Texas ~ Corporate Income Tax: Comptroller Denies Use of MTC Three-Factor Apportionment Method Again

The Texas Comptroller of Public Accounts has issued another decision holding that a taxpayer could not use the he three-factor apportionment method permitted under the Multistate Tax Compact (MTC) for Texas franchise tax purposes. The Comptroller pointed out 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. The taxpayer was required to use the single gross receipts factor in apportioning its margin to Texas, and consequently the amended taxpayer’s franchise tax return for report year 2015 was properly rejected and the refund claim was properly denied.

Decision, Hearing No. 112,889, Texas Comptroller of Public Accounts, June 17, 2016, ¶404-183



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