The Multistate Tax Commission (MTC) is proposing to significantly change how the sales factor is calculated for apportioning corporate income. Currently, most states define “sales” includable in the sales factor as “all gross receipts of the taxpayer” (except those receipts related to nonbusiness income). MTC members are considering a proposal to limit the definition of “sales” to include only those gross receipts from activity that meets the “transactional test” of the definition of “business income.” Under this proposal, all other receipts—including receipts from sales that satisfy the “functional test”—would be excluded from the sales factor (even though the related income would remain subject to apportionment). 

Thus, under this MTC proposal, the sales factor would include only those receipts arising from sales of inventory or services.  Examples of receipts that would be excluded are receipts from treasury or hedging transactions and the proceeds from the sale of a unitary subsidiary.


Sutherland’s SALT Poll, “The Impact of State Budget Deficits,” revealed that the majority of those surveyed believe that state budget deficits have led to a difficult state tax audit environment. The poll results are consistent with Sutherland’s recent experience with state tax auditors—an overwhelming 80% of respondents believe that state auditors generally are less flexible in negotiating difficult issues. Further, 60% of the respondents experienced state tax auditors creating more substantial assessments during this time of state budget shortfalls.

Continue Reading Weekly SALT Poll Results: The Impact of State Budget Deficits

On Monday, Sutherland SALT Partner Jeff Friedman participated in a panel discussion titled “Waive or Walk: Considerations for Extending the Statute of Limitations,” at the Tax Executives Institute (TEI) 61st Annual Midyear Conference. The panel was moderated by Tov Haueisen from General Electric Company and Henry Orphys from Intel Corporation, and included Steven Rainey from KPMG.

Click here to read the A Pinch of SALT article “Waive or Walk: Considerations for Extending the Statue of Limitations,” which appeared in State Tax Notes.

Now it’s time for our first weekly state and local tax poll:


Check in next week for our analysis of the poll results.