Michigan Mum on DirecTV’s Petition on Retroactive Tax

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By Che Odom

Michigan’s Department of Treasury remains silent on requests by DirecTV and other companies for the U.S. Supreme Court to review its retroactive application of a business tax law.

DirecTV Group Holdings LLC, parent of DirecTV, petitioned the high court in early December after several other companies did so. The businesses—which include Sonoco Products Co., Goodyear Tire & Rubber Co., IBM Corp., Gillette Commercial Operations North America and Skadden, Arps, Slate, Meagher & Flom LLP—are contesting several Michigan Court of Appeals rulings upholding a state law that alters taxes back to 2008 ( DirecTV Grp. Holdings, LLC v. Mich. Dep’t of Treasury , U.S., No. 16-736, petition for certiorari 12/5/16 ).

As it has done in earlier petitions on the matter, Michigan notified the Supreme Court that it wouldn’t be filing a response in the DirecTV case, which was due Jan. 5.

Attorneys familiar with the petitions say they don’t believe the high court will take up the matter, having recently rejected petitions in other state cases over the Multistate Tax Compact. Practitioners have said the retroactivity issue in the Michigan cases may make them more interesting to the Supreme Court, but that still won’t be enough.

The Michigan Legislature in 2014 amended the Michigan Business Tax Act and repealed the Multistate Tax Compact. Under the compact, business taxpayers could elect to apportion income using “an equally-weighted, three-factor apportionment formula based on a business’s sales, property, and payroll.” Under the amendment, businesses would need to apportion their tax base using a “sales-factor apportionment formula,” retroactive to Jan. 1, 2008.

At stake is more than $1 billion in potential refunds to the companies.

To contact the reporter on this story: Che Odom at COdom@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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