Petition for Writ of Mandamus - Filed - Supreme Court of Texas

5124750237 TEXAS COMPTROLLER
May-11-2012 01:57em
From-Winstead PC
02:06:38 p.m. 05-11-2012 2 /2
5124574265 1-740 P,007/008 F-418
Texas Comptroller of Public Accounts
May 1 1, 2012
Page 6
IV.
The Margin Tax Violates the Commerce Clause of the United States Constitution.
The Commerce Clause prohibits discrimination against interstate commerce and bars
state regulation that unduly burdens interstate commerce. Quill, 504 U.S. at 312; see U.S
CONST. art. 1, § 8. Specifically, the Commerce Clause requires that a state tax (1) be applied to
an activity with a substantial nexus with the taxing state, (2) be fairly apportioned. (3) not
discriminate against interstate commerce, and (4) fairly relate to the services provided by the
state. Complete Auto Transit, Inc. v. Brady, 430 U.S 274, 279 (1977). A valid tax must treat
similarly situated in-state and out-of-state taxpayers equally. Tyler Pipe Indus. v. Wash. State
Dep't of Revenue, 483 U.S, 232, 246 (1987) (citing Hailiburton Oil Well Cementing Co v.
373 U.S. 64, 70 (1963)). Further, the measure of the tax must be reasonably related to the
extent of the taxpayers presence or activities within the taxing state and to the taxpayer's
consequent enjoyment of the opportunities that the state has afforded. Rylander v. 3 Been
Bros. 3, Inc., 2 S.W.3d 562, 571 (Tex. App.—Austin 1999, pet. denied) (citing Commonwealth
Edison Co. v. Montana, 453 U.S. 609, 629 (1981)).
The Margin Tax imposes a tax rate that is often dependent on a taxpayers activities
outside of Texas For example. Nestle is subject to a tax rate of 1,0% rather than 0.5% based
solely on the fact that it manufactures in other states. The Margin Tax discriminates against
interstate commerce by subjecting entities to a higher tax rate based solely on the fact that they
conduct certain activities in interstate activities. The Margin Tax also is not fairly related to the
services provided by Texas because it imposes different tax rates on similarly-situated
wholesalers based on their operations in other states, which operations have no relation to the
services provided by Texas. Because it discnminates against interstate commerce and does
not fairly relate to the services provided ey Texas, the Margin Tax violates the Commerce
Clause of the United States Constitution.
For the foregoing reasons, Nestle merits recovery of the Protest Payment. By your
signature at the bottom of this letter, you acknowledge receipt of this written statement of
protest.
Thank you very much for your assistance.
Sincerely,
RECEIVED:
Jennifer Patterson Rabb
AUSTIN-, 1 \661403 vi 52275-1