Media Coverage
Source: Bloomberg Tax, Law360
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Taina Rosa, Olivia Meyer
01.13.26
A recent Bloomberg Law article suggests the coming year could bring pivotal state and local tax rulings with implications that extend well beyond the individual disputes. Pending cases in New York, South Carolina and Maryland raise key questions involving foundational state tax issues that SALT practitioners will be watching closely in 2026.
One such dispute now before a New York appellate court centers on claims by payroll and HR services provider Paychex Inc. that a New York State Department of Taxation and Finance regulation conflicts with the state’s corporate tax statute, which allocates income using New York receipts divided by total receipts.
According to State & Local Tax partner Aruna Chittiappa, “the case sits at the intersection of statutory interpretation, appointment mechanics, constitutional limitations around retroactivity and agency deference.”
“What happens when the statute that’s been on the books since 2014 does not square with the regulations that the department has promulgated?” she asked. “That’s why this case is important on many different levels.”
Chittiappa considered the Paychex case in a separate interview with Law360.
“This idea that agencies can just arbitrarily expand or narrow statutory definitions through regulation, I think there’s a real pushback against this,” she said. “Courts remain the final arbiters of statutory meaning. That’s another reason why Paychex has received the kind of attention it has.”
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