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Tennessee Court of Appeals affirms variance requiring telecommunications company to use market-based sourcing

The Tennessee Court of Appeals has held that the state’s revenue commissioner properly issued a variance requiring a telecommunications company to apportion sales using market-based sourcing based on a customer’s billing address rather than the statutory cost of performance (COP) method. In affirming the trial court, the Court of Appeals agreed that the commissioner properly exercised his discretion in requiring the variance because the COP apportionment method did not fairly represent the taxpayer’s business activity in the state.

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