WASHINGTON Oct 11 The U.S. Supreme Court on
Tuesday rejected a challenge by Procter & Gamble Co and
other companies to the way California imposes taxes on
businesses that operate in multiple states.
The justices left in place a December 2015 ruling by the
California Supreme Court that California is not bound by a 1967
agreement between states that set a formula for calculating
taxes. California, which joined the Multistate Tax Compact in
1974, changed the formula in 1993.
California has since withdrawn from the state compact.
Several companies, including two Procter & Gamble
subsidiaries, Kimberly-Clark Worldwide Inc and Merck
KGaA subsidiary Sigma-Aldrich Corp, sued in 2010 after
being denied refunds for the tax they paid between 1993 and
2005. The companies said they overpaid their taxes by $34
Lawyers for the companies had said $750 million in potential
tax refunds in California and additional amounts in other states
were at stake in the case.
Many states have moved away from the Multistate Tax Compact
formula. To favor and attract businesses within their borders,
these states have rearranged the way they tax business income so
that in-state businesses pay less and out-of-state businesses
(Reporting by Lawrence Hurley; Editing by Will Dunham)