Section 125-801-10 - Payroll value and factor The assessor may require taxpayers to provide information on tax returns on payroll value and factor. The payroll factor also may be used in appropriate circumstances in determining variations on the apportionment formula as provided under 36 M.R.S. §5211(17). The payroll factor is a fraction, the numerator of which is the total amount of compensation paid in this State during the tax period by the taxpayer, and the denominator of which is the total compensation paid everywhere during the tax period.
A.Effect of accounting method. If a taxpayer has adopted the accrual method of accounting, all compensation properly accrued will be deemed to have been paid. However, compensation may be included in the payroll factor by use of the cash method if the taxpayer is required to report such compensation under that method for unemployment compensation purposes.B.Base of operations. "Base of operations" means the taxpayer's place of business from which an employee customarily begins work or to which the employee customarily returns at some other time to receive instructions, direction and supervision from the taxpayer or communications from customers or other persons, to replenish stock or other materials, to repair equipment, or to perform any other function necessary to the exercise of the employee's trade or profession.C.Compensation. The term "compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services. Payments made pursuant to a contract to an employee-leasing company for leased employees or to a temporary service company for temporary employees are compensation. Payments made to an independent contractor, or any other person not properly classifiable as an employee, are excluded. Only amounts paid directly to employees are included in the payroll factor. Amounts considered paid directly include the value of board, rent, housing, lodging and other benefits or services furnished to an employee by the taxpayer in return for personal services provided that such amounts constitute income to the recipient under the Internal Revenue Code. In the case of employees not subject to the Internal Revenue Code (e.g., those employed in foreign countries), the determination of whether such benefits or services would constitute income to the employees is made as though such employees were subject to the Internal Revenue Code. Employer contributions under a retirement plan, qualified cash or deferred arrangement as defined in Internal Revenue Code § 401(k), and employer contributions to nonqualified deferred compensation plans are generally included in the payroll factor.D.Employee. "Employee" means any officer of a corporation or any individual who would be considered an employee under the common law rules governing the employer- employee relationship. Generally, an individual is considered to be an employee if the individual is included by the taxpayer as an employee for purposes of the payroll taxes imposed by the Federal Insurance Contributions Act. This presumption may be overcome by evidence provided by a taxpayer that an individual who is included as an employee for purposes of the Federal Insurance Contributions Act would not be an employee of the taxpayer under the usual common law rules.E.Independent contractor. "Independent contractor" means any individual who performs services for a taxpayer, but who is not an employee of the taxpayer, and who is not otherwise subject to the supervision or control of the taxpayer in the performance of the services.F.Payroll in states in which taxpayer is not taxable. Compensation paid to employees whose services are performed entirely in a state where the taxpayer is immune from taxation, for example, by P.L. 86-272, is included in the denominator of the payroll factor.18-125 C.M.R. ch. 801, § 10