The court’s decision to exercise its powers of discretionary review will likely be met with cheers from taxpayers struggling to apply the Comptroller’s new test for sourcing services, as well as the industry groups who filed amicus briefs encouraging the court the take the case and provide a more workable standard. 

Although Sirius XM predates the Comptroller’s recent rule amendments adopting a receipts-producing, end-product act test for sourcing service receipts, a taxpayer win could invalidate the rule because the Comptroller’s Sirius XM litigating position advances the same statutory interpretation as the rule. If the court disagrees with the Comptroller’s interpretation of the governing apportionment statute in Sirius XM, that portion of the new rule should also be invalid.

Newsflash 2021-232