Florida takes California to the Supreme Court over Tax Apportionment Rule

Many tax professionals were surprised by a U.S. Supreme Court case filed by Florida in late October and officially docketed on November 3. Florida alleges that it has been harmed by a special tax rule California uses alongside its single-sales factor apportionment method.

Established in the early 2000s, this special rule—known as the occasional sales rule—determines how the state apportions substantial yet infrequent business activity conducted outside a taxpayer’s usual operations. Skepticism surrounding Florida’s complaint largely stems from the fact that many states, including Florida, have similar provisions. Adding to the confusion, the single-sales factor method was previously upheld by the U.S. Supreme Court in Moorman Manufacturing v. Bair.

Richard Pomp, a well-known tax professor at the University of Connecticut, has questioned Florida’s position, and many are watching closely to see how this case evolves. The case is Florida v. California et al., No. 22o163 in the U.S. Supreme Court.

You can view the complaint here: fl-v.-franchise-tax-board-final.pdf

For questions regarding this case, please contact Kim Allen at (617) 451-0303 x106 or Olivia Cannizzaro at (702) 850-2950