Computation of the payroll factor

# (a)

The percentage of the surcharge taxpayer's payroll apportioned to the MCTD is determined by dividing the wages, salaries and other personal service compensation of the surcharge taxpayer's employees within the MCTD, except general executive officers, during the period covered by the report by the total amount of such compensation of all of the surcharge taxpayer’s employees within New York State, except general executive officers, during the period covered by the report.

# (b)

Wages, salaries and other compensation include all amounts paid for services rendered to the surcharge taxpayer by its employees, after intercorporate eliminations of such amounts paid by members of a combined group, and do not include amounts paid by the surcharge taxpayer that do not have the element of compensation for personal services already rendered or to be rendered.

# (c)

Wages, salaries and other compensation are computed either on the cash or the accrual basis, in accordance with the method of accounting used in computing the entire net income (ENI) of the surcharge taxpayer.

# (d)

# (1)

Employees within the MCTD include all employees regularly connected with or working out of an office or place of business of the surcharge taxpayer within the MCTD, irrespective of where the services of such employees were performed. However, the commissioner may permit or require the surcharge taxpayer to instead compute the payroll factor on the basis of the amount of compensation paid for services performed within the MCTD if both of the following are established:

(i) that a substantial part of the surcharge taxpayer’s payroll was paid to employees either attached to an office in the MCTD, but who performed a substantial part of their services outside the MCTD, or attached to an office outside the MCTD, but who performed a substantial part of their services within the MCTD; and
(ii) that the computation of the payroll factor according to the general rule stated above would not properly reflect the amount of the surcharge taxpayer's business done within the MCTD by its employees.

# (2)

Services performed within the MCTD will be deemed to be:
(i) in the case of an employee whose compensation depends directly on the volume of business secured by such employee, for example, a salesperson on a commission basis, the amount received by such employee for such business attributable to the employee’s efforts within the MCTD;
(ii) in the case of an employee whose compensation depends on achieving results other than as described in subparagraph (i) of this paragraph, the proportion of the total compensation that the value of such employee’s services within the MCTD bears to the value of all of the employee’s services within New York State;
(iii) in the case of an employee compensated on a time basis, the proportion of the total amount received by such employee that such employee’s working time within the MCTD bears to the employee’s total working time within New York State; and
(iv) in the case of an employee compensated by a combination of the bases of subparagraphs (i) through
(iii) of this paragraph, the aggregate of the amounts arrived at pursuant to (i) through (iii).