Alaska Administrative Code › Title 15 - Revenue › Chapter 19 - Multistate Tax Compact › Article 5 - Payroll Factor › 15 AAC 19.211 - Payroll factor in general

Current through May 31, 2024
(a) The payroll
				factor of the apportionment formula for each trade or business of the taxpayer
				must include the total amount paid by the taxpayer in the regular course of its
				trade or business for compensation during the tax period.
(b) The total amount "paid" to employees is
				determined upon the basis of the taxpayer's accounting method. If the taxpayer
				has adopted the accrual method of accounting, all compensation properly accrued
				is considered to have been paid. Notwithstanding the taxpayer's method of
				accounting, at the election of the taxpayer, compensation paid to employees may
				be included in the payroll factor by use of the cash method if the taxpayer is
				required to report that compensation under that method for unemployment
				compensation purposes.
(c) The
				compensation of any employee on account of activities which are connected with
				the production of nonbusiness income must be excluded from the
				factor.
(d) "Compensation" means
				wages, salaries, commissions, and any other form of remuneration paid to
				employees for personal services. Payments made to an independent contractor or
				any other person not properly classifiable as an employee are excluded. Only
				amounts paid directly to employees are included in the payroll factor. Amounts
				considered paid directly include the value of board, rent, housing, lodging,
				and other benefits or services furnished to employees by the taxpayer in return
				for personal services if those amounts constitute income to the recipient under
				the federal Internal Revenue Code. In the case of employees not subject to the
				federal Internal Revenue Code, e.g., those employed in foreign countries, the
				determination of whether those benefits or services would constitute income to
				the employees must be made as though those employees were subject to the
				federal Internal Revenue Code.
(e)
				"Employee" means (1) any officer of a corporation; or (2) any individual who,
				under the usual common-law rules applicable in determining the
				employer-employee relationship, has the status of an employee. Generally, a
				person will be considered to be an employee if he is included by the taxpayer
				as an employee for purposes of the payroll taxes imposed by the Federal
				Insurance Contributions Act; except that, since certain individuals are
				included within the term "employees" in the Federal Insurance Contributions Act
				who would not be employees under the usual common-law rules, it may be
				established that a person who is included as an employee for purposes of the
				Federal Insurance Contributions Act is not an employee for purposes of this
				section.
(f) In filing returns with
				this state, if the taxpayer departs from or modifies the treatment of
				compensation paid, used in returns for prior years, the taxpayer shall disclose
				in the return for the current year the nature and extent of the
				modification.
(g) If the returns or
				reports filed by the taxpayer with all states to which the taxpayer reports
				under the Multistate Tax Compact or the Uniform Division of Income for Tax
				Purposes Act are not uniform in the treatment of compensation paid, the
				taxpayer shall disclose in its return to this state the nature and extent of
				the variance.
Authority:
AS
					 43.05.080
AS
					 43.19.010