In Gillette Company v. Franchise Tax Board, the Supreme Court today decides that the Legislature has validly precluded multistate businesses from using an apportionment election option under the Multistate Tax Compact. The unanimous opinion by Justice Carol Corrigan holds that, although California adopted the Compact in 1974, the Legislature’s subsequent enactment of a new apportionment formula can and does trump the Compact’s election option. The Compact did not create a binding reciprocal agreement among the states that adopted the Compact, the court concludes. The opinion also includes discussion of the state constitution’s reenactment rule (“A section of a statute may not be amended unless the section is re-enacted as amended”), explaining why enactment of the new apportionment formula did not violate that rule.
The court reverses the First District, Division Four, Court of Appeal, which issued its opinion in this case over three years ago.
