Putting the ‘Fair’ Back In Fair Apportionment


The Tennessee Court of Appeals’ recent decision in BellSouth Advertising & Publishing Corp. v. Chumley1 (BAPCO) raises an important question: What procedures and requirements should be in place to ensure that taxpayers and taxing authorities are on a level playing field when seeking to deviate from the standard apportionment formula? In this Pinch of SALT, we evaluate a fair application of equitable apportionment from the perspective of both taxpayers and tax administrators.


BellSouth Advertising & Publishing Corp. is a subsidiary of BellSouth Corp. that sold advertising and compiled, published, and distributed Yellow Pages telephone directories. Ninety-five percent of BAPCO’s revenue was derived from the sale of advertising to individuals and businesses that advertised in these directories.

All of BAPCO’s representatives responsible for selling advertising were located outside Tennessee.2 Also, all of BAPCO’s production offices were located outside the state. BAPCO transferred the finished directories to an affiliate located outside Tennessee to be printed and bound, and an unrelated party distributed the directories to Tennessee residents.

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