Vodafone Americas Holdings, Inc. & Subsidiaries v. Richard H. Roberts, Commissioner of Revenue, State of Tennessee

In this appeal, we review a tax variance. The Commissioner of Tennessee’s Department of Revenue determined that, if the standard apportionment formula in Tennessee’s franchise and excise tax statutes were applied to the appellant taxpayer, a multistate wireless telecommunications company, nearly all of the taxpayer’s sales receipts for services to its Tennessee customers—over a billion dollars in receipts—would not be subject to Tennessee franchise and excise taxes.  Pursuant to his authority under Tennessee’s franchise and excise tax variance statutes, the Commissioner imposed on the taxpayer a variance that required the taxpayer to pay taxes on the receipts from its Tennessee customers. The taxpayer now argues that, by imposing the variance, the Commissioner has usurped the legislature’s prerogative to set tax policy.  After review of the legislative history, we find that Tennessee’s legislature intended for the Commissioner to have the authority to impose a variance where, as here, application of the statutory apportionment formula does not fairly represent the extent of the taxpayer’s business activity in Tennessee.  We decline to judicially abrogate the legislature’s express delegation of this authority to the Commissioner.  The variance in this case comports with Tennessee’s franchise and excise tax statutes, the implementing regulation, and the statutory purpose of imposing upon corporations a tax for the privilege of doing business in this State.  Finding no abuse of the Commissioner’s discretion, we affirm.