Income/Franchise:
Texas Supreme Court Reinstates Petition for Review in Sales Factor Case Involving Hedging Transactions
Case No. 21-0997, Tex. (denial of petition for review on 9/30/22, withdrawn; petition reinstated 4/21/23). The Texas Supreme Court (Court) has withdrawn its earlier order denying the taxpayer’s petition for review while granting a taxpayer’s motion for rehearing related to a previously filed petition for review concerning a Texas Court of Appeals decision from 2021, which held that only the net proceeds, not gross proceeds, from a taxpayer’s sales of commodity futures were includable in its apportionment factor denominator for Texas franchise tax purposes [see Case No. 03-21-00011-CV, Tex. Ct. App. (10/14/21) and previously issued Multistate Tax Alert for more details on the 2021 decision]. The taxpayer’s motion for rehearing (as filed on 11/16/22) asserts the Texas Court of Appeals’ opinion was inconsistent with Texas Supreme Court precedent and gave too much deference to the Texas Comptroller. The Court has ordered briefing on the merits with an initial due date for the petitioner’s brief on May 22, 2023. However, the Court has not yet granted review of the case; thus, the Court may still ultimately decline to grant taxpayer’s petition for review following full briefing. We will continue to monitor this case’s movement going forward. Please contact us with any questions.
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