Gillette Co. v. Franchise Tax Bd.

In 1974, the state of California joined the Multistate Tax Compact, which contained an apportionment formula and permitted a taxpayer election between the Compact’s formula and any other formula provided by state law. In 1993, the Legislature adopted a different apportionment formula by amending the Revenue and Taxation Code to provide that, notwithstanding the Compact’s provisions, the new apportionment formula “shall” apply. Between 1993 and 2005, six multistate corporations (Taxpayers) paid income tax calculated under the new formula but then sought a refund, contending that they remained entitled to elect between the new statutory formula and that contained in the Compact. The trial court concluded that the Legislature could, consistent with the Compact, eliminate the election provision. The court of appeal reversed. The Supreme Court reversed, holding that the Legislature may properly preclude a taxpayer from relying on the Compact’s election provision. View "Gillette Co. v. Franchise Tax Bd." on Justia Law