The National Taxpayers Union (NTU) has urged a California appeals court to strike down a state law that alters the tax treatment of dividends for multinational companies. The group argues that S.B. 167, enacted in 2024, is unconstitutional because it retroactively changes existing law to undo a victory for Microsoft Corp. before an administrative tribunal. The law could have led to $1.3 billion in refunds to other multinationals, according to the NTU.
The NTU is seeking to revive its declaratory judgment action against the law, which the legislature described as a “clarification.” The group contends that the statute improperly applies retroactively and deviates from established legal principles. The case is now before the California Court of Appeal, Third Appellate District.
The dispute centers on how California taxes dividends received by multinational companies from their foreign affiliates. The NTU claims the law undermines fairness and constitutional standards by targeting a specific legal outcome for Microsoft and other affected firms.