On June 12, 2015, the South Carolina Department of Revenue (the “Department”) issued Revenue Procedure #15-2 and Revenue Ruling #15-5, which together provide detailed information regarding determining when to use an alternative apportionment method, selecting an alternative apportionment method, combined reporting as an alternative apportionment method, and the procedural/administrative aspects related to alternative apportionment methods. The provisions of Revenue Procedure #15-2 are effective June 1, 2015, whereas, Revenue Ruling #15-5 is effective for all taxable periods open under the statute of limitations.
Under its standard apportionment formula, South Carolina requires most businesses to apportion unallocated income using a single sales factor. However, South Carolina allows for the use of an alternative apportionment method, which may include separate accounting, the exclusion or inclusion of one or more factors, or the use of any other method to effectuate allocation and apportionment of a taxpayer’s income, including combined reporting, where the standard apportionment formula does not fairly represent the extent of the taxpayer’s business in the state.
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This article originally appeared in BDO USA, LLP’s BDO Knows: SALT – July 2015. Copyright © 2015 BDO USA, LLP. All rights reserved. www.bdo.com.