncertainty, resulting in many more sales and use tax disputes and consequent litigation.  The taxing authorities will undoubtedly argue that the intent of the amendment was to create a rule to be applied when a byproduct, viewed in a vacuum, is not profitable; but that is not what the Legislature said.  The Legislature adopted a rule to be applied to “incidental products,” without defining that term.  Thus, we believe a proper interpretation requires that a determination must first be made regarding whether the byproduct is an “incidental product;” and only if it is an incidental product, does the second part of the “test” – whether it is sold for a sales price less than the cost of its material – apply.

May the new law be applied retroactively?

Taxpayers may expect the taxing authorities to impose the new law going forward.  Serious questions arise, however, regarding the applicability of the new law to taxes already reported and paid, or incurred, before the new law became effective.

The new law expressly provides that it “shall not be applicable to any existing claim for refund filed or assessment of additional taxes due issued prior to the effective date of this Act for any tax period prior to July 1, 2016, which is not barred by prescription.”  If a taxpayer’s claim or dispute with the taxing authority falls within the language of this provision, the new law should not be applied by the taxing authorities.  It is not clear what is meant by the terminology “claim for refund filed.”  Does it mean the submission of a refund request or claim with the taxing authority, or a suit for refund, or both?  Likewise, it is not clear what is meant by “assessment of additional taxes due issued” – does it include notices of intent to assess (“proposed assessments”), notices of assessment (“final assessments”), petitions for redetermination of assessments, or suits to collect tax, or all four.  We recommend that taxpayers apply the most liberal interpretation of the language unless and until guidance is provided by regulation or judicial decision.

There will undoubtedly be cases in which no claim for refund has been filed or assessment issued before the effective date of the act, but involving tax periods prior to July 1, 2016.  In such cases, we believe a strong argument may be made that retroactive application of the new law to pre-amendment tax periods is unconstitutional.  The Legislature stated in the Act that it “is intended to clarify and be interpretive of the original intent and application of” the further processing exclusion, and that “[t]herefore, the provisions of this Act shall be retroactive and applicable to all refund claims submitted or assessments of additional tax due which are filed on or after the effective date of this Act.”  Despite this statement by the legislature, we believe that the amendment to the law is not merely clarifying and interpretive.  We believe the changes are substantive in nature.  Generally, substantive laws may be applied prospectively only.  And despite express legislative intent to the contrary, it is uniquely the province of the courts to determine if an Act is substantive, or merely clarifying and interpretive.  And, if the law is substantive, it will not be applied retroactively by the courts because to do so impinges upon the authority of the judiciary in violation of the constitutional doctrine of separation of powers and divests taxpayers of substantive rights and causes of action that accrued and vested in the taxpayer before the effective date of the Act, such that imposition of the new law would constitute a denial of due process.[14]

Was the amendment to the law constitutionally enacted?

In the case of an attempt by a taxing authority to apply the new law retroactively to pre-amendment tax periods, or in the case of a purely prospective application of the new law to post-amendment tax periods, a question still exists regarding the constitutionality of the law’s enactment.  The Louisiana Constitution provides that enactments levying a new tax or increasing an existing tax require a two-thirds vote of both houses of the Legislature to become law.[15]  Here, the Act at issue did not have a two-thirds vote of the House of Representatives.  A viable legal argument exists that because the law amends definitions in a manner that makes previously non-taxable transactions taxable, it constitutes either a “new tax” or an “increase in an existing tax,” thus requiring a two-thirds vote of both houses of the Legislature. [16]  Unless and until this issue is resolved in the courts, a taxpayer would be wise to seek legal counsel and consider its options before voluntarily paying tax on materials purchased for further processing into a byproduct.


[1] La. R.S. 47:301(10)(c)(i)(aa), before amendment effective June 23, 2016; see La. Act No. 3 (2nd Extra. Sess. 2016) (“Act 3 of 2016”).

[2] Act 3 of 2016, supra.

[3] NISCO, pp. 8-9, 190 So.3d at 282.

[4] Id. at pp. 7-8, 190 So.3d at 281, quoting International Paper, Inc. v. Bridges, 2007-1151, p. 19 (La. 1/16/08), 972 So.2d 1121, 1134.

[5] Id. at pp. 5-6, 190 So.3d at 280-281.

[6] Id. at pp. 7-9, 190 So.3d at 281-282.

[7] Id. at pp. 9-10, 190 So.3d at 282-283.

[8] Id. at pp. 4, 10-13, 190 So.3d at 279, 283-285/

[9] Id. at pp. 13-15, 190 So.3d at 285-286.

