In a decision marked “not precedential,” the OTA held 100 percent of repatriated dividends must be included in the taxpayer’s sales factor denominator. First, the OTA rejected the “matching principle” included in FTB Ruling 2006-01, and supported its holding based primarily on the plain language of Cal. Rev. & Tax.…
Articles Posted in Apportionment
COST’s 2024 Spring Conference
SALT partners Zachary Atkins and Evan Hamme will speak at COST’s upcoming Spring Conference. This three-and-a-half day conference will bring multistate tax professionals together and will provide updates on key SALT issues and insights regarding state tax trends and opportunities. Join Zack and Evan as they speak on the following…
Maine Expressly Requires Express Scripts to Apportion Services Receipts Using a Look-Through Approach
On November 7, 2023, the Supreme Judicial Court of Maine held a taxpayer’s receipts from the performance of pharmacy benefit management (PBM) services should be apportioned using a look-through approach. Specifically, the court held such services receipts should be apportioned to the state where the prescription drug is dispensed by…
No Sugarcoating: The California Office of Tax Appeals Limits the California FTB’s Application of Legal Ruling 2006-01
In the Appeal of Southern Minnesota Beet Sugar Cooperative (2023-OTA-342P) (Beet Sugar), the California Office of Tax Appeals (OTA) issued a precedential opinion holding the California Franchise Tax Board (FTB) is not entitled to apply its FTB Legal Ruling 2006-01 (Apr. 28, 2006) to prohibit taxpayers from including in…
New Jersey Enacts Significant Changes to Corporation Business Tax Law
On July 3, 2023, New Jersey Governor Phil Murphy signed A.B. 5323 into law to amend New Jersey’s Corporation Business Tax (CBT). The bill enacted a variety of clarifications, corrections and modifications to the CBT. The bill includes substantive amendments to CBT provisions, such as: Economic Nexus Threshold: The bill…
No Day Off for Buehler: California Sources Gain from Sale of Intangible to Domicile and Denies Other State Tax Credit
The California Office of Tax Appeals (OTA) held a California resident was not entitled to claim an other state tax credit (OSTC) for taxes paid to Massachusetts because gain from the sale of an LLC membership interest was wholly sourced to the taxpayer’s domicile under California law. The taxpayer contended…
Certainly COP: Florida Court Rejects Department of Revenue’s Attempt to Conflate Costs of Performance Sourcing With Market-Based Sourcing
On March 1, 2023, a Florida trial court confirmed that costs of performance (COP) sourcing, not market-based sourcing, is Florida’s standard methodology for sourcing service receipts for apportionment purposes. In Billmatrix Corp. v. State of Florida, Department of Revenue, No. 2020-CA-000435 (Fla. 2d Cir. Ct. Mar. 1, 2023), the court…
Texas Comptroller Takes a Serious Look at Sourcing Regulation After SiriusXM Loss
The Texas Comptroller of Public Accounts has proposed significant amendments to its service receipts sourcing regulation in the wake of the Texas Supreme Court’s decision in Sirius XM Radio, Inc. v. Hegar, 643 S.W.3d 402 (Tex. 2022). The proposed amendments would dispense with the Comptroller’s long-standing “receipts-producing, end-product act” test…
The California Franchise Tax Board Fails to Follow the Order of Its Market-Based Sourcing Cascading Rules
In the Appeal of Sheward, 2022-OTA-228P (May 25, 2022), the California Office of Tax Appeals (OTA) held the California Franchise Tax Board (FTB) failed to follow its own market-based sourcing apportionment regulation by prematurely using reasonable approximation to source the income of a multistate unitary business. During the tax year…
The Curious First Meeting of the MTC’s Model Receipts Sourcing Regulations Work Group
The SALT team briefs the outcomes of the first meeting of the Multistate Tax Commission (MTC). Read More: Model Receipts Sourcing Regulations Work Group’s Curious First Meeting(pillsburylaw.com)