Texas ~ Corporate Income Tax: Taxpayer Not Permitted to Use MTC’s Three-Factor Apportionment Formula

The Texas Comptroller has again ruled that taxable entities cannot elect to use the Multistate Tax Compact’s (MTC) three-factor apportionment formula for franchise tax purposes because the Texas Tax Code requires the use of a single-factor formula in apportioning an entity’s taxable margin. Therefore, the taxpayer’s amended tax reports for the 2008, 2009, 2010 and 2011 tax years were rejected and the refund claims properly denied. Over the years, the Comptroller has consistently ruled that taxpayers may not use the MTC’s three-factor apportionment method.

Decision, Hearing Nos. 107,971; 107,972; 107,973; and 107,974, Texas Comptroller of Public Accounts, June 20, 2013, released June 2016, ¶404-159



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