Tax Notes State, Florida Sues California Over ‘Special’ Apportionment Rule:

Florida is challenging a California rule for apportioning business income, arguing that it violates the U.S. Constitution.

The suit concerns Cal. Code Regs., tit. 18, section 25137(c)(1)(A), which excludes from California’s sales factor formula “substantial amounts of gross receipts [that] arise from an occasional sale of a fixed asset or other property held or used in the regular course of the taxpayer’s trade or business.”

“California is playing games with its apportionment formula at the expense of other states like Florida, and drags out and fights resolving these things on the merits in California courts,” Bishop-Henchman said.

But Florida’s filing was criticized by Darien Shanske, a tax law expert at the University of California, Davis School of Law (King Hall), who in an October 29 email called it “performatively preposterous.”

Law360, Fla. Challenges ‘Special’ Calif. Tax Rule At Supreme Court:

Florida on Tuesday took steps to sue California in the U.S. Supreme Court, seeking to strike down a California taxation rule as unconstitutional for allegedly discouraging companies from relocating or operating outside the Golden State.

California, through its single-sales factor, excludes a corporation’s payroll and property from a business income apportionment formula, imposing a tariff on goods manufactured in other states, Florida said.

Bloomberg Tax, Florida Asks Justices to Bar California Corporate Tax Rule:

The state of Florida is hoping to convince the US Supreme Court that California’s requirement that businesses exclude proceeds from “substantial and occasional” sales from their state tax returns deprives the former state of tax and investment revenue to the detriment of its citizens and businesses.