Payroll Factor; in General

372.01 Total Compensation Paid to Employees. The payroll factor of the apportionment formula includes the total compensation paid to employees in the regular course of the trade or business during the tax period. 372.01A The total compensation paid to employees is determined by the accounting method used. If the taxpayer uses the accrual method of accounting, all compensation properly accrued is deemed to have been paid during the tax period. If the taxpayer is required to report compensation under the cash method for unemployment compensation purposes, the taxpayer may use this method to calculate the payroll factor regardless of the taxpayer's method of accounting. 372.01B Compensation paid to employees includes wages, salaries, commissions, and any other form of payment given to employees for services, as well as the value of the board, rent, housing, lodging, or other benefits or services furnished to employees by the taxpayer in return for personal services if the value received constitutes income to the recipient under the IRC. 372.01C In the case of employees not subject to the IRC (for example, those employed in foreign countries) the determination of whether benefits or services would constitute income to the employees will be made as though the employees were subject to the IRC. 372.02 Employees. 372.02A Employees include any officer of a corporation, or any individual who, under the common-law rules applicable when determining the employer-employee relationship, has the status of an employee. 272.02B Generally, a person will be considered an employee if he or she is included by the taxpayer as an employee for purposes of the payroll taxes imposed by the Federal Insurance Contributions Act. Individuals included within the term "employees" in the Federal Insurance Contributions Act who would not be employees under the usual common-law rules, are not employees for purposes of this regulation. 372.03 Excluded from the Payroll Factor. The payroll factor does not include: 372.03A Compensation paid in producing income that is not subject to apportionment; or 372.03B Payments made to an independent contractor or any other person not properly considered an employee. (Neb. Rev. Stat. § 77-2734.13. December 27, 2015.)