By Hanish Patel and Amy Nogid

The Minnesota Supreme Court held that Minnesota’s adoption of the Multistate Tax Compact (Compact) did not create a binding contractual obligation and, as a result, the state’s subsequent repeal of the Compact’s alternative apportionment election provision was not prohibited as unconstitutionally impairing contractual obligations. As such, the taxpayer was not entitled to use the Compact’s alternative apportionment election for the tax years after Minnesota’s repeal of the provision. Additionally, the Minnesota Supreme Court noted that even if Minnesota’s adoption of the Compact created a binding contractual obligation, it would have been invalid, running afoul of the Minnesota Constitution’s mandate that “[t]he power of taxation shall never be surrendered, suspended or contracted away.” Kimberly-Clark Corp. v. Comm’r of Revenue, No. A15-1322 (Minn. June 22, 2016).