AT&T Corp. v. Dept. of Revenue

Pursuant to ORS 314.665(4), Oregon's codification of the Uniform Division of Income for Tax Purposes Act (UDITPA), “income-producing activity” is determined by “individual exchange[s] between a buyer and a seller..., whether the transmissions are sold individually or are sold in bulk.” Once the income-producing activity is identified, the location of the income-producing activity needs to be ascertained to determine whether it is performed completely within Oregon or “the greater proportion of the income-producing activity is performed in [Oregon], based on costs of performance.”

AT&T appealed a Tax Court judgment denying AT&T's claim that it was owed a refund for taxes paid between 1996 and 1999. At issue was the interpretation of “income-producing activity” and “costs of performance.” AT&T argued that the terms should be interpreted through a network-based focus on the overall operation of its network. The Department of Revenue contended that interpretation of the terms should be transaction-based, relying on the individual transactional sales of customers. This Court agreed with the Department’s analysis of ORS 314.665(4) and determined that AT&T did not correctly calculate their requested refund because it was based on an erroneous interpretation of the Oregon statute. Affirmed.