NIHC, Inc. v. Comptroller of the Treasury

Nordstrom, Inc. created several subsidiary corporations, including NIHC, Inc., which engaged in a series of transactions, with each other and with Nordstrom, involving the licensing rights to Nordstrom’s trademarks. The rights to use Nordstrom’s trademarks eventually ended up back with Nordstrom. In the process, Nordstrom’s Maryland taxable income was significantly reduced, and Nordstrom realized a significant gain. The Comptroller of the Treasury issued tax assessments against the subsidiaries’ income, determining that the transactions were an effort to shift income from Nordstrom, where a portion of the income would be taxable by Maryland, to the subsidiaries, where the income would escape Maryland taxation, as the subsidiaries had arguably no nexus to Maryland. The tax court affirmed the assessments against the two subsidiaries, concluding that the activities of the subsidiaries must be considered the activities of Nordstrom, which had a nexus with Maryland, and therefore, the subsidiaries’ income was taxable by Maryland. The circuit court and court of special appeals affirmed. The Court of Appeals affirmed, holding that NIHC did not carry its burden of showing that the Comptroller’s assessment was wrong. View "NIHC, Inc. v. Comptroller of the Treasury" on Justia Law