Budget Amendment ID: FY2018-S3-23

OTH 23

Closing the Single Sales Factor Tax Loophole

Messrs. Eldridge and Montigny, Ms. Chang-Diaz and Ms. O'Connor Ives moved that the proposed new text be amended by inserting after section XX the following new sections:-

SECTION XX. Section 38 of chapter 63 of the General Laws, as appearing in the 2014 Official Edition, is hereby amended by striking out subsection (c) and inserting in place thereof the following subsection:-

(c) If a corporation, other than a defense corporation as described in subsection (k) or a manufacturing corporation as described in subsection (l), has income from business activity which is taxable both within and without this commonwealth, its taxable net income, as determined under the provisions of subsection (a), shall be apportioned to this commonwealth by multiplying said taxable net income by a fraction, the numerator of which is the property factor plus the payroll factor plus twice times the sales factor, and the denominator of which is four.

SECTION XX. Subsection (f) of section 38 of chapter 63 of the General Laws, as so appearing, is hereby amended by striking out the sixth paragraph.

SECTION XX. Section 38 of chapter 63 of the General Laws, as so appearing, is hereby further amended by striking out subsections (m) and (n) and inserting in place thereof the following subsection:-

(m) In any case in which a purchasing corporation makes an election under section 338 of the Code, the target corporation shall be treated as having sold its assets for purposes of this section.