Multistate Tax Alert: California Supreme Court Grants Review in Gillette
The California Supreme court recently granted the Franchise Tax Board’s petition for review of the California Court of Appeal’s decision in The Gillette Company, et al., v. California Franchise Tax Board (“Gillette”). In that decision, the California Court of Appeal upheld the right of the taxpayers to elect to allocate and apportion income to California using the Multistate Tax Compact (“Compact”), as statutorily adopted in California Revenue and Taxation Code Section 38006. The Compact election allowed the taxpayers to apply the Compact’s equally-weighted, three-factor apportionment formula (property, payroll and sales), eliminating the double weighting of the sales factor applicable to most taxpayers.
In the attached Tax Alert we summarize the Gillette decision and provide some taxpayer considerations.