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Texas Appeals Court denies use of compact’s three-factor formula

The Texas Court of Appeals has affirmed a trial court’s decision that a taxpayer cannot elect to use the equally weighted three-factor apportionment formula provided by the Multistate Tax Compact and therefore must use a single receipts factor to compute its revised Texas franchise tax (RTFT). The court concluded that the RTFT isn't an income tax under the definition of the Compact, and therefore the Compact’s three-factor election doesn't apply.

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