Multi-state corporations doing business inside and outside of Alabama source their income based on a three factor formula: property, payroll and sales. Currently, sales of services and other sales of intangible property producing income occurring both within and outside of Alabama are sourced to Alabama using the "costs of performance" methodology as denoted in Article IV of Section 40-27-1 of the Code of Alabama.
This bill proposes to amend the sales factor such that sales of services and other sales of intangible property are sourced to Alabama if the taxpayer's market for the sales is in Alabama.
Thus, income a taxpayer receives from providing a service to an Alabama customer will be sourced to Alabama rather than another state.
This bill also increases the weight given the sales factor in the apportionment of business income.
Delivered to Governor at 7:00 p.m. on June 1, 2011.
Assigned Act No. 2011-616.
Clerk of the House Certification
Signature Requested
Enrolled
Passed Second House
Motion to Read a Third Time and Pass adopted Roll Call 872
Third Reading Passed
Read for the second time and placed on the calendar
Read for the first time and referred to the Senate committee on Finance and Taxation Education
Motion to Read a Third Time and Pass adopted Roll Call 650
Third Reading Passed
Read for the second time and placed on the calendar
Read for the first time and referred to the House of Representatives committee on Ways and Means Education
Source: Alabama Legislature