Taxpayer Victory in South Carolina 'Bifurcated' Apportionment Case


The South Carolina Court of Appeals, in an opinion released today, ruled in favor of the taxpayer in CarMax Auto Superstores West Coast, Inc. v. South Carolina Department of Revenue, Opinion No. 4953 (March 14, 2012). The Court of Appeals ruled that where the SC Department of Revenue ("Department") seeks to deviate from the standard method of apportionment, the Department – and not the taxpayer – bears the burden of proving that (1) the standard method should not be used and (2) the alternative method is reasonable and is more appropriate than any competing method...

Reed Smith participated in the case, on behalf of the Council on State Taxation, as amicus curiae.


CarMax Auto Superstores West Coast, Inc. ("Taxpayer") is a retailer of used light trucks and automobiles, and operates CarMax retail locations in several Western states, including California, Utah, and Nevada. CarMax Auto Superstores, Inc. ("East") is a related entity that operates CarMax retailers in several Eastern states, including South Carolina. Also, prior to 2004, East handled financing and corporate overhead/management.

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