In its petition to the California Supreme Court for review of the ruling in the Gillette case regarding apportionment of multistate income, the Franchise Tax Board will focus on findings in the appellate court's decision related to the impairment of contracts and rules for reenactment of state laws, Laura Mahoney reported for Bloomberg BNA’s Daily Tax Report.
Specifically, the FTB will focus on the appeals court finding that California violated the re-enactment rule when it adopted an alternative income apportionment formula in 1993 that varied from the compact “notwithstanding” the existence of the compact in state law.
Litigation surrounding the case is far
from settled, but it raises a multitude of questions surrounding the income tax
treatment of multistate businesses. One question is: how aggressively should Gillette
be read? In Gillette, the taxpayers were retailers seeking
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.
Other potential opportunities arising from Gillette include:
These challenges are likely to be made in every state that is a member of the MTC Compact. “I expect we are going to see the largest dollar volume of refund claims across the nation that we have ever seen,” said Donald Griswold a partner with in the Washington, D.C. office of Crowell & Moring at a recent Bloomberg BNA State Tax Roundtable. “Because… it’s not going to be limited to just those taxpayers that may want to single weight their sales factor in an MTC member state. It’s anything in the MTC Compact that the state has departed from.”
This and other aspects of the Gillette ruling will be the subject of a Dec. 12 Bloomberg BNA Webinar. Kendall Houghton and Matthew Hedstrom of Alston & Bird and Jeffrey Reed with Mayer Brown will share their insights on Gillette and the Future of Income Tax Apportionment.
By Steven Roll
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)