Sep 07, 2015
From KPMG TaxWatch
It has been almost three years since the California Court of Appeal issued its decision in Gillette Co. v. Franchise Tax Board. Recall, in the October 12, 2012 opinion, the court held that a taxpayer could avail itself of the election available in Article III of the Multistate Tax Compact and choose to apportion its income to California using the evenly-weighted three factor formula provided for in Article IV of the Compact, despite contrary statutory language mandating the use of a double-weighted sales factor for general corporations. The court’s ruling was based entirely on federal case law regarding interstate compacts. In its view, when California became a signatory to the Compact, it entered into a binding agreement with other signatory states and, absent repeal of the Compact in its entirety, California was obligated to offer multistate taxpayers the option of electing the Compact’s allocation and apportionment methodology.
Following the Court of Appeal’s decision, the Franchise Tax Board petitioned for review before the California Supreme Court; review was granted on January 16, 2013. For the last several months, the case has been fully briefed awaiting the court to schedule oral arguments, which will be held on October 6, 2015 in San Francisco. Once the oral arguments have occurred, the court must issue its written opinion within 90 days, and the court’s decision will become final 30 days after it is issued. Please stay tuned to TWIST for future updates on Gillette Co. v. Franchise Tax Board.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.