Current through Reg. 50, No. 187; September 24, 2024
(1)
(a) A departure from the applicable method of
apportionment required under the provisions of section
220.15 or
220.151, F.S., shall be
permitted only where the method does not accurately and fairly reflect business
activity in Florida. An alternative method may not be invoked, either by the
Department of Revenue or the taxpayer, merely because it reaches a different
apportionment percentage than the regularly applicable formula. However, if the
applicable formula will lead to a grossly distorted result in a particular
case, a fair and accurate alternative method is appropriate (see Norfolk and
Western Railway Co. v. Missouri State Tax Commission, 390 U.S. 317, 88 S. Ct.
995, 19 L. Ed. 2d 1201 (1968), which is incorporated by reference in rule
12C-1.0511, F.A.C.).
(b) A taxpayer seeking to utilize an
alternative apportionment method must show by clear and cogent evidence that
the regularly applicable formula would result in taxation of extraterritorial
values (see Butler Bros. v. McColgan, 315 U.S. 501, 62 S.Ct. 701, 86 L. Ed. 991
(1942), which is incorporated by reference in rule
12C-1.0511, F.A.C.). This can be
shown only if the regularly applicable formula is demonstrated to operate
unreasonably and arbitrarily in apportioning to Florida a percentage of income
which is out of all proportion to the business transacted in Florida and does
not accurately and fairly reflect business activity in Florida (see Hans Rees'
Sons, Inc. v. North Carolina ex rel Maxwell, 283 U.S. 123, 51 S. Ct. 385, 75 L.
Ed 879 (1931), which is incorporated by reference in rule
12C-1.0511,
F.A.C.).
(2) The party
seeking to use an alternative formula must prove that the alternative formula
fairly and accurately apportions income to Florida based upon business activity
in Florida.
(3) A departure from
the regularly applicable apportionment method will be authorized only in
limited and specific cases where unusual fact situations (which ordinarily will
be unique and nonrecurring) produce a result that is incongruous with the
results of previous tax years under the regularly applicable apportionment
method.
(4) A taxpayer must
petition the Department for a departure from the required apportionment method
by filing, on or before the due date for filing of the return for the taxable
year, with extension, either: a written request for a technical assistance
advisement under section
213.22, F.S., and rule chapter
12-11, F.A.C.; or, a petition for a declaratory statement under section
120.565, F.S.
(a) The taxpayer must file the request or
petition with Technical Assistance and Dispute Resolution, P.O. Box 7443,
Tallahassee, Florida 32314-7443.
(b) The taxpayer's request or petition must
include a summary of the evidence to support the taxpayer's contention that the
applicable apportionment formula results in taxation of extraterritorial values
and to demonstrate that the regular formula operates to unreasonably and
arbitrarily attribute income to Florida far out of proportion to the business
transacted in Florida. The taxpayer must also furnish evidence that the use of
an alternative method fairly and accurately apportions income to
Florida.
Rulemaking Authority
213.06(1),
220.51 FS. Law Implemented
220.15,
220.151,
220.152
FS.
New 5-17-94, Amended 3-18-96,
3-13-00.
