California – Decision of the California Supreme Court in the Gillette Company vs. Franchise Tax Board

SALT Report 3876 – As this case has unfolded over the years, many companies in California filed claims for refund in order to protect the statute of limitations in the event the case was decided in the taxpayer’s favor. The denial of review by the United States Supreme Court effectively removes the potential for success of these refund claims. In other words, any company that filed a claim for refund related to the Gillette apportionment issue must decide whether to withdraw the claims with no further action.

“On October 11, 2016, the United States Supreme Court denied review of the California Supreme Court’s decision in Gillette Co. v. Franchise Tax Board.  The decision, published in December 2015, held that the Multistate Tax Compact (the “MTC”) is not a binding contract among its member states.  By refusing to review this case, the U.S. Supreme Court has given tacit support to the California Supreme Court’s holding. Significantly, this means that the California Legislature can prevent taxpayers from relying on the MTC’s equally-weighted, three-factored sales apportionment formula, without regard to decisions from other states.”

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