The U.S. Supreme Court has declined to hear KFC’s appeal of the Iowa Supreme Court decision saying Iowa can tax their income just because they have Iowa franchisees. The Tax Policy Blog is disappointed:
It is unfortunate that the Court declined to hear the case, as states undermine predictability and disrupt the national economy when they are permitted to reach beyond their borders to tax businesses with no property or payroll in their state. As occurred after the U.S. Supreme Court declined to hear a similar case in 2007 (FIA Card Services fka MBNA America v. West Virginia Tax Commissioner), such state efforts will probably continue. The Tax Foundation’s Center for Legal Reform will continue educational efforts emphasizing the value of the physical presence standard for interstate business taxation.
But what was the Supreme Court supposed to do? After all, the Iowa Supreme Court can overrule the federal courts.
Related: Iowa Supremes reject ‘physical presence’ requirement, stick KFC with income tax.