Section 35.01.01.310 - APPORTIONMENT ELECTIONS FOR MULTISTATE CORPORATIONSSection 63-3027, Idaho Code
01.Available Options. A multistate corporation transacting business in Idaho may elect to be taxed pursuant to the provisions of the Idaho Income Tax Act or pursuant to the Multistate Tax Compact, Section 63-3701, Idaho Code. This provides three (3) options:a. Apportionment and allocation pursuant to Section 63-3027, Idaho Code.b. Apportionment and allocation pursuant to Article III, Section 1 of the Multistate Tax Compact. However, if this option is elected, in any case in which the provisions of Article III, Section 1 of the Multistate Tax Compact are inconsistent with the provisions of Section 63-3027, Idaho Code, the provisions of Section 63-3027, Idaho Code, shall control. Because of Subsection 63-3027(3), Idaho Code, this option is indistinguishable from the standard apportionment option identified above in Subsection 01.a. of this rule.c. Tax based on one percent (1%) of sales pursuant to Article III, Section 2 of the Multistate Tax Compact and Section 63-3702, Idaho Code. This option is available to corporations whose only activity in Idaho consists of sales that are not in excess of one hundred thousand dollars ($100,000) during the taxable year.02.Three-Factor Apportionment Election for Certain Taxpayers. The default apportionment factor for taxpayers under Section 63-3027, Idaho Code, is sales factor only. However, multistate taxpayers subject to Section 63-3027(23), Idaho Code, are an exception to the default provision of apportioning income and are subject separate accounting where required. Pursuant to Section 63-3027(10)(b), Idaho Code, an electrical corporation, a telephone corporation, a communications company, or a taxpayer subject to a special industry regulation pursuant to Rule 580 may elect to apportion all apportionable income of the taxpayer to Idaho by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three (3).03.Electing an Option. A multistate corporation is to file pursuant to Section 63-3027, Idaho Code, unless it elects to report and pay income tax pursuant to one (1) of the options specified in Subsections 310.01.b., 310.01.c., or 310.02. The election must be made on the return by checking the applicable box if provided, otherwise, by attaching a written statement of the election to the return. After the election has been made, the election may not be changed for a taxable year thereafter without permission of the Tax Commission. A petition to change the election must include an explanation of the legal or factual basis for requesting the change and a computation of the taxpayer's Idaho taxable income and tax liability computed using both the prior reporting method and the method the taxpayer is petitioning to use for the year of change. The written petition requesting the change of apportionment method must be filed with the Tax Commission at least thirty (30) days prior to the due date for filing the tax return.04.Election for Members of a Combined Group. The elections identified in this Rule apply at the entity level, not to the entire combined group. For example, if an entity in a combined group is one (1) of the types of corporations allowed to make the three-factor election, and choses to do so, but the other entities in the group are not the types of corporations allowed to make the three-factor election, these other entities will still use single sales factor. If mixing entities using different apportionment methods within a combined group produces apportionment results that do not fairly represent the business activity in Idaho of any of the taxpayers, then, pursuant to Section 63-3027(17), Idaho Code, the taxpayer may petition for or the Tax Commission may require, a reasonable alternative apportionment. A written statement must be attached to the combined return specifying which entities have or are electing to use three-factor apportionment.Idaho Admin. Code r. 35.01.01.310