In Gillette Co. et al. v. California Franch. Tax Bd., t he California Court of Appeal held that the formula under the Multistate Tax Compact for allocating and apportioning income remains available to California multistate taxpayers, notwithstanding the state's attempt to repeal and supersede the Compact formula with a double-weighted sales factor for most business activity.
The case has sent shock waves through California and other states that are members of the Multistate Tax Compact. The California Franchise Tax Board (FTB) responded on Nov. 13, 2012, by filing a Petition for Review to the California Supreme Court. Should the court decide to take discretionary review and ultimately rule in favor of the taxpayers (thereby upholding their right to elect allocation and apportionment under the Compact), California could owe $750 million in refunds, and hundreds of state statutes could be called into question.
There are 18 states that have adopted the Compact; 19 counting the District of Columbia. Any state that has enacted the Compact could face challenges similar to those in Gillette.
For example, in Oregon, in Health Net Inc. v. Oregon Dept. of Rev., t he taxpayer has asserted the right to elect the Compact's three-factor formula instead of Oregon's single-sales-factor apportionment. While Oregon has not repealed the Compact nor purported to do so, the Oregon Department of Revenue is deferring action on all protective claims until the outcome of the litigation is known.
In this week’s issue of the Weekly State Tax Report, BBNA’s Deborah Swann takes a closer look at these and other issues following in the wake of Gillette[ full text article available here ].
In other developments…
Sutherland issues a legal alert on the California Court of Appeal’s decision in Microsoft.
Alabama Tax Developments: 2012 Year in Review , by Bradley Arant Boult Cummings. LLP
How personal income tax Increases affect small business , by Nick Kasprak of the Tax Foundation.
Mobile Workforce State Income Tax Simplification Act of 2012 , by PricewaterhouseCoopers LLP.
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)