Texas ~ Corporate Income Tax: MTC three-factor apportionment method denied

CCH Tax Day Report

The Texas Comptroller of Public Accounts has issued two 2014 decisions holding that a taxpayer could not use the three-factor apportionment method permitted under the Multistate Tax Compact (MTC) for Texas franchise tax purposes. In both decisions, the Comptroller ruled that the Texas Franchise Tax Act clearly requires the use of the single-factor apportionment method and that entities may not elect to use the MTC’s three-factor apportionment formula. Texas has consistently ruled that taxpayers may not use the MTC three-factor apportionment method.

Decision, Hearing Nos. 109,934, 109,935, 109,936, Texas Comptroller of Public Accounts, January 27, 2014, released August 2016, ¶404-179; Decision, Hearing No. 110,044, Texas Comptroller of Public Accounts, February 19, 2014, released August, 2016, ¶404-180

Other References:

Explanations at ¶11-520



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