Passive Activities And Other Oxymorons

534,563.Between January 31 11 for sales into New Mexico, 1998 and July 31, 2005 (the audit period). The sole issue on charm is if the hearing officer correctly concluded that Taxpayer didn’t have a substantial nexus with New Mexico, as required under the Business Clause of the U.S. Constitution. Because we conclude that the in-state use of the Barnes & Noble trademarks was sufficient to meet up with the constitutional standard, we reverse. After Taxpayer submitted a timely protest, both parties shifted for summary view.

The facts weren’t disputed, and the parties decided that the GRT statute applied to Taxpayer’s activities. However, Taxpayer argued that application of the statute was unconstitutional because there was no considerable nexus between Taxpayer and New Mexico. Department argued that the GRT statute applied to Taxpayer’s sales and that the existence of Barnes & Noble Booksellers, Inc. (Booksellers) stores in New Mexico created an adequate nexus allowing the tax. During the audit period, Taxpayer was at all times a wholly possessed subsidiary of barnes&noble.com, inc. The possession of barnes&commendable.com Inc. varied through the period; however, at least 40% was owned by B&N.com Holding Corp.

B&N.com Holding Corp. was at all relevant times an owned subsidiary of Barnes & Noble wholly, Inc. (Parent). It comes after that during the audit period, Parent had an interest of between 40% and 100% in Taxpayer. Parent owned other companies relevant to our discussion as well. Most importantly, it owned Booksellers.

Booksellers works physical Barnes & Noble reserve stores throughout America, including three stores in New Mexico. Parent also owned Marketing Services (Minnesota) Corporation, Inc. (MSMC), which provided gift card services to Booksellers and Taxpayer. Booksellers performed activities at its three in-state stores that Department argues created a considerable nexus between Taxpayer and New Mexico.

These are the sales of gift cards, the devotion program memberships, and a come back policy that allowed Booksellers to simply accept Taxpayer’s merchandise. Both Booksellers and Taxpayer, and other retailers, sold Barnes & Noble gift cards. These present cards could be redeemed either in-store or online. The gift card program was run by MSMC.

When Booksellers (or any other vendor) sold a cards, it received a small fee from MSMC, and the proceeds were delivered by it from the sale to MSMC. Whenever a card was later redeemed by a customer, MSMC credited the value of the card to the retailer who had honored it. The slow aspect of the Barnes & Noble gift cards displayed the address of Taxpayer’s website. 25. Membership entitled customers to special discounts at Booksellers’ stores and online. Fees went to Parent, who administered the commitment program and deducted expenses from the charge income.

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Taxpayer and Booksellers each received a talk about of the rest of the fees that were predicated on the percentage of special discounts they accounted for. Bookstores applied an expansive return plan also. Customers could return salable what to Booksellers no matter their origin. Booksellers provided in-store credit (or, equivalently, present cards that could only be utilized in the stores) for such items.

Customers could only return items for cash if they could produce a receipt showing that the things have been purchased in-store. Taxpayer provided information about Booksellers’ comeback plan on its website. Taxpayer’s website also provided a store locator and descriptions of in-store events. Taxpayer prevailed below based on the hearing officer’s bottom line, that there was not a significant nexus between Taxpayer and the State of new Mexico. The hearing official concluded that the actions of Booksellers “didn’t create and create and maintain a market for” Taxpayer. New Mexico.” Taxpayer argues that the hearing officer did not err in which imposition of the GRT would violate the Due Process Clause of the U.S.