On January 4, 2010, the Maryland Court of Special Appeals issued a decision in the appeal of In the Classics Chicago, Inc. v. Comptroller of the Treasury, No. 2047 (Md. Ct. of Special Appeals, Jan. 4, 2010). Affirming the decision of the Circuit Court in favor of the Comptroller, the court held that Classics, an out-of-state subsidiary of Talbots with no physical presence in Maryland, had substantial nexus with Maryland sufficient to allow Maryland to impose its income tax. The court went on further to state that the proper test for determining substantial nexus is not a “two-prong sham transaction” test that was suggested to have been adopted by the court in SYL. Instead, the economic presence of the taxpayer should be sufficient to justify taxation.