Are there specific requirements a corporation must meet to end its Kansas two-factor apportionment election before the 10-year period ends?

Plain-English summary

Kansas lets certain corporate taxpayers elect a two-factor apportionment formula, and the election generally runs for a 10-year period. Under Kan. Stat. Ann. § 79-3279(b)(2)(B), the Secretary of Revenue may grant permission to end that election before the 10 years are up, on the taxpayer's request. A taxpayer asked what requirements must be satisfied to obtain that early-termination permission.

The Department's answer: there are none. No specific requirements must be met before the Secretary will consider a request to end the two-factor apportionment election early. Instead, the Secretary weighs each request on its own facts and circumstances and decides case-by-case.

What this means for you

Corporations using two-factor apportionment

If you want to end your two-factor apportionment election before the 10-year period expires, you can request the Secretary's permission without meeting a fixed checklist of prerequisites. Be prepared to explain your specific facts and circumstances, since the Secretary decides these requests individually.

Tax professionals

There is no bright-line test for early termination of the § 79-3279(b)(2)(B) election. Frame the request around the client's particular facts; approval is discretionary and decided case-by-case.

Common questions

Q: Can a corporation end its Kansas two-factor apportionment election before 10 years?
A: Yes, with the Secretary of Revenue's permission on request under Kan. Stat. Ann. § 79-3279(b)(2)(B).

Q: What requirements must be met to get early-termination permission?
A: None specific. The Secretary considers each request on its own facts and circumstances, case-by-case.

Q: Is approval guaranteed?
A: No. It is a discretionary, case-by-case decision by the Secretary.

Q: Does this ruling apply to me?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others, though it shows how the Department reasons.

Citations and references

• Kan. Stat. Ann. § 79-3279(b)(2)(B) — permission to end the two-factor apportionment election before the end of the 10-year period, on the taxpayer's request

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2016-011

Original ruling text

Private Letter Ruling

Body:

August 15, 2016

XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Income Tax

Dear XXXXX

Your correspondence of August 9, 2016, has been referred to me for response. Thank you for your inquiry.

By your e-mail you have requested our advice regarding Kansas income tax. Specifically, your e-mail states:

I have a question regarding the Two-Factor Apportionment.

"Permission to end the election before the end of the 10-year period can be granted by the Secretary of Revenue on the taxpayer's request. [Kan. Stat. Ann. §79-3279(b)(2)(B).]"

I have been researching the above issue, however I am unable to find any information regarding how to end the election before the 10 years. Is there certain requirements which must be met, before the end of election may be granted by the Secretary of Revenue?

In response to your inquiry, please be advised the answer to your question is "no". There are no specific requirements that must be met prior to the Secretary of Revenue considering a request to end the two-factor apportionment election prior to the end of the 10-year period. Instead, each request is considered based on its on facts and circumstances, and decisions are made on a case-by-case basis.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

JW:jw

NOTE: This opinion letter is based solely on the facts provided in your request for advice. If material facts or information were not disclosed this letter is null and void. This letter will be revoked without further action by the Department if the statutes, administrative regulations, published revenue rulings, or court decisions that materially affect this opinion are changed.

Date Composed: 09/16/2016 Date Modified: 09/16/2016

Table 1

| Ruling Number: | P-2016-011 |

Table 2

| Tax Type: | Corporate Income Tax |
| Brief Description: | Ending Two-Factor Apportionment Election Prior to End of 10 Year Period |
| Keywords: | |
| Effective Date: | 08/15/2016 |
| Approval Date: | 08/15/2016 |