Sourcing of sales of mutual fund service corporations - definitions

(a) Administration services includes, but is not limited to, clerical, fund, or shareholder accounting and participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal, and tax services performed for a regulated investment company. Services qualify as administrative services only if the provider of such services during the taxable year also provides, or is affiliated with a person that provides, management or distribution services to a regulated investment company during the same taxable year.

(b) Distribution services includes, but is not limited to, the services of advertising, servicing, marketing, or selling shares of a regulated investment company. The services of advertising, servicing, or marketing shares qualify as distribution services only when the service is performed by a person that is, or in the case of a closed-end company was, either engaged in the business of selling regulated investment company shares or affiliated with a person that is engaged in the service of selling regulated investment company shares. In the case of an open-end company, such service of selling shares must be performed pursuant to a contract entered into pursuant to 15 U.S.C. sec. 80a-15 (b), as amended.

(c) Domicile presumptively means the shareholder's mailing address on the records of the regulated investment company. If, however, the regulated investment company or the mutual fund service corporation has actual knowledge that the shareholder's primary residence or principal place of business is different from the shareholder's mailing address, the presumption shall not control. If the shareholder of record is a company that holds the shares of the regulated investment company as depositor for the benefit of a separate account, then the shareholder shall be the contract owners or policyholders of the contracts or policies supported by the separate account determined using any reasonable basis, such as zip codes of underlying shareholders or United States census bureau data in order to determine the proper location for the assignment of these shares. If the regulated investment company or the mutual fund service corporation has actual knowledge that the shareholder's principal place of business is different from the shareholder's mailing address, the presumption shall not control.

(g) Regulated investment company means a regulated investment company as defined in section 851 of the federal Internal Revenue Code of 1986, as amended.

(2) Notwithstanding any provision of section 39-22-303.5 or 39-22-303.6, for taxable years commencing on or after January 1, 2009, mutual fund sales by a mutual fund service corporation shall be considered Colorado sales for purposes of section 39-22-303.5 (4)(c) and section 39-22-303.6 (6), to the extent that shareholders of the regulated investment company are domiciled in Colorado as follows:

(a) (I) By multiplying the mutual fund service corporation's total dollar amount of mutual fund sales of such services on behalf of each regulated investment company by a fraction, the numerator of which shall be the average of the number of shares owned by the regulated investment company's shareholders domiciled in Colorado at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the mutual fund service corporation's taxable year, and the denominator of which shall be the average of the number of shares owned by the regulated investment company shareholders everywhere at the beginning of and at the end of the regulated investment company's taxable year that ends with or within the mutual fund service corporation's taxable year.

(II) Notwithstanding subparagraph (I) of this paragraph (a), a mutual fund service corporation may use the year-end of the regulated investment company's fund advisor for this calculation, as long as the mutual fund service corporation consistently uses this method from year to year. For purposes of this paragraph (a), a regulated investment company's fund advisor is the person that is directly and primarily responsible for providing investment advice to the regulated investment company under a contract entered into pursuant to 15 U.S.C. sec. 80a-15 (a).

(b) If the domicile of a shareholder is unknown to the mutual fund service corporation because the shareholder of record is a person that holds the shares of a regulated investment company as a depositor for the benefit of others, the mutual fund service corporation may utilize any reasonable basis, such as zip codes of underlying shareholders or United States census bureau data, in order to determine the proper location for the assignment of the shares.

(c) A separate computation shall be made to determine the mutual fund sales for each regulated investment company, