Tax Type
Corporation Income Tax
Description
Sales factor; Income producing activity
Topic
Allocation and Apportionment
Date Issued
03-31-1987
March 31. 1987
Re: §58.1-1821 Application; Corporation Income Tax
§58.1-416 Sales Factor, Income Producing Activity
Dear ******************
This is in response to your letter of May 7, 1986, in which you applied for correction of an assessment dated April 11, 1986.
You object to the inclusion of certain interest, service charges and factoring (commission) income in the numerator of the sales factor on the grounds that all of the income producing activity occurred in the branch offices located outside of Virginia.
The interest income was derived from notes receivable which the branch offices were responsible for creating, servicing and collecting. The service charges are late payment charges on accounts receivable maintained, serviced and collected by the branch offices. The factoring income represents cash discounts taken on purchases of merchandise which the branch offices sold to their customers.
After reviewing the facts submitted it appears that the greater portion of the income producing activity for purposes of §58.1-416 appears to have taken place in the branch offices which serviced the accounts producing the income.
Accordingly, the audit will be revised to remove these items from the numerator of the sales factor. You will shortly receive a revised audit report and a bill for any outstanding tax and accrued interest. The bill should be paid within 30 days to avoid the accrual of additional interest
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner