B&O Tax Information
B&O Tax Return Form and Frequently Asked Questions
Effective January 1, 2008
Apportionment and Allocation Fact Sheet: To assist with questions you may have regarding apportionment, please refer to our fact sheet.
Apportionment Worksheet and Instruction: Microsoft Word Version or Adobe Acrobat Reader Version.
Apportionment Provision for Business & Occupation Tax Under current law, income is taxed in the jurisdiction where the majority of the activity takes place, and credits apply if your business pays tax in another jurisdiction. Effective January 1, 2008, specific rules for allocating and apportioning income when a business engages in business activity within multiple jurisdictions will apply. The allocation and apportionment will vary depending on the classification under which income is reported:
- Manufacturing: allocated to the location where the activity takes place
- Retail sales: the activity takes place where delivery to the buyer occurs (similar to state sales tax changes “destination-based sourcing” that effect on July 1, 2008)
- Wholesale sales: the activity takes place where delivery to the buyer occurs
- Royalties from the Granting of Intangible Rights: allocated to the commercial domicile of the taxpayer
- Services and Other: apportioned to a city by multiplying service income by a payroll factor (based on the payroll within the jurisdiction), plus the service-income factor (based on the income producing activity attributable for tax purposes within the jurisdiction), divided by two:
Total taxable service income X (Payroll factor + Service Income Factor) 2 Payroll Factor = City Compensation Paid Total Compensation Paid Everywhere Service Income Factor = Service Income In City
