Kansas Administrative Regulations › Agency 92 - KANSAS DEPARTMENT OF REVENUE › Article 12 - INCOME TAX › Section 92-12-91 - Payroll factor; in general

Current through Register Vol. 43, No. 28, July 11, 2024
(a) The payroll
			 factor of the apportionment formula for each trade or business of the taxpayer
			 shall 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
			 shall be determined upon the basis of the taxpayer's accounting method. If the
			 taxpayer has adopted the accrual method of accounting, all compensation
			 properly accrued shall be deemed 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 such compensation under such
			 method for unemployment compensation purposes.
(c) The compensation of any employee on
			 account of activities which are connected with the production of nonbusiness
			 income shall be excluded from the factor.
(d) The term "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 shall be excluded. Only amounts
			 paid directly to employees shall be 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 when the 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 such as those employed in foreign countries, the
			 determination of whether the benefits or services would constitute income to
			 the employees shall be made as though the employees were subject to the federal
			 internal revenue code. The term "employee" means any officer of a corporation,
			 or 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 the person 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 regula-tion.
(e) 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
			 mod-ification.
(f) 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.