Sec. 19-5.1. General

Tax Law, § 1454

(a) The percentage of the taxpayer's payroll allocated to New York State is determined by dividing 80 percent (100 percent when computing the alternative entire net income allocation percentage) of the wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, within New York State during the period the taxpayer is entitled to allocate, by the total amount of wages, salaries and other personal service compensation of the taxpayer's employees, except general executive officers, both within and without New York State during the period the taxpayer is entitled to allocate.

(b) The term employees within New York State includes all employees regularly connected with or working out of an office of the taxpayer within New York State, irrespective of where the services of such employees were performed. However, if the taxpayer establishes to the satisfaction of the Tax Commission, or the Tax Commission establishes on its own motion, that (1) a substantial part of the taxpayer's payroll was paid to employees attached to an office in New York State who performed a substantial part of their services outside New York State, or a substantial part of the taxpayer's payroll was paid to employees attached to an office outside New York State who performed a substantial part of their services within New York State, and (2) establishes that the computation of the payroll factor according to the general rule stated in this subdivision would not properly reflect the amount of the taxpayer's business carried on within New York State by its employees, then the Tax Commission may permit or require the payroll factor to be computed on the basis of the amount of compensation paid for services performed within New York State. The compensation paid for services performed within New York State will be deemed to be:

(1) in the case of an employee whose compensation depended directly on the volume of business secured by him, the amount received by him for the business attributable to his efforts within New York State;

(2) in the case of an employee whose compensation depended on other results achieved, the proportion of the total compensation which the value of his services within New York State bears to the value of all his services; and

(3) in the case of an employee compensated on a time basis, the proportion of the total amount received by him which the working time within New York State bears to the total working time.

(c) Wages, salaries and other personal service compensation include all amounts paid for services to the taxpayer and deducted by the taxpayer in computing its alternative entire net income, but do not include amounts paid by the taxpayer which do not have the element of compensation for personal services actually rendered or to be rendered.

(d) Wages, salaries and other personal service compensation are computed on a cash or accrual basis, in accordance with the method of accounting used by the taxpayer for the taxable year in computing alternative entire net income.