Apportionment of Income of Pipeline Companies

830 CMR: DEPARTMENT OF REVENUE 830 CMR 63.00: TAXATION OF CORPORATIONS .00 is amended by adding the following section: .38.8: Apportionment of Income of Pipeline Companies (1) Purpose, Outline, Effective Date (a) Purpose . The purpose of .38.8 is to provide an alternative apportionment rule, as provided in M.G.L. c. 63, § 38(j), for income received by pipeline companies that is derived from the transportation of mineral products. (b) Outline . .38.8, is organized as follows: (1) Purpose, Outline, Effective Date (2) Definitions (3) Apportionment Percentage (c) Effective Date . The provisions of .38.8 as amended shall be effective for taxable years beginning on or after the date of promulgation. The provisions of .38.8 as promulgated on December 30, 2005 are hereby repealed and replaced but remain applicable for taxable years beginning on or after December 30,2005 and before the effective date of .38.8, as amended. (2) Definitions For the purposes of .38.8 the following terms have the following meanings unless the context requires otherwise: Code , the Internal Revenue Code, as amended and in effect for the taxable year. Commissioner , the Commissioner of Revenue or the Commissioner's duly authorized representative. Payroll Factor , the payroll factor as defined in M.G.L. c. 63, § 38(e). See .38.1(8). Pipeline Company , any taxpayer engaged in the business of moving, conveying or transporting through a system or conduit of pipes any mineral products, such as oil, gasoline, or natural or casinghead gas, within the commonwealth and whose income is allocated or apportioned under or by reference to M.G.L. c. 63, § 38. For purposes of this definition, the term “system or conduit of pipes” includes transmission lines and connecting field and storage lines. Property Factor , the property factor as defined in M.G.L. c. 63, § 38(d). See .38.1(7). Sales Factor , the sales factor as defined in M.G.L. c. 63, § 38(f), with the adjustments in the numerator provided in .38.8. Taxable Net Income , the part of the net income of a taxpayer, adjusted as required by M.G.L. c. 63, §38(a)(1) and (2), that is taxable both within and without Massachusetts and therefore apportionable under M.G.L. c. 63, § 38(c). Taxpayer, any individual or entity that is entitled to or required to allocate or apportion income under or by reference to M.G.L. c. 63, § 38. Traffic Unit , the movement of one unit of product such as one barrel of oil, one barrel of gasoline, or one thousand cubic feet of natural or casinghead gas through a pipeline for a distance of one mile. (3) Apportionment Percentage A pipeline company that has taxable net income that is taxable both within and outside of Massachusetts shall apportion its income to Massachusetts according to the provisions of M.G.L. c. 63, § 38(c) by multiplying the taxable net income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four. The property and payroll factors shall be computed in accordance with the provisions of M.G.L. c. 63, §§ 38(d) and (e), respectively, and .38.1. In computing the sales factor, the numerator consists of: (a) the taxpayer’s sales derived from the transportation of mineral products, multiplied by a fraction the numerator of which is the total number of traffic units in Massachusetts during the taxable year and the denominator of which is the total number of traffic units everywhere during the taxable year; plus (b) the taxpayer’s sales not derived from the transportation of mineral products that are assigned to Massachusetts in accordance with the provisions of M.G.L. c. 63, §§ 38(f) and .38.1. REGULATORY AUTHORITY: .38.8: G.L. c. 14, § 6(l); G.L. c. 62C, § 3; G.L. c. 63, § 38(j). REGULATORY HISTORY Date of Promulgation: December 30, 2005 Amended 12/16/16 - Sections (1)(a), (c); (2); (3)