California adopted UDITPA in 1966, with its equally weighted three-factor formula for apportioning multistate income – property, payroll, and sales. Over time, however, the sales factor has emerged as the primary mechanism for determining tax liability in California.
Today, California’s sales factor is the same as it was nearly 60 years ago. Although the fraction itself may not have changed, its interpretation and application have evolved at the hands of the Legislature, the California Franchise Tax Board, and California courts. And that evolution continues apace.
In this installment of “A Pinch of SALT,” published by Tax Notes State, Eversheds Sutherland attorneys Tim Gustafson and Constance Chien provide a brief timeline of key California sales factor developments over the past 25 years and examine issues that will drive change for the next 25 years and beyond.
Read the full article here.