California Supreme Court Hears Arguments in MTC Case

October 6, 2015

Tensions and passions were high at the California Supreme Court before they even turned to the Gillette Co. v. Franchise Tax Board case deciding whether the Multistate Tax Compact is a binding agreement or a model law offering non-binding suggestions (As I noted yesterday, the MTC is coming up on 48 years since it promised that it would achieve uniformity and it seems further away than ever.

Who will win? On the state’s side is the fact that challenging tax statutes is very tough and the tenor of questioning seemed to go their way. On the taxpayer’s side is a strong lower court decision, the unsettled questions of the state’s suggested approach, and (in my opinion) a more persuasive briefing. The California Supreme Court is required to issue its opinion within 90 days (January 6, 2016), and because of this, my California friend means that’s it’s likely much of the opinions have already been pre-written. This case deals with compact law and state tax law, two areas that most lawyers get through law school and the bar exam without ever touching. I think the taxpayer is in the right so hopefully that’s enough for them to prevail.

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