Knowledge Center

Monday, October 20, 2014

Alternative Apportionment and the Erosion of Due Process - Part 2

State Tax Notes, October 2014

by Christopher T. Lutz and Breen M. Schiller

Although the burden for obtaining alternative apportionment is technically on the party seeking it, courts appear to apply different standards depending on whether a taxpayer or a department of revenue claims the election. As a result of that disparate treatment, recent state court decisions have skewed heavily in favor of the tax administrators. Three cases over the past few years, General Mills, Equifax, and Vodafone, demonstrate the leeway courts have provided to states requesting alternative apportionment. Those decisions have rightfully gained a good deal of attention for their results-driven conclusions and lack of fairness to taxpayers...

Christopher T. Lutz is an associate and Breen M. Schiller is a senior associate in the Chicago office of Horwood Marcus & Berk. Lutz concentrates his practice on multistate tax issues, while Schiller is in the State and Local Tax (SALT) Group, where she concentrates on state and local tax planning and the resolution of state and local tax controversies for multistate and multinational corporations.

In this article, the second of two parts, the authors discuss the burden of obtaining alternative apportionment and how much stricter courts are when taxpayers request alternative apportionment than they are when states do. The authors cite three cases that they say show the courts' lack of fairness to taxpayers.

To read the full article, please click HERE.

Copyright 2014 Tax Analysts. Reprinted with permission.

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