TX Again Denies Use of MTC Three-Factor Apportionment Method

The Texas Comptroller of Public Accounts has issued another decision holding that a taxpayer was not permitted to use the three-factor apportionment method permitted under the Multistate Tax Compact (MTC) for purposes of reporting its Texas franchise tax and claiming a refund.

The Comptroller stated 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.

Furthermore, the Comptroller noted that the refund claim was untimely filed. Consequently the amended franchise tax return and the refund claim were properly denied.

Decision, Hearing No. 112,338, Texas Comptroller of Public Accounts, September 1, 2016, released January 2017, ¶404-214

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