MASSACHUSETTS DEPARTMENT OF REVENUE REGULATION FACT SHEET

TITLE: 830 CMR 63.38.7, Apportionment of Income of Mutual Fund Service Corporations

REGULATORY HISTORY:
Regulation promulgated March 31, 2000
Regulation amended October 6, 2006 (sections 2 and 4(c))
Regulation amended November 28, 2008 (sections (3)(a)-(b))

SUMMARY OF REGULATION: This regulation explains how mutual fund service corporations are to apportion their income from mutual fund sales to Massachusetts, using a single sales factor apportionment formula, as provided by G.L. c. 63, § 38(m). In particular, the regulation

  • defines key terms, such as mutual fund sales (which includes management services, distribution services, administration services, direct and indirect sales) and mutual fund service corporation;
  • outlines steps to determine taxable net income from mutual fund sales;
  • provides step by step guidance for calculating the new sales factor, including an explanation for assigning mutual fund sales to Massachusetts based on the domicile of the shareholders of the mutual fund to which services are provided, and an explanation for calculations in instances involving affiliated funds arrangements;
  • explains how a mutual fund service corporation qualifies for single factor apportionment if it meets certain job growth requirements, including rules for increasing employment levels through the 2002 tax year, calculated using a base period employment level from January 1, 1996;
  • provides an exception to the job growth requirement for adverse economic conditions;
  • provides rules for mutual fund service corporations that participate in combined return filing; and
  • sets forth reporting requirements
  • explains how to compute the apportionment percentage that is to be applied by a mutual fund service corporation for non-income measure purposes.

PREPARED BY:
Massachusetts Department of Revenue
Rulings and Regulations Bureau
100 Cambridge Street, 7 th floor
Boston, Massachusetts 02114-9566
(617) 626-3250
FAX: (617) 626-3290