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If you have any questions regarding apportionment, then please refer to our fact sheet


Apportionment Provision for Business and Occupation Tax

Under current law, income is taxed in the jurisdiction where the majority of the activity takes place, and credits apply if your business pays tax in another jurisdiction.  Effective January 1, 2008, specific rules for allocating and apportioning income when a business engages in business activity within multiple jurisdictions will apply.  The allocation and apportionment will vary depending on the classification under which income is reported:

Manufacturing - allocated to the location where the activity takes place.

Retail Sales - the activity takes place where delivery to the buyer occurs.  This is similar to state sales tax changes, destination-based sourcing, that are effective as of July 1, 2008.

Wholesale Sales - the activity takes place where delivery to the buyer occurs.

Royalties from the Granting of Intangible Rights - allocated to the commercial domicile of the taxpayer.

Services and Other: apportioned to a city by multiplying service income by a payroll factor (based on the  payroll within the jurisdiction), plus the service-income factor.  This is based on the income producing activity attributable for tax purposes within the jurisdiction, divided by two.  The formula is listed below:
Total Taxable Income × (Payroll Factor + Service Income Factor) ÷ 2

Payroll factor is the City compensation paid and total compensations paid everywhere.

Service Income Factor is the service income in the City and total service income everywhere.

Specific provisions apply to newspaper and publishing businesses which exempt them from the apportionment requirements.