New Mexico Administrative Code › Title 3 - TAXATION › Chapter 5 - UNIFORM DIVISION OF INCOME FOR TAX PURPOSES › Part 14 - PAYROLL FACTOR FOR APPORTIONMENT OF BUSINESS INCOME › Section 3.5.14.8 - PAYROLL FACTOR - IN GENERAL

Current through Register Vol. 35, No. 13, July 16, 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 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
				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 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 provided that such 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 such benefits or services would
				constitute income to the employees shall be made as though such employees were
				subject to the federal Internal Revenue Code.
E. 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, an individual will be 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. The term
				"employee" also includes a leased employee whenever the taxpayer is the
				employer or joint employer of such a leased employee.
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 Uniform
				Division of Income for Tax Purposes Act or Article IV of the multistate tax
				compact 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.