News & Insights

Another Nail in the Multistate Tax Compact Coffin

Tax Development Apr 04, 2018

The deadline for the Graphic Packagingappeal to the United States Supreme Court has passed without any legal action taken by the taxpayer. In December 2017, the Texas Supreme Court ruled against Graphic Packaging by finding that the Multistate Tax Compact (MTC) is not binding on member states and not in violation of constitutional provisions. The Texas Legislature was allowed to disregard the MTC three-factor apportionment provisions in favor of the separate statutory apportionment factor for franchise tax purposes. This was the last opportunity to appeal the Texas Supreme Court ruling.

The lack of appeal to the United States Supreme Court is not surprising, in that the Court has previously denied requests for review of several state supreme court rulings regarding the MTC apportionment factor. Appeals from California (Gillette), Minnesota (Kimberly-Clark), and Michigan (IBM) have all been denied review at the highest level court. 

The sole remaining undecided state level MTC case is in Oregon (HealthNet), which has been pending at the state supreme court level awaiting the final outcome of Graphic Packaging. That decision could be the final nail in the MTC coffin.

1 Graphic Packaging Corp. v. Hegar, Tex. No 15-0669, 12/22/17.

TECHNICAL INFORMATION CONTACT:

Mary Bernard
Director
Ryan
401.272.3363
mary.bernard@ryan.com