In an INSIGHT article published on May 26, 2020, by Bloomberg Tax, Mark E. Haynes spelled out his recent Supreme Court victory in Rodriguez v. Federal Deposit Insurance Corp. and what the decision means.
“…for tax accountants the outcome is clear and straightforward: Affiliated companies filing a joint tax return should have a written tax allocation agreement.”Mark Haynes
The case raised the question: Should federal courts rely on state law, together with any applicable federal rules, or should they devise their own federal common law test?
The Court’s opinion noted that disputes between members of affiliated groups without a tax allocation agreement or with a contested one have been previously decided under a federal common law rule applied in some jurisdictions known as the Bob Richards rule. Generally, this rule provides that, in the absence of a tax allocation agreement, a refund belongs to the group member responsible for the losses that led to it.
You can read the entire Bloomberg Tax INSIGHT here.