[10] Act 3 of 2016, supra (emphasis added)

[11] Borel v. Young, 2007-0419, pp. 8-9 (La. 11/2/07), 989 So.2d 42, 48 (emphasis added).

[12] State v. Campbell, 2003-3035, pp. 8-9 (La. 7/6/04), 877 So.2d 112, 118.

[13] Merriam-Webster’s Collegiate Dictionary (11th ed. 2012) (emphasis added).

[14] See e.g. Mallard Bay Drilling, Inc. v. Kennedy, 2004-1089 (La. 6/29/05), 914 So.2d 533); Unwired Telecom Corp. v. Parish of Calcasieu, 2003-0732 (La. 1/19/05), 903 So.2d 392; and Bourgeois v. A.P. Green Indus., Inc., 2000-1528 (La. 4/3/01), 783 So.2d 1251; La. Const. Art. II, §§1-2; La. Const. art. I, §2; U.S. Const. Amend. XIV, §1.

[15] La. Const. Art. VII, §2.

[16] See e.g. Dow Hydrocarbons & Resources v. Kennedy, 1996-2471 (La. 5/20/97), 694 So.2d 215.




By Daniel Stanton

By emergency declaration issued August 18, 2016, the Commissioner of the Louisiana Department of Insurance adopted Emergency Rule 27. Emergency Rule 27 allows the Department of Insurance to suspend certain statutes in the Louisiana Insurance Code and the rules and regulations promulgated under those statutes that may affect families and business affected by the current flood crisis in Louisiana.

While Emergency Rule 27 suspends many provisions of the Louisiana Insurance Code, most of the suspended provisions affect the ability of an insurer to cancel, terminate, non-renew, or non-reinstate a policy of insurance. One of its most significant provisions provides that an insurer may not terminate, cancel, or non-renew a policy of insurance as a result of the “inability of an insured . . . from complying with any policy provisions,” this includes non-payment of premiums. Insurers are further forbidden from imposing any interest, penalty, or other charge as a result of the enactment of Emergency Rule 27. Furthermore, the rule extends to September 10, 2016, any deadline for the submission of evidence or the completion of any act related to any claim for coverage under a policy of insurance made prior to August 12, 2016.

Emergency Rule 27 currently applies to policy holders residing in the following parishes: Acadia, Allen, Ascension, Avoyelles, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Point Coupee, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermillion, Washington, West Baton Rouge, and West Feliciana. Emergency Rule 27 applies to any policy of insurance in effect as of 12:01 a.m. on August 12, 2016, and will remain in effect through September 10, 2016.

Additional information and a copy of Emergency Rule 27 may be found on the Louisiana Department of Insurance’s website.

Members of the Louisiana Army National Guard rescue people from rising floodwater near Walker, La., after heavy rains inundated the region, Sunday, Aug. 14, 2016. (AP Photo/Max Becherer)

By Jason R. Brown

If you are one of the many South Louisiana residents directly affected by recent flooding but did not have flood insurance protection for your home and/or assets, be aware that the law provides some limited relief in the form of sales tax refunds.   Under Louisiana law (La. R.S. 47:315.1), residents living in an area determined by the president of the United States to warrant federal assistance can seek a refund of state sales taxes paid on destroyed household items such as furniture, appliances, electronic equipment, etc.  Refunds are not limited to homeowners.  Apartment and other homestead renters are equally eligible.  Eligibility is limited, however, to the actual owner of the property who paid the state sales tax and no refunds are allowed on property for which the purchaser received reimbursement (whether through insurance or other means, including, potentially, assistance from FEMA).

The Louisiana Department of Revenue has issued standard forms for making natural disaster refund claims.  The forms – R-1362 (Claim for Refund); R-1362D (Schedule of Tangible Personal Property Destroyed by a Natural Disaster); and R-1362S (Calculation of States Sales Tax Refund) – must be submitted on or before December 31, 2019.  Form R-1362 must be notarized and form R-1362i should be referenced for instructions on how to complete the three required forms and what documentation must be attached to verify a claim.

Purchases of automobiles/trucks, boats/boat trailers, water/snow skis or similar recreational items generally used away from home are not eligible.  Nor are items that were installed or became component parts of the residence (i.e., lighting and bathroom fixtures, water heaters, hot tubs/spas and wall-to-wall carpeting).  Finally, be aware that eligibility is limited to taxes paid on the destroyed property’s original purchase, not its replacement.

