Section 27 Payroll Factor

• Library: Tax Law 2009

“The payroll factor is a fraction, the numerator of which is the total amount paid in [Missouri] during the tax period by the taxpayer for compensation and the denominator of which is the total compensation paid everywhere during the tax period.” Compact, Article IV, § 13.

Any direct remuneration to an employee in return for personal services that constitutes income to the employee for federal income tax purposes is included in the term “compensation,” for instance, the value of meals, lodging, and certain other benefits or services. 12 C.S.R. § 10-2.075(36). The compensation paid to foreign employees employed outside the United States is determined as if those employees were subject to income taxation by the United States. Id.The amount of compensation “paid” during the tax period is determined in accordance with the method of accounting employed by the taxpayer. 12 C.S.R. § 10-2.075(35). Amounts properly accrued by an accrual method taxpayer are deemed “paid.” Id.But accrual method taxpayers may elect to include compensation in the...