20 NYCRR § 4-3.5

Reasonable approximation based on customer information

Official textus-ny/regstax.ny.gov11 subsections

# (a)

Where a corporation’s books and records kept in the ordinary course of business and reasonable inquiries to the customer when required do not provide adequate information to determine the customer’s primary use location of a digital product or digital service, then reasonable approximation based on customer information must be used to determine primary use location.

# (b)

Definition. Reasonable approximation based on customer information is an alternative method used to determine the location or locations at which a customer primarily uses a digital product or digital service in instances in which:

# (1)

(i) the location or locations where the digital product or digital service is primarily used and/or the percentage of use attributable to each location as a share of the total use cannot be determined, or
(ii) obtaining the primary use location or locations and/or the percentage of use attributable to each location as a share of the total use would require the corporation to expend undue effort and expense beyond the due diligence required by this Subpart; and

# (2)

the corporation has sufficient information to reasonably approximate the primary use location or locations and/or the percentage of use attributable to each location as a share of the total use.

# (c)

Application of reasonable approximation based on customer information.

# (1)

A corporation must use all available information in its books and records, including information obtained upon reasonable inquiries where required, and information publicly available about the location or locations where its actual customers primarily use the digital product or service.

# (2)

When a corporation is required under this section to reasonably approximate, the corporation must use a method that is intended to approximate where the customer primarily uses the digital product or digital service.

# (3)

Sourced receipts method. In any instance where a corporation can ascertain the location or locations where a substantial portion of similar receipts are sourced (“sourced receipts method”), but not all of such receipts, and the corporation reasonably believes, based on all available information, that the geographic distribution of the remainder of such receipts is substantially similar to that of the sourced receipts, it may source such receipts in the same proportion as its sourced receipts (sourced receipts method). If the corporation reasonably believes, based on all available information, that the geographic distribution of the remainder of such receipts is different from that of the sourced receipts, and the corporation otherwise lacks sufficient information to use reasonable approximation either under this section or under section 4-3.6 of this Subpart, it must next attempt to source such receipts to where the digital product or service is received using the where received method (see section 4-3.7 of this Subpart).

# (4)

In any case in which a corporation uses a method of approximation to apportion its receipts and the commissioner determines that the method of approximation employed by the corporation is not reasonable, the commissioner may substitute a method of approximation that the commissioner determines is appropriate. In this instance, the corporation bears the burden of demonstrating that the method the commissioner prescribes is not reasonable.

# (5)

In any case in which the commissioner determines that a corporation’s method of approximation is reasonable, but that it has not been applied in a consistent manner with respect to similar transactions, the commissioner may require that the corporation apply its method of approximation in a consistent manner.

# (6)

In any case in which, after reasonable inquiries are made when required, the corporation does not have sufficient information based on its actual customers to use reasonable approximation, the corporation must next attempt to source such receipts using the rules for reasonable approximation based on general information.

Source: official source document (DTF adopted rule text, December 2023 corporate reform)

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