PETITION OF:

J. James Marzilli, Jr.

Carl M. Sciortino, Jr.

Benjamin Swan

Denise Provost

Ruth B. Balser

Matthew C. Patrick

Peter V. Kocot

Alice K. Wolf

Kay Khan

Susan C. Fargo

David B. Sullivan

Michael E. Festa

Martha M. Walz

Jennifer M. Callahan

Steven J. D'Amico

SECTION 1. Chapter 63 of the Massachusetts General Laws is hereby amended by inserting after section 30, as appearing in the 2002 Official Edition, the following section:-

Section 30B. (a) For purposes of this chapter, the income of 2 or more corporations, the voting stock of which is more than 50 per cent owned directly or indirectly by a common owner, and which are engaged in an unitary business, except as provided in subsection (j) of section 38, shall be allocated or apportioned as if the group of corporations were a single corporation, in which event:

(1) The taxable income of any corporation subject to taxation in this commonwealth shall be determined by use of a combined report which includes the income of all corporations which are members of the unitary business, allocated and apportioned using apportionment factors for all corporations included in the combined report under the methods set out in this chapter.

(2) Subject to the limitations of clause (3), the combined report shall include, but shall not be limited to, the income of all corporations which are members of the unitary business and are part of a combined group, as defined by, or are included in a combined report required by, the laws of another state.

(3) Notwithstanding the preceding clause, the combined report shall be limited to the following affiliated entities:

(i) a domestic international sales corporation, as described in Sections 991 to 994, inclusive, of the Internal Revenue Code and a foreign sales corporation as described in Sections 921 to 927, inclusive, of the Internal Revenue Code;

(ii) any corporation, other than a bank, life insurance company, or utility corporation within the meaning of this chapter, regardless of the place where it is incorporated if the average of its property, payroll, and sales factors within the United States is 20 per cent or more;

(iii) a corporation incorporated in the United States, excluding a corporation making an election pursuant to Sections 931 to 936, inclusive, of the Internal Revenue Code or that is a bank, life insurance company, or utility corporation within the meaning of this chapter;

(iv) any corporation that is not described in clauses (i) to (iii), inclusive, or clause (v), but only to the extent of its income derived from or attributable to sources within the United States and its factors assignable to a location within the United States. Income of that corporation derived from or attributable to sources within the United States as determined by federal income tax laws shall be limited to and determined from the books of account maintained by the corporation with respect to its activities conducted within the United States;

(v) an export trade corporation, as described in Sections 970 to 972, inclusive, of the Internal Revenue Code; and

(vi) any affiliated corporation which is a "controlled foreign corporation," as defined in Section 957 of the Internal Revenue Code, if all or part of the income of that affiliate is defined in Section 952 of Subpart F of the Internal Revenue Code, "Subpart F income". The income and apportionment factors of any affiliate to be included under this paragraph shall be determined by multiplying the income and apportionment factors of that affiliate without application of this paragraph by a fraction, not to exceed 1, the numerator of which is the "Subpart F income" of that corporation for that taxable year and the denominator of which is the "earnings and profits" of that corporation for that taxable year, as defined in Section 964 of the Internal Revenue Code.

(b) The commissioner shall adopt regulations necessary to ensure that the tax liability or net income of any corporation whose income is derived from or attributable to sources within this commonwealth and which is required to submit a report under subsection (a), and of each entity included in said report, both during and after the period of inclusion in the combined report, is properly reported, determined, computed, assessed, collected, or adjusted.