While most of us with a brother or a sister are used to them tattling to the parents over some perceived slight (real or imagined), it is rare for such squabbles to play out in court. Yet that is exactly what’s happening in the recent Motion for Leave to File a Bill of Complaint filed by Florida with the U.S. Supreme Court. Florida v. California et al., Mot. Leave Bill of Complaint, No. 163 (Oct. 28, 2025).
In its proposed Bill of Complaint, Florida objects to California’s exclusion from the sales factor of the apportionment formula of substantial amounts of gross receipts resulting from the sale of assets or property used in a taxpayer’s trade or business. While Florida alleges that its claims are “serious and dignified,” it fails to note that it has a similar provision whereby the Florida Department of Revenue can exclude occasional sales of business assets that materially distort the sales factor. See Fla. Admin. Code R. 12C-1.0155(1)(b).
Nevertheless, Florida describes two “harmful” scenarios resulting from California’s provision. The first scenario involves a company that sells property in Florida, the receipts from which would be excluded from the California factor and included in the Florida factor. In this scenario, the company would be subject to double taxation. Yet, Florida fails to mention that the company could seek alternative apportionment in either Florida or California in an attempt to avoid such a result.
The second scenario involves a company selling property in California, the receipts from which would again be excluded from the California factor and included in the Florida factor. This scenario, according to Florida, would result in the non-taxation of a portion of the company’s income. In both scenarios, however, the result is due to Florida’s legislative choice and has potential remedies, such as alternative apportionment.
Moreover, while not directly attacking California’s use of a single sales factor, Florida claims that such an apportionment method “operates as a tariff on goods manufactured in other States.” In comparison, Florida touts its own apportionment formula as “three-factor,” while burying in a footnote that Florida double weights its sales factor.
The crux of Florida’s beef with California is its allegations that California’s apportionment rule incentivizes companies to move their business property to California and/or keep their property in California. However, Florida only provides conjecture as to the constitutionality of California’s apportionment provision. While using a single sales factor can be flawed and distortive, the U.S. Supreme Court does not seem like the appropriate venue to resolve the siblings’ bickering. We will have to wait for the Court to rule on Florida’s motion to see if they agree.
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