Steve and Sarah Speer invested in a Wisconsin brewery while living part-time in Oregon. The business only operates in Wisconsin and pays taxes to Wisconsin on behalf of its owners. Recently, however, Oregon decided it also wants to tax the brewery’s income, while refusing to recognize a Wisconsin credit the brewery receives for investing in Wisconsin. The result is that Steve and Sarah are paying twice, with both states saying the problem is the other state.
On August 14, 2023, we filed a motion for summary judgment with the Oregon Magistrate, where we argued that Oregon law requires that they recognize Wisconsin’s credit for Oregon’s credit for taxes imposed by another state, and that refusing to do so results in multiple taxation in violation of the Due Process Clause and Dormant Commerce Clause of the U.S. Constitution.
On September 29, 2023, the government responded, arguing that they need not recognize Wisconsin’s credit because it was not paid, and that “imposed” in Oregon law actually means “paid.” Further, they argue that because the Speers are residents, any tax on them is constitutional.
On October 31, 2023, we filed a reply brief, citing the Kaestner and Wynne decisions from the U.S. Supreme Court that held that even taxes on residents cannot violate due process or discriminate against interstate commerce. Our brief also cited evidence that to “impose” a tax is not the same as to “pay” a tax, and that only the Legislature can make such a change.
Oral argument is scheduled in Salem, Oregon on December 14, 2023.
NTUF’s Taxpayer Defense Center is proud to represent Steve and Sarah in this matter. This case is vital because Oregon’s argument sets a dangerous precedent for allowing extra taxes if a resident invests out-of-state. By taxing the same income already taxed by Wisconsin and then directing that Wisconsin credits be added to Oregon’s tax, Oregon is effectively placing a tariff on the Speers’ out-of-state business activity.
NTUF’s Taxpayer Defense Center will continue to protect small business owners from arbitrary and excessive taxation. The case is TC-MD Case No. 220449G, Speer v. Department of Revenue. Stay tuned for further developments.