The Oregon Tax Court held that the Multistate Tax Compact (Compact), which allows for an equally weighted, three-factor apportionment formula, was an illusory contract and its terms had been effectively disabled by the Oregon Legislature. The statute in question, ORS 314.606, provides that in case of conflict the provisions of ORS 314.605 to 314.675, which codified the Uniform Division of Income for Tax Purposes Act, trump the provisions of ORS 305.655, which codified the Compact. The taxpayer argued that ORS 314.606 violated, among other things, the Contract Clause of the Oregon Constitution and the Contract and Compact Clauses of the U.S. Constitution. The court concluded, as a threshold matter, that ORS 314.606 was intended to disable the Compact election rather than provide taxpayers with an alternative means of apportioning their income. The court also held that the state’s codification of the Compact did not create a statutory contract because, under Oregon law, any promises the state purportedly made when it adopted the Compact lacked consideration. The terms of the Compact gave member states the unconditional right to withdraw at any time without having to satisfy any conditions precedent, and it contained no reciprocal promises. The court also observed that member states had modified or disabled provisions of the Compact for years without any objection from other member states, which was evidence that the member states regarded the Compact as non-binding. Based on the foregoing, the court held that ORS 314.606 did not impair any contractual obligations in violation of the Oregon Contract Clause or the federal Contract Clause. The court noted that even if a statutory contract had been created, the federal Contract Clause would not have barred the state from disabling the Compact election (and thus modifying its financial obligations) because doing so was reasonable and necessary to serve two important public purposes: protecting the fisc and ensuring that all businesses are on equal footing. Health Net, Inc. v. Dep’t of Revenue, No. 5127, 2015 WL 5249431 (Or. Tax Ct. Sept. 9, 2015)