Gillette has sent shockwaves through the state tax community. Unexpectedly, a California Court of Appeal ruled that a taxpayer could elect to file income tax returns using UDITPA’s three-factor apportionment rather than California statutory apportionment because California signed the Multistate Tax Compact, which provides for optional apportionment using UDITPA. The court’s decision has nationwide ramifications and likely impacts most multistate businesses. The decision also raises a host of interesting questions. Perhaps most obviously, what will happen next in California? California has repealed its membership in the Multistate Tax Compact and has signed retroactive legislation designed to bar taxpayers from filing refund claims electing to use UDITPA apportionment. Moreover, the California FTB is likely to appeal the decision to the California Supreme Court. Accordingly, the war may be far from over in California. What impact will Gillette will have in other states? Nineteen jurisdictions are currently full members of the Multistate Tax Compact. Litigation could potentially ensue in those jurisdictions on the same issue (if it has not already). From a tax planning perspective, a question is how aggressively to read Gillette. In Gillette, the taxpayer sought three-factor apportionment, but there may be other reasons for taxpayers to seek to take advantage of UDITPA apportionment and allocation besides wanting to take advantage of UDITPA’s three-factor apportionment formula. This recorded webinar will explore these and other questions. This is a recorded webinar that originally ran live on December 12, 2012. As an eLearning course, you must pass the final exam of this course to receive CPE credit. 

 Course Level: Intermediate 

 Course Prerequisites: None 

 Delivery Method: Self-study

After completing this course, you will know: 

• The history of the Multistate Tax Compact and why states decided to sign it; 

• The Gillette litigation and the main arguments raised by Gillette and the FTB; 

• What California SB 1015 was designed to do and whether there are arguments that it does not achieve these objectives; 

• Litigation and administrative rulings on the Gillette issue in other states; 

• Several potential advantages/opportunities of being able to elect to file corporate income tax returns using UDITPA’s apportionment and allocation scheme; 

• Several potential advantages and disadvantages of filing refund claims in different states in response to Gillette; and 

• The potential review of the Gillette decision by the United States Supreme Court.

CPE

1.5

CLE

N/A