Code of Maine Rules › 18 - DEPARTMENT OF ADMINISTRATIVE AND FINANCIAL SERVICES › 125 - BUREAU OF REVENUE SERVICES › Chapter 801 - APPORTIONMENT › Section 125-801-10 - Payroll value and factor

Current through 2024-29, July 17, 2024
The assessor may require taxpayers to provide information on
				  tax returns on payroll value and factor. The payroll factor also may be used in
				  appropriate circumstances in determining variations on the apportionment
				  formula as provided under
				  36 M.R.S.
				  §5211(17). The payroll
				  factor is a fraction, the numerator of which is the total amount of
				  compensation paid in this State during the tax period by the taxpayer, and the
				  denominator of which is the total compensation paid everywhere during the tax
				  period.
A.
Effect of accounting
				method
. If a taxpayer has adopted the accrual method of accounting, all
				compensation properly accrued will be deemed to have been paid. However,
				compensation may be included in the payroll factor by use of the cash method if
				the taxpayer is required to report such compensation under that method for
				unemployment compensation purposes.
B.
Base of operations
. "Base of
				operations" means the taxpayer's place of business from which an employee
				customarily begins work or to which the employee customarily returns at some
				other time to receive instructions, direction and supervision from the taxpayer
				or communications from customers or other persons, to replenish stock or other
				materials, to repair equipment, or to perform any other function necessary to
				the exercise of the employee's trade or profession.
C.
Compensation
. The term
				"compensation" means wages, salaries, commissions and any other form of
				remuneration paid to employees for personal services. Payments made pursuant to
				a contract to an employee-leasing company for leased employees or to a
				temporary service company for temporary employees are compensation. 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 an employee by the taxpayer in return for personal
				services provided that such amounts constitute income to the recipient under
				the
Internal Revenue Code
. In the case of employees not
				subject to the
Internal Revenue Code
(e.g., those employed in
				foreign countries), the determination of whether such benefits or services
				would constitute income to the employees is made as though such employees were
				subject to the
Internal Revenue Code
. Employer contributions
				under a retirement plan, qualified cash or deferred arrangement as defined in
Internal Revenue Code
§ 401(k), and employer
				contributions to nonqualified deferred compensation plans are generally
				included in the payroll factor.
D.
Employee
. "Employee" means any officer of a corporation or any
				individual who would be considered an employee under the common law rules
				governing the employer- employee relationship. Generally, an individual is
				considered to be an employee if the individual is included by the taxpayer as
				an employee for purposes of the payroll taxes imposed by the Federal Insurance
				Contributions Act. This presumption may be overcome by evidence provided by a
				taxpayer that an individual who is included as an employee for purposes of the
				Federal Insurance Contributions Act would not be an employee of the taxpayer
				under the usual common law rules.
E.
Independent contractor
.
				"Independent contractor" means any individual who performs services for a
				taxpayer, but who is not an employee of the taxpayer, and who is not otherwise
				subject to the supervision or control of the taxpayer in the performance of the
				services.
F.
Payroll in
				states in which taxpayer is not taxable
. Compensation paid to employees
				whose services are performed entirely in a state where the taxpayer is immune
				from taxation, for example, by P.L. 86-272, is included in the denominator of
				the payroll factor.