Justices Remand Tax Dispute Over Lexis Sale

WASHINGTON (CN) - MeadWestvaco won a round in the U.S. Supreme Court in a case challenging Illinois' ability to levy taxes on the Ohio-based paper company's $1 billion gain from the 1994 sale of data-retrieval service Lexis/Nexis.

The justices unanimously voted to have Illinois courts reconsider the state's right to tax Mead Corp., MeadWestvaco's predecessor, on its profit from the $1.5 billion sale.

An Illinois appellate court found that the state Department of Revenue could tax a portion of Mead's profit, because Lexis did a substantial amount of business in Illinois and had several state contacts.

The justices vacated and remanded, saying the state courts had misinterpreted Supreme Court precedent for determining whether a multi-state business operated as a "unitary" entity.

The National Association of Manufacturers, Gannett Co. Inc. and the Walt Disney Co. filed briefs supporting MeadWestvaco.

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