Court Opinion

ID: 9533948
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:35:47.354354+00
Date Added: 2024-06-11T13:29:14.267394
License: Public Domain

Fatzer, C. J.,
dissenting: I join in Justice Fontron’s dissent; however, I wish to make an additional comment. Conflicting apportionment and allocation methods utilized in taxing multistate business are the most severe ailment of state taxation policies. The theory of apportionment by formula is that certain elements of a business will fairly reflect the measure of tax allocable to a state. Accordingly, the formula method has been recognized as a practical approach in the taxation of multistate business. (Gen. Motors v. District of Columbia, 380 U. S. 553, 14 L. Ed. 2d 68, 85 S. Ct. 1156; Harvester Co. v. Evatt, 329 U. S. 416, 91 L. Ed. 390, 67 S. Ct. 444; Subcommittee on State Taxation of Interstate Commerce of the House Committee on the Judiciary, "State Taxation of Interstate Commerce,” H. Rept. No. 1480, 88th Cong., 2d Sess., Vols. 1 and 2 [June 15, 1964], H. Rept. No. 565, 89th Cong. 1st Sess., Vol. 3 [June 30, 1965].)
It is my opinion that a multistate business is entitled to apportionment and allocation regardless of whether the power of taxation has *657been exercised by another state. This is the fundamental premise of the Uniform Act. The purpose of the Act is uniform apportionment and allocation of business income, and not to insure all income of a multistate business will be taxed. (K. S. A. 79-3289.) Tax liability is to be computed on the basis of business activity, and a comparison between formula allocation and separate accounting to ascertain the higher tax, is not within the scheme of the Uniform Act.
Whether the apportionment formula correctly depicts a multistate business’ activity in this state is dependent upon the facts of each particular case. A taxpayer’s return when filed in accordance with applicable statutes speaks for itself. The party seeking to invoke the alternate taxing methods set out in K. S. A. 1973 Supp. 79-3288 has the burden of proof. In the instant case, the director failed to offer any evidence which would warrant the use of separate accounting.
Finally, in conjunction with apportioning the taxable income of a multistate business is the apportionment of any losses of that business. (Bass, Etc., Ltd. v. Tax Comm., 266 U. S. 271, 69 L. Ed. 282, 45 S. Ct. 82.) I submit, continued diversity by the states in taxing multistate business will result in federal legislation establishing a mandatory method for apportionment and allocation of income.
Accordingly, I join with Justice Fontron in concluding this case should be reversed and that judgment be entered in favor of the taxpayer on the basis of the record presented.
Fontron, J., joins in the foregoing dissent.