As of today, the President of the United States has declared Acadia, Ascension, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Pointe Coupee, St. Helena, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermillion, Washington and West Feliciana Parishes federal disaster areas.  More are expected in the coming days.  Residents who live in one of these parishes, but did not have flood insurance should consider seeking natural disaster refunds on their destroyed household items purchases.

Neighborhood flooded. Sign warns of high water.

By Christopher J. Dicharry

Property taxes in Louisiana are generally based on the status and condition of taxable property on January 1 of each tax year. For Baton Rouge and surrounding areas devastated by the recent flooding that could mean paying property taxes on homes and business property based on the condition of property before the floods.

Fortunately, Louisiana law offers a solution. Historically, Louisiana law had special provisions for the reassessment of flooded property. See La. R.S. 47:1978. In 2005, the Louisiana Legislature expanded this reassessment provision and provided clearer procedures related to the reassessment of damaged or destroyed property. La. R.S. 47:1978.1.

La. R.S. 47:1978.1 requires assessors to modify the assessments of properties that have been damaged or destroyed or that are non-operational or uninhabitable due to an emergency declared by the governor. Gov. Edwards has declared the recent flooding as an emergency. See Proclamation No. 111JBE 2016. Under the law, assessors must recognize damage to land and other property, including buildings, structures, or personal property, such as equipment.

Since the assessment rolls have not yet been certified by the assessors, La. R.S. 47:1978.1 requires the assessors to modify their property tax assessments and delay the certification process, as necessary. The modified rolls will be subject to public inspection for a period of fifteen days once the rolls have been completed. Valuation appeals will have to be filed after shortly after the public inspection period.

It is important that taxpayers with damaged property contact the appropriate assessor’s office so that they can submit evidence of damage, such as pictures and insurance claims. This evidence will then be used by the assessor’s office to determine what adjustments need to be made to the assessment of the damaged property to properly account for the destruction, damage, or other impairment. The assessors in many of the impacted areas have not yet established procedures for requesting and implementing the valuation adjustments required by La. R.S. 47:1978.1. Kean Miller will be monitoring developments related to reassessments and is ready to help taxpayers get adjustments that properly account for all damage from the 2016 floods.

For information or questions about the reassessment law or other tax issues related to the 2016 floods contact the Kean Miller State and Local Tax Team: Chris Dicharry, Jason Brown, Angie Adolph or Phyllis Sims.


By Angela W. Adolph

The statutory and regulatory deadline for appealing an adverse decision of the Louisiana Tax Commission (the “Commission”) is clearly thirty (30) days, but identifying the event that triggers commencement of the deadline has not always been easy. The applicable statute provides that the appeal deadline runs from the date the decision is “entered,” while the applicable administrative rule provides that the deadline runs from the date the decision is “mailed.” A decision from the Fourth Circuit Court of Appeal had previously held that a decision was “entered” on the day that the members of Commission signed the decision. In that case, the decision was signed and mailed on the same day.

The courts have finally clarified when the 30 day appeal period begins to run, hopefully resolving this issue for good.  In Erroll Williams v. Hotel Ambassador NOLA, LLC, No. 2016-CA-0015 (La. App. 4 Cir. 6/15/16), ___ WL _____, the Commission mailed its decision some eight (8) days after the decision was signed by the members of the Commission. In Halliburton Energy Services, Inc. v. Bossier Parish Board of Review, No. 50,734-CA  c/w 50,735-CA (La. App. 2 Cir. 8/10/16), ___ WL ___, the Commission mailed its decision some sixteen (16) days after it was signed.  In both cases, the aggrieved litigant appealed within thirty (30) days of the mailing date, but the district courts in each case found the appeal to be untimely. On appeal, both the Fourth Circuit and the Second Circuit noted that the applicable statute did not provide a specific definition of “entry” of judgment. Surveying the cases, the Courts noted that entry of judgment may be the date of signing, but it may also include the date of distribution or the date of mailing. The Courts gave great weight to the fact that each decision stated that it would become effective upon date of issuance (yet another term that is not defined in the applicable statute or administrative rule), and that each decision bore a “true copy” stamp that suggested that the Commission had entered that decision into its own records on that date.

Accordingly, the Courts concluded that entry of judgment occurs on the date that the decision is mailed.  As such, each appeal was found to have been timely filed.  Both Courts recognized the due process principles that compelled them to hold that entry of judgment cannot occur earlier than the date on which the decision is mailed, noting that to hold otherwise could allow the appeal delay to lapse before the affected party is even sent notice of the decision against it.  In each case, the Court reversed and remanded the case to the district court for further proceedings.