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Texas, the Lone Apportionment State: Comptroller Rejects MTC Election, Declining to Consider Merits of Gillette Decision

By David Pope and Pilar Mata

The Texas Comptroller of Public Accounts determined that a taxpayer was not permitted to elect the Multistate Tax

June 27, 2013

By David Pope and Pilar Mata

The Texas Comptroller of Public Accounts determined that a taxpayer was not permitted to elect the Multistate Tax Compact’s (Compact) three-factor apportionment formula. This treatment is consistent with prior Texas Comptroller decisions holding that Texas law requires a single-factor apportionment methodology (see Sutherland SALT’s previous articles on this topic here and here). However, unlike those prior decisions, the taxpayer in this matter argued that California’s Gillette decision (permitting California taxpayers to make a Compact election for three-factor apportionment) supported the Texas taxpayer’s position. The Comptroller determined that no weight should be afforded to the Gillette decision because the decision was depublished pending the California Supreme Court’s grant of review, and therefore has no precedential value. The Comptroller further stated that it would be “premature” to consider the Gillette decision on its merits, thus abdicating any responsibility to analyze the implications of the Compact on Texas law. Texas Comptroller’s Accession No. 201305712H (May 2, 2013).

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