Illinois Pepsi Case Puts Spotlight on 80/20 Rule Modernization

States have for years allowed a domestic “80/20 company” to be excluded from combined reporting based on a straightforward calculation of property and payroll factors. Such rules had rarely been in the spotlight, in part because of the seemingly noncontroversial test. But last month's ruling in PepsiCo Inc. v. Illinois Department of Revenue raises the question of whether taxpayers and state policymakers should take a fresh look at the rules.