and submitted January 18, 2018
appeal from the Oregon Tax Court.[*] Henry C. Breithaupt,
Judge. (TC 5265).
Timothy A. Gustafson, Eversheds Sutherland (US) LLP,
Sacramento, California, argued the cause for appellant.
Gregory A. Chaimov and Mark P. Trinchero, Davis Wright
Tremaine LLP, Portland, fled the briefs for the appellant.
Also on the briefs were Timothy A. Gustafson, Eversheds
Sutherland (US) LLP, Sacramento, California, and Jeffrey A.
Friedman, Eversheds Sutherland (US) LLP, Washington, District
Marilyn J. Harbur, Assistant Attorney General, Salem, argued
the cause and fled the brief for respondent. Also on the
brief were Ellen F. Rosenblum, Attorney General, and Benjamin
Gutman, Solicitor General.
Or. 538] Case Summary: Taxpayer challenged the Tax
Court's construction of the statutory formula by which
Oregon calculates the share of an interstate
broadcaster's income that is taxable by Oregon.
Specifcally, ORS 314.684 provides that the ratio of the
broadcaster's Oregon audience to the broadcaster's
total audience determines the portion of the taxpayer's
"gross receipts from broadcasting" that is
attributable to Oregon for income tax purposes. The Tax Court
held that "gross receipts from broadcasting" was
not limited to those gross receipts derived from one-way
electronic transmissions and granted partial summary judgment
to the Department of Revenue on that part of taxpayer's
appeal. Taxpayer appealed that decision to the Supreme Court.
Held: "Gross receipts from broadcasting,"
as defned in ORS 314.680(2), are not limited to those gross
receipts derived from one-way electronic transmissions.
Or. 539] FLYNN, J.
appeal from a decision of the Oregon Tax Court, taxpayer
challenges the Tax Court's construction of the statutory
formula by which Oregon calculates the portion of an
interstate broadcaster's income that is taxable by
Oregon. See ORS 314.680 to 314.690. Based in part on
those statutes, the Oregon Department of Revenue calculated
that taxpayer had underpaid Oregon taxes for the tax years
2007-2009 and sent notices of deficiency, which taxpayer
appealed to the Tax Court. The Tax Court agreed with the
department's construction of the income-apportionment
statutes and granted the department partial summary judgment
on that part of taxpayer's appeal. Comcast Corp. v.
Dept. of Rev. (TC 5265), 22 OTR 295 (2016). The Tax
Court also entered a limited judgment to permit this appeal.
We conclude that the Tax Court correctly construed the
statutes that govern income-apportionment for interstate
broadcasters, and we affirm the limited judgment.
discussing the parties' arguments in more detail, we
briefly describe the pertinent legal framework. Oregon, like
most states that tax a portion of the income of multistate
businesses, has adopted a formula for doing so that is
derived from a uniform law-the Uniform Division of Income for
Tax Purposes Act (UDITPA). Health Net, Inc. v. Dept. of
Rev., 362 Or. 700, 704-06, 415 P.3d 1034
(2018). [363 Or. 540] Since 2005, Oregon's
income-apportionment formula for interstate businesses has
been based exclusively on what is referred to as the
business's "sales factor." Id. at 707
(citing Or Laws 2005, ch 832, § 49). In general, the
Oregon "sales factor" for a multistate-business
taxpayer is the fraction representing the taxpayer's
"total sales" in Oregon during the tax period-the
numerator-divided by "the total sales of the taxpayer
everywhere during the tax period"-the denominator. ORS
314.665(1). For example, if a taxpayer has $10 million in
total sales in a tax year, and $1 million of those are in
Oregon, then the taxpayer's sales factor is $1 million in
local sales divided by the $10 million in total sales, or
1/10. That would be the fraction of the taxpayer's total
income that would be taxed by Oregon.
1989, however, the legislature created a special sales factor
for any business that qualifies as an "interstate
broadcaster," meaning "a taxpayer that engages in
the for-profit business of broadcasting to subscribers or to
an audience located both within and without this state."
ORS 314.680(3) (definition of "interstate
broadcaster"); ORS 314.684 (specifying sales factor for
an "interstate broadcaster"); Or Laws 1989, ch 792.
