Sec. 19-8.4. Power of the Commissioner of Taxation and Finance to adjust or change the method of allocation

Tax Law, § 1454(a)(6)

(a) When it appears that the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage described in section 1454 of the Tax Law does not properly reflect the activity, business, income or assets of the taxpayer in New York State, the commissioner, in his or her discretion, may adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage by:

(1) excluding one or more factors; or

(2) including one or more factors.

(b) The commissioner is authorized, in his or her discretion, to permit or require the allocation of entire net income, alternative entire net income or taxable assets by a different method of allocation when it appears to the commissioner that such method of allocation will effect a fair and proper allocation of the taxpayer's income or assets reasonably attributable to New York State.

(c) A taxpayer may not adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage described in section 1454 of the Tax Law, or use a different method of allocating its entire net income, alternative entire net income or taxable assets within and without New York State, without the consent of the commissioner. A request to adjust the entire net income allocation percentage, the alternative entire net income allocation percentage or the asset allocation percentage, or to use a different method of allocation, must be submitted separately from the report as prescribed by the department and must set forth complete information on which the request is made. A taxpayer making a request for an adjustment of any of its allocation percentages, or to use a different method of allocation, that does not have such consent prior to the time it files its report, must compute and pay its tax in accordance with the entire net income allocation percentage, the alternative entire net income allocation percentage and the asset allocation percentage described in section 1454 of the Tax Law, and it must file its return in accordance with the instructions shown on the return.

(d) If a taxpayer has been permitted or required to adjust the entire net income allocation percentage, alternative entire net income allocation percentage or asset allocation percentage described in section 1454 of the Tax Law, or to use a different method of allocating its entire net income, alternative entire net income or taxable assets within and without New York State, the taxpayer must continue to use such permitted or required method in subsequent taxable years. If the facts materially change, the taxpayer must notify the commissioner of such change. If such permitted or required method no longer properly reflects the activity, business, income or assets of the taxpayer, the taxpayer must request permission, or the commissioner may require the taxpayer, to change such permitted or required method.

(e) See section 1462(g) of the Tax Law concerning other powers of the commissioner to adjust entire net income, alternative entire net income and taxable assets.