39-22-303.6–5 Calculating the Receipts Factor. Basis and Purpose. The bases of this rule are §§ 39-21-112, 39-22-301, 39-22-303,

and 39-22-303.6, C.R.S. The purpose of this rule is to provide guidance for determining which gross receipts are included in a taxpayer’s receipts factor. Consistent with the General Assembly’s adoption of § 39-22-303.6, C.R.S., these rules are intended to conform the state’s income tax laws to the Multistate Tax Commission’s model statute and regulation except when those model provisions are inconsistent with Colorado statute. See 2018 Colo. Sess. Laws, ch. 369, § 1(2). (1) General Rule. All apportionable income of each trade or business of the taxpayer shall be apportioned to this state by use of the apportionment formula set forth in § 39-22-303.6(4), C.R.S. (a) Denominator. The denominator of the receipts factor shall include the gross receipts derived by the taxpayer from transactions and activity in the regular course of its trade or business, except gross receipts excluded under § 39-22-303.6, C.R.S., and these rules. (b) Numerator. The numerator of the receipts factor shall include the gross receipts attributable to Colorado and derived by the taxpayer from transactions and activity in the regular course of its trade or business, except gross receipts excluded under § 39-22-303.6, C.R.S., and these rules. (c) Exceptions. In some cases, certain gross receipts should be disregarded in determining the receipts factor in order that the apportionment formula will operate fairly to apportion to Colorado the income of the taxpayer's trade or business. (d) The receipts factor for an affiliated group of C corporations filing a combined return shall not include receipts from property delivered in Colorado by an includable C corporation that is not doing business in Colorado. (e) Consistency in Reporting. (i) Numerator and Denominator Consistency. In filing returns with Colorado, the taxpayer must use the same methodology in calculating both the numerator and the denominator of the receipts factor. (ii) Year-to-Year Consistency. In filing returns with Colorado, if the taxpayer departs from or modifies the basis for excluding or including gross receipts in the receipts factor used in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modification. (iii) State-to-State Consistency. If the returns or reports filed by the taxpayer with all states to which the taxpayer reports under § 39- 22-303.6, C.R.S., Article IV of the Multistate Tax Compact, or the Uniform Division of Income for Tax Purposes Act are not uniform in the inclusion or exclusion of gross receipts, the taxpayer shall disclose in its return to Colorado the nature and extent of the variance. (2) Mediation. Whenever a taxpayer is subjected to different sourcing methodologies regarding intangibles or services by the Department and one or more other state taxing authorities, the taxpayer may petition for, and the Department may participate in, and encourage the other state taxing authorities to participate in, non-binding mediation in accordance with the alternative dispute resolution regulations promulgated by the Multistate Tax Commission from time to time, regardless of whether all the state taxing authorities are members of the Multistate Tax Compact.