The New Jersey Appellate Division agreed with our arguments and the New Jersey Tax Court that the Division of Taxation may not apply dual nexus standards for Throwout purposes in the Appellate Division’s December 4, 2015 decision in Lorillard Licensing Company LLC v. Director, Division of Taxation.

In 2011, the New Jersey Supreme Court interpreted the Throwout rule narrowly to find it Constitutional on its face in Whirlpool Properties, Inc. v. Director, Division of Taxation.  In so doing, it held that Throwout does not apply when another state may Constitutionally impose a tax on the taxpayer—regardless of the tax decisions by the other state.  The Appellate Division applied Whirlpool Properties and held that, because New Jersey successfully asserted an economic nexus standard for Corporation Business Tax Constitutional subjectivity purposes, in applying Throwout that same standard must also apply for other states’ subjectivity.