For an interstate broadcaster, determining the numerator of
the sales-factor fraction-the Oregon portion- requires a
different calculation: the taxpayer's "gross
receipts from broadcasting" are "included in the
numerator of the sales factor in the ratio that the
interstate broadcaster's audience or subscribers located
in this state bears to its total audience and subscribers
located both within and without this state." ORS
314.684(4). In other words, for an interstate business that
engages in "broadcasting" to an audience that is in
part located in Oregon, the ratio of the broadcaster's
Oregon audience to the broadcaster's total audience
determines the portion of the taxpayer's "gross
receipts from broadcasting" that is attributable to
Oregon for income tax purposes. For example, if 1/20th of the
broadcaster's total audience (or subscribers) live in
Oregon, then 1/20th of the broadcaster's total
"gross receipts from broadcasting" are [363 Or.
541] counted as gross receipts attributed to Oregon and
included in the numerator of the sales-factor fraction.
dispute between the parties in this court narrowly focuses on
the question of what is included in the "gross receipts
from broadcasting" to which the Oregon audience ratio is
applied. Taxpayer does not dispute that it engages in
"broadcasting" or that its income is apportioned to
Oregon-at least in part-using the special "sales
factor" formula specified in ORS 314.684 for
"interstate broadcasters." However, taxpayer contends
that most of its receipts for the disputed tax years arose
from activity that does not qualify as
"broadcasting," a term defined to mean "the
activity of transmitting any one-way electronic signal."
ORS 314.680(1). According to taxpayer, only receipts from its
activity that qualifies as "broadcasting" should
have been attributed to Oregon under the audience-ratio
formula of ORS 314.684.
department counters, however, that the audience-ratio formula
of ORS 314.684 is used to determine the Oregon portion of
taxpayer's "gross receipts from broadcasting"
and that the term is specifically defined to mean "all
gross receipts of an interstate broadcaster from transactions
and activities in the regular course of its trade or
business," with a few unrelated exceptions, ORS
314.680(2). The department understands that definition of
"gross receipts from broadcasting" to include a
broader category of receipts than simply receipts from
"broadcasting" activity and, thus, maintains that
it correctly counted taxpayer's receipts from both
"broadcasting" and other business activities in the
category of "gross receipts from broadcasting" that
are attributable to Oregon under the audience-ratio formula
specified in ORS 314.684.
issue of statutory construction was a focus of motions for
partial summary judgment that both parties filed in the Tax
Court. Taxpayer asked the court to determine [363 Or. 542]
that only its receipts from "broadcasting" activity
should be apportioned under ORS 314.684, and that its revenue
from other business activities must be apportioned according
to the general apportionment formula of ORS 314.665. The Tax
Court rejected that hybrid approach to apportionment.
Comcast Corp., 22 OTR at 298. The court agreed with
the department that, as a statutory matter, taxpayer's
receipts from both "broadcasting" and other
business activity fall within the definition of "gross
receipts from broadcasting" and are attributed to Oregon
under the formula described in ORS 314.684. 22 OTR at 299.
The Tax Court, accordingly, denied taxpayer's motion for
partial summary judgment, granted the department's
motion, and entered a limited judgment. Taxpayer has appealed
from that limited judgment.
general, summary judgment is appropriate when there are no
genuine issues of material fact and the moving party is
entitled to judgment as a matter of law. See TCR 47
C (standard for granting summary judgment in Tax Court);
Tektronix, Inc. v. Dept. of Rev., 354 Or. 531, 533,
316 P.3d 276 (2013) (applying that standard on appeal from
Tax Court decision). On appeal, taxpayer does not assert that
there is any genuine issue of material fact, but taxpayer
renews its statutory argument that only its receipts from
one-way electronic transmissions qualify as "gross
receipts from broadcasting" for purposes of determining
its sales factor under ORS 314.684. In determining the
meaning of that statute, as with all statutes, we
"pursue the intention of the legislature if
possible." ORS l74.O2O(1)(a). Because it is "the
intent of the legislature as formally enacted into law"
that we seek to determine, we give "primary weight in
the analysis" to text and context, but we also consider
legislative history "where that legislative history
appears useful to the court's analysis." State
v. Gaines, 346 Or. 160, 171-72, 206 P.3d 1042 (2009).
"Gross Receipts from
Broadcasting"-Text and Context
The disputed statute specifies in its entirety: "(1) The
sales factor for an interstate broadcaster shall be
determined as ...