The dispute in California over taxpayers’ ability to elect to use the evenly weighted, three-factor (i.e., property factor, payroll factor, and sales factor) business income apportionment formula provided by the Multistate Tax Compact (the “Compact”) has come to an end. On October 11, 2016, the US Supreme Court denied the taxpayers’ petition for certiorari in The Gillette Company, et al. v. California Franchise Tax Board, et al., No. 15-1442 — one of the most highly publicized MTC apportionment election cases.
The U.S. House of Representatives passed H.R. 2315, the Mobile Workforce State Income Tax Simplification Act of 2015 (“Mobile Workforce Act” or “Act”), on September 21, 2016. The Senate received the House-approved bill on September 22, 2016, and its ultimate fate remains unclear.
Bringing a semblance of order to the prior proceedings, the Michigan Court of Appeals reversed the Michigan Court of Claims ruling that defied the remand instructions from the Michigan Supreme Court. International Business Machines Corp. v. Dep’t of Treasury, Dkt. 327359 (Mich. Ct. App. July 21, 2016). The appellate court’s ruling would result in granting to International Business Machines Corp. (“IBM”) a total of nearly $6 million in Michigan Business Tax (“MBT”) refunds for the company’s 2008 tax year.