• View detailsArticle

    First Charges Announced for Bad Entry Into OVDP Alternative...

  • View detailsPresentation

    State Bar of Texas Tax Section Leadership Academy...

  • View detailsConference

    21st Annual Meadows Collier Tax Conference...

  • Firm News

    Michael A. Villa, Jr. has been appointed Chair of the Tax Controversy Committee of the State Bar of Texas Tax Section for the 2019-2020 year....

VIEW MOST RECENT
 
 
 
 
 
 
View All
     
Showing 3 of 10

Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P.

901 Main Street, Suite 3700
Dallas, TX 75202

Phone: (214) 744-3700
Fax: (214) 747-3732
Toll Free: (800) 451-0093

submit inquiry
blog

The Texas Comptroller Receives Christmas Gift from the Texas Supreme Court in MTC Apportionment Decision

By David E. Colmenero and Jason A. Hendrix on December 22, 2017

In a much anticipated decision (here), the Texas Supreme Court today issued its decision in Graphic Packaging Corp. v. Hegar, No. 15-0669, (December 22, 2017). The Court held that Graphic Packaging could not use the three-factor apportionment formula provided for in the Multistate-Tax Compact for apportioning Texas franchise tax, notwithstanding that Texas is a member of the Compact. The Court of Appeals in Austin had previously held that the three-factor apportionment formula in the Compact is not available to Texas taxpayers because the Texas franchise tax is not an income tax. Without deciding if the Texas franchise tax is in fact an income tax, the Texas Supreme Court otherwise affirmed the decision of the Court of Appeals, holding that the Texas Legislature intended that the single-factor apportionment formula provided for in Section 171.106 of the Texas Tax Code be the exclusive formula for apportioning Texas franchise tax. Additionally, the Court held that the Compact is not a binding regulatory compact for the State of Texas, meaning that even if both Section 171.106 and the Compact were intended to be viable formulas for apportioning Texas franchise tax, the terms of the Compact are not binding on the State. For this reason, Graphic Packaging could not use the three-factor apportionment formula in the Compact for Texas franchise tax.