United States

Maryland: Bills Phasing in Single Sales Factor Apportionment Signed Into Law

Apr 30, 2018
From KPMG TaxWatch

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On April 24, 2018, a pair of bills were signed into law (House Bill 1794 and Senate Bill 1090) that phase-in single-sales factor apportionment for most Maryland corporate taxpayers. Historically in Maryland, only manufacturing companies were allowed to use single-sales factor apportionment. Effective for tax years beginning after December 31, 2017 and before January 1, 2019, a taxpayer whose trade or business is a unitary business will compute its Maryland apportionment using a three-factor formula, consisting of property, payroll and three times the sales factor. The denominator is five. For the tax year beginning after December 31, 2018 and before January 1, 2020, the sales factor is weighted four times and the denominator is six. For the tax year beginning after December 31, 2019 and before January 1, 2021, the sales factor is weighted five times and the denominator is seven. For the tax year beginning after December 31, 2020 and before January 1, 2022, the sales factor is weighted six times and the denominator is eight. For the tax year beginning after December 31, 2021, a 100 percent sales factor will be used. Under the bills, Worldwide Headquartered Companies, as defined, can elect each year to calculate their Maryland apportionment using a three factor double-weighted sales formula. These are generally corporations that (1) filed a Form 10-Q with the SEC for the quarterly period ending June 30, 2017, (2) have their principal executive office in Maryland, and (3) between July 1, 2017 and June 30, 2020 employed at least 500 full-time employees at the Parent Corporation’s principal executive office in Maryland.  In determining the Maryland modified income of a Worldwide Headquartered Company, gross income from intangible investments and capital gains from the sale of intangible property are included in the calculation of the Maryland numerator based on the average of the property and payroll factors. Please contact Dan McGuire at 703-286-8275 or Jonathan Weinberg at 703-286-8275 with questions.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.