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Harley-Davidson Seeks California Supreme Court Review of Tax Decision

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By William Vogeler, Esq. on September 19, 2018 7:00 AM

Harley-Davidson is headed toward the end of the road in California.

After losing an appeal over a discriminatory tax, the motorcycle company will ask the California Supreme Court to review the case. In Harley Davidson v. Franchise Tax Board, the Fourth District Court of Appeal upheld California's requirement that out-of-state companies report combined tax liability on a single return.

Even though the tax favors in-state corporations, the lower court said there is no better way to apportion taxes for the inter-state business. Harley-Davidson says there has to be a nondiscriminatory way.

No Nondiscriminatory Way

The appeals panel affirmed a San Diego trial judge, who said the state had a legitimate reason for treating in-state and out-of-state businesses differently.

Judge Joel Pressman ruled the state's interest -- preventing tax manipulation -- could not be served by a reasonable nondiscriminatory alternative.

Harley Davidson had argued that separate accounting for multistate businesses or combined reporting for all businesses would be reasonable alternatives.

But the Fourth District rejected the appeal, saying that intrastate and interstate companies are not similarly situated for tax purposes.

Rough Road Ahead

It's been a rough road for Harley-Davidson, which filed the case in 2011. In 2015, the California Supreme Court turned down its appeal over whether its subsidiaries had nexus for state tax purposes.

Last month, President Trump called for a boycott against the company if it moves motorcycle production overseas.

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