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Administrative Procedure AP 304: Applications for Section 42 Method of Apportionment
Table of Contents
304.1. In General
Chapter 63 of the Massachusetts General Laws sets forth apportionment methods for business corporations as defined in G.L. c. 63, § 30, to use when approximating net income derived from business carried on in Massachusetts. G.L. c. 63, § 38. If a corporation determines that the statutory method is not reasonably adapted to approximate its net income derived from business carried on in Massachusetts, it may apply for permission to use an alternate method. G.L. c. 63, § 42; 830 CMR 63.42.1.
304.2. Application, Payment of Tax
A taxpayer subject to the Department’s electronic filing requirements must electronically file its return using the applicable statutory apportionment formula as described in G.L. c. 63, § 38.
The taxpayer should then submit a paper copy of Form AA-1 to the Massachusetts Department of Revenue, Rulings and Regulations Bureau, P.O. Box 9566, Boston, MA 02114 with a completed return attached showing the desired alternative apportionment method.
If a taxpayer is not required to file electronically, an application for alternative apportionment is made by attaching a completed Form AA-1, Application for Section 42 Method of Apportionment, to a duly‑filed statutory return. The applicant must also check off the box on the return indicating an attached application and file the other information required pursuant to 830 CMR 63.42.1(3). Form AA-1 and the return must be filed timely and must be accompanied by payment of the tax due as stated below.
Payment of the excise must be made according to the statutory method; if the proposed alternate method is later accepted, a refund of any overpayment will be made.
An applicant seeking permission to use alternative apportionment must strictly comply with the rules set out in 830 CMR 63.42.1. Failure to comply may result in denial of the application.
For more information contact the Massachusetts Department of Revenue, Customer Service Bureau, P.O. Box 7010, Boston, MA 02204, (617) 887-MDOR, or call toll free within Massachusetts at 1-800-392-6089.
G.L. c. 63, §§ 30, 38, 42
830 CMR 63.42.1
Form AA-1, Application for Section 42 Method of Apportionment