Foley & Lardner LLP obtained a victory for Apex Laboratories in a dispute with the city of Detroit related to whether Apex was subject to the city’s income tax. Apex, a Delaware holding company, was formed by Detroit-based private equity firm Huron Capital Partners’ to hold the stock of Labstat, Inc., a Canadian testing company acquired by a Huron fund.
On August 19, 2022, the Michigan Tax Tribunal held that Apex did not establish a taxable presence in Detroit and could not be subject to the city’s income tax. The Tribunal ordered the city to refund Apex for estimated taxes paid and cancel assessments that the city issued for tax years 2010 and 2012.
Notably, the case was one of the first to examine how the U.S. Supreme Court’s 2018 decision in South Dakota v. Wayfair, which allowed states to collect sales and use taxes from out-of-state businesses, may implicate nexus for income taxes.
The Foley team was led by Partner Lynn Gandhi.