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Michigan Court of Claims reconsiders and rules against IBM in Multistate Tax Compact three-factor apportionment case

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In the ongoing drama surrounding the ability to elect to use the Multistate Tax Compact’s three-factor apportionment formula for purposes of the Michigan Business Tax, the Michigan Court of Claims has granted the Michigan Department of Treasury’s motion for summary disposition, denying IBM’s election for purposes for the 2008 tax year. In 2014, the Michigan Supreme Court had ruled in favor of IBM and allowed the three-factor apportionment election. However, Michigan subsequently enacted legislation that retroactively repealed the Michigan statutes adopting the Compact effective Jan. 1, 2008. Based on the Supreme Court decision, the Court of Claims initially granted IBM’s motion for summary disposition. However, the Court of Claims recently granted the Department’s motion to reconsider and motion for summary disposition because the legislation specifically precluded IBM’s three-factor apportionment election.

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