DALLAS, Dec. 16, 2016 /PRNewswire/ -- In October 2016, the court declined to review Gillette v. California Franchise Board. Now, the denial ofKimberly-Clark Corp. v. Minnesota Commissioner of Revenue puts another nail in the coffin of the availability of the elective three-factor apportionment election under the Multistate Tax Compact in states where the Compact had been approved. Taxpayers have repeatedly challenged the validity of refund denials when invoking the elective apportionment in several states.
Unlike other Compact apportionment cases, Minnesota's Kimberly-Clark case involved the decades old repeal of the Article III apportionment election. The taxpayer challenged the binding contract involved with adopting the Compact. The Minnesota Supreme Court, however, held, under the unmistakability doctrine, that there was no contractual obligation that prohibited the Legislature from later repealing selected Articles.1
The Supreme Court's denial of certiorari dictates that the Minnesota Supreme Court's ruling stands. The Department of Revenue will begin processing all claims pending resolution of this case. The state stands to be spared refunding an estimated $700 million in claims filed under the Compact election.
The remaining cases on this issue pending certiorari at the U.S. Supreme Court are the five petitions filed to appeal the Supreme Court of Michigan's ruling. Those petitions challenge the retroactive repeal of the Compact, as well as whether the Compact was a binding agreement. Challenges to the Compact are still working their way through the courts in Colorado, Oregon, and Texas.
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the seventh largest corporate tax practice in the United States. With global headquarters in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a five-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 2,100 professionals and associates serves over 12,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.
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