$750 million in refunds at stake in California

The California Supreme Court heard oral arguments yesterday regarding a taxpayer's right to use the Multistate Tax Compact's (MTC) income apportionment formula (Gillette Co. v. Franchise Tax Bd., Cal. No. S206587, oral arguments held, 10/6/15). The Court must issue a ruling within 90 days.

If you have a subscription to the Bloomberg BNA Daily Tax Report, then you may have read an excellent article summarizing the proceedings yesterday by Laura Mahoney and Ryan Tuck.

In brief, the taxpayers are arguing the Compact is a "binding, reciprocal agreement between the states." California is arguing that the Compact is not a binding contract. Consequently, as the the article by Laura and Ryan suggests, a win for California may actually weaken the Compact and the move by states to uniformity. A win for taxpayers would reinforce the value of the Compact and the MTC would simply need to improve its weaknesses or flaws. Who will win? Stay tuned.