23 Va. Admin. Code § 10-120-190 - Payroll factor
A. In general.
The payroll factor is a fraction, the numerator of which is the total amount
paid or accrued within Virginia during the tax period by the corporation for
compensation , and the denominator of which is the total compensation paid or
accrued everywhere during the tax period.
B. Compensation .
1. Compensation , as defined in Va. Code
§ 58.1-302, shall be included in the payroll factor if it is effectively
connected with the taxpayer's trade or business within the United States and
the income from such trade or business is includible in both Virginia taxable
income and federal taxable income.
2. The denominator of the payroll factor is
the total compensation paid everywhere during the tax period. Accordingly,
compensation paid to employees whose services are performed entirely in a state
where the taxpayer is exempt from taxation, for example, by federal law 15 USC
§§ 381 - 384, is included in the denominator of the payroll factor.
However, compensation paid to employees whose services are connected with
foreign source income as defined in Va. Code § 58.1-302 is excluded from
the denominator because such income is not effectively connected with the
taxpayer's trade or business within the United States and such income is not
includible in Virginia taxable income.
C. Compensation within Virginia. The total
wages reported to Virginia for unemployment compensation purposes are presumed
to be compensation paid in Virginia (except for compensation excluded above).
Compensation paid to employees which is deemed paid or accrued in Virginia
under Va. Code § 58.1-413 shall be included in the numerator of the
fraction whether or not such compensation is subject to the Virginia
Unemployment Tax Act (Va. Code §§ 60.1-1 et seq.).
Notes
Statutory Authority
§§ 58.1-203 and 58.1-412 of the Code of Virginia.
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