IDAPA 35.01.01.310 — APPORTIONMENT ELECTIONS FOR MULTISTATE CORPORATIONS (RULE 310)

Section 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:
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a.
Apportionment and allocation pursuant to Section 63-3027, Idaho Code.
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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.
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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.
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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
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.01
Idaho State Tax Commission
Income Tax Administrative Rules
Section 320
Page 48
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).
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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.
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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.
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