MultiTax Commission

An intergovernmental state tax agency whose mission is to promote uniform and consistent tax policy and administration among the states, assist taxpayers in achieving compliance with existing tax laws, and advocate for state and local sovereignty in the development of tax policy.

80/20 Exclusion Is a Bad Idea for States

A tale article

Pepsi Tax Case Shows Why 80/20 Exclusion Is a Bad Idea for States

In this article, Senior Counsel Bruce Fort explains how the use of the “80/20” company exclusion from several states’ water’s edge combined filing group enables taxpayers to shift domestic income to a non-combined entity. In PepsiCo v. Illinois, Ill. Cir. Ct., No. 2022TX000155, the state is challenging the “80/20” status of PepsiCo’s subsidiary on economic substance grounds. Fort hopes the litigation will shed light on an unnecessary and unwarranted carve-out from the scope of domestic unitary filing requirements. Minnesota, Vermont and New Mexico, have eliminated their 80/20 company exceptions; another 14 states retain the provision.


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