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Oregon Tax Court denies use of Multistate Tax Compact’s 3-factor apportionment formula election

The Oregon Tax Court on Sept. 9 granted the Oregon Department of Revenue’s motion for summary judgment and denied a taxpayer’s election to use the equally weighted three-factor apportionment formula provided by the Multistate Tax Compact. The state of Oregon was a full member of the Compact for the 2005-2007 corporate excise (income) tax years at issue, but the state enacted legislation in 1993 directing that inconsistencies between the Compact provisions and the Oregon apportionment statutes be construed in favor of the Oregon statutes. The Court determined that the 1993 legislation was enacted for the purpose of disabling the Compact election and did not violate the U.S. or Oregon Constitutions or federal statutory law. As a result, the taxpayer could not make the apportionment election under the Compact.

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