TROY, N.Y. – A Canadian oil and gas importer whose only connection to New York is a pipeline is not carrying on its business in this state, and even if it were, imposition of a franchise tax would be barred by the Commerce Clause of the U.S. Constitution, an administrative law judge has determined in a potentially pivotal decision.
The determination by Administrative Law Judge Jean Corigliano in Matter of Wascana Energy Marketing (U.S.) Inc., 817866, apparently marks the first New York case addressing the question of whether the presence of a product establishes taxable nexus. Ms. Corigliano said the mere fact that Wascana Energy had customers in New York state and exploited the New York market did not mean the company was doing business in this state. The company reported $41.2 million in revenues from sales of natural gas to New York buyers between 1994 and 1997.
