Apportionment Provision for Business
& Occupation Tax Under current law, income is taxed in the jurisdiction
where the majority of the activity takes place, and credits apply if your
business pays tax in another jurisdiction. Effective January 1, 2008, specific
rules for allocating and apportioning income when a business engages in business
activity within multiple jurisdictions will apply. The allocation and
apportionment will vary depending on the classification under which income is
reported:
Manufacturing: allocated to the location
where the activity takes place
Retail sales: the activity takes place
where delivery to the buyer occurs (similar to state sales tax changes
“destination-based sourcing” that effect on July 1, 2008)
Wholesale sales: the activity takes place
where delivery to the buyer occurs
Royalties from the Granting of Intangible
Rights: allocated to the commercial domicile of the taxpayer
Services and Other: apportioned to
a city by multiplying service income by a payroll factor (based on the
payroll within the jurisdiction), plus the service-income factor (based on
the income producing activity attributable for tax purposes within the
jurisdiction), divided by two:
Total taxable service income x (Payroll factor +
Service Income Factor)
