Bill > S1420

This bill extends the "single sales factor apportionment" method to all retail and wholesale corporations, meaning how a company's profits are taxed in a state when it operates in multiple states. Currently, the law uses a three-factor formula (property, payroll, and sales) to determine how much of a company's income is taxable in a state, but this bill modifies that for retail and wholesale businesses. Specifically, it defines "retail corporation" as those primarily engaged in activities classified under NAICS Sectors 44-45 and "wholesale corporation" as those in NAICS Sector 42. For these businesses, the bill phases in a greater weighting of the sales factor in the apportionment formula over several years, eventually moving to a single sales factor by tax years beginning on or after January 1, 2018, meaning 100% of their taxable net income will be apportioned based solely on their sales within the state. This change aims to encourage businesses to locate and invest in the state by reducing the tax burden associated with their property and employees within the state, as long as their sales are also within the state.