Reed Smith Client Alerts

Maryland may be catching on to the single sales factor trend.  A recently proposed bill, S.B. 1090, passed by a wide margin in the Maryland Senate on March 19, 2018, and was the subject of a public hearing before the Maryland House Ways & Means Committee on March 28, 2018.  If enacted, S.B. 1090 would change the state’s standard corporate income tax apportionment formula from the current three factor formula with double-weighted sales to a single sales factor formula for tax years beginning after December 31, 2017.  The bill also would provide an election to opt out of single sales factor apportionment for qualifying taxpayers.

Under current Maryland law, corporate taxpayers are required to apportion income to the state using a three-factor formula with double-weighted sales. Maryland has flirted with adopting single sales factor apportionment for several years. (It has already moved to market-based sourcing for sales other than tangible personal property). In 2016, single sales factor legislation was introduced in both chambers of the General Assembly. The House passed its proposed bill, but ultimately, both bills died in the Senate. A similar bill was introduced in the Senate in 2017 but never made it out of the Senate’s Budget and Taxation Committee.