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Richard Jones was quoted in the Tax Notes [sub. req'd] article “The State of Use Tax Apportionment After Ellingson Drainage,” published on January 8, 2026. The article looks at the U.S. Supreme Court’s decision not to review Ellingson Drainage Inc. v. South Dakota Department of Revenue and the ongoing questions around how the external consistency test applies to state use taxes.

Rich pushed back on the reasoning behind the South Dakota Supreme Court’s decision and questioned what it means to have an external consistency requirement if it is not applied in cases like this one. “How can you have a constitutional external consistency requirement and not apply it in that situation?” he asked. He also noted that the Supreme Court’s decision not to hear the case should not be taken as an endorsement of South Dakota’s position, adding, “I do not think denial of cert. [in Ellingson Drainage] can be read to suggest that they implicitly agree with the South Dakota court.”

Rich said the issue is far from settled, pointing out that other state court cases raising the same questions are still working their way through the system. He also addressed the role of tax credits, explaining that while credits may resolve internal consistency concerns, they do not address external consistency. “When you have a 100 percent unapportioned use tax on mobile property that is used less than 10 percent inside that state, it’s pretty clear by definition that the tax would not reasonably reflect the in-state activity being taxed and it is externally inconsistent,” said Rich.