How to request alternative apportionment in South Carolina

On June 1, 2015, the South Carolina Department of Revenue published Revenue Procedure 15-2. The purpose of the Revenue Procedure is to provide a procedure for a taxpayer to request use of an alternative apportionment method if the taxpayer believes that the prescribed statutory formula does not fairly represent the extent of the taxpayer’s business activities in South Carolina. This request is an “Application for an Alternative Apportionment Method under Code Section 12-6- 2320(A).” 

South Carolina also released Revenue Ruling 15-5. The Revenue Ruling addresses some of the issues that may arise when South Carolina requires or a taxpayer requests an alternative allocation or apportionment method, including combined unitary reporting. Noted in the Ruling is that the Department may require and a taxpayer may request combined unitary reporting as an alternative method, if reasonable. Combined reporting can be used to effectuate equitable apportionment of the taxpayer’s income when separate entity reporting does not fairly represent the taxpayer’s business activity in South Carolina. If the Department requires combined reporting, the Department will apply the Finnigan method to apportion the unitary income using a two-step process (as described in the ruling).

For prior posts on South Carolina and alternative apportionment, including the recent South Carolina Supreme Court Case, click here.