apportionment

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On July 30, the Multistate Tax Commission (MTC) approved amendments to the Multistate Tax Compact’s (1) definition of nonbusiness income, (2) definition of “sales,” (3) factor-weighting, (4) alternative apportionment, and (5) sourcing of service and intangible revenue. With the approval, the amendments officially become a model act of the MTC, and taxpayers should expect legislation…

By Stephen Burroughs and Andrew Appleby

Former Chicago Bears linebacker Hunter Hillenmeyer and former Indianapolis Colts center Jeff Saturday challenged the City of Cleveland’s application of the “games-played” apportionment method to their football salaries before the Ohio Board of Tax Appeals. During their careers, both players were nonresidents whose respective NFL teams traveled to the…

By Madison Barnett

The Alaska Supreme Court held that a foreign member of a water’s edge unitary group must include its foreign dividend income in the Alaska apportionable tax base, regardless of whether the income is “effectively connected income” (ECI) for federal income tax purposes. Alaska law incorporates the Internal Revenue Code, including the ECI…

On July 28, the Multistate Tax Commission (MTC) Uniformity Committee tabled two projects in order to focus on apportionment regulations in anticipation that the Commission will amend several key UDITPA sourcing rules on Wednesday.
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On July 28, the Multistate Tax Commission (MTC) Uniformity Committee tabled two projects in order to…

By Stephanie Do and Pilar Mata

The Colorado Department of Revenue determined that an out-of-state S corporation was not subject to Colorado income taxes and was not required to register with the Department. The S corporation provided information technology consulting services and designed accounting software systems. One of the S corporation’s clients was located in…

On July 14, 2014, the Michigan Supreme Court in a splintered 3-1-3 decision found in favor of IBM’s election to apply the Multistate Tax Compact’s three-factor apportionment formula to the now-repealed Michigan Business Tax (MBT).
Background
Several states, including Michigan in 1970, entered into the Multistate Tax Compact (Compact), which describes how multistate corporations allocate

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By Stephen Burroughs and Andrew Appleby

The Tennessee Court of Appeals held that the Commissioner had the authority to require Vodafone, a wireless communications provider, to use an alternative apportionment method for Tennessee franchise and excise tax purposes. Vodafone used Tennessee’s statutory cost-of-performance (COP) method to source its telecommunication service receipts. Using Tennessee’s statutory COP…

On May 8, the Multistate Tax Commission’s Executive Committee voted to advance its amendments to the Multistate Tax Compact’s definition of nonbusiness income, definition of “sales,” factor weighting, and the sourcing of service and intangible revenue. The Committee essentially embraced the MTC’s original proposed amendments and failed to incorporate any of the comments and observations…

By Suzanne Palms and Tim Gustafson

In direct response to the Mississippi Supreme Court’s decision in Equifax, Inc. v. Miss. Dep’t of Revenue, wherein the court upheld the Department of Revenue’s use of market-based sourcing despite the taxpayer’s use of cost-of-performance sourcing in compliance with the governing statute, Mississippi’s Governor signed House Bill (HB)…

By Ted Friedman and Timothy Gustafson

The Supreme Court of Missouri reversed and remanded a decision of the Administrative Hearing Commission (see our coverage of the Commission’s January 28, 2013 decision here) and held that income from a “rabbi trust”—a trust established by a corporation to fund a nonqualified deferred compensation plan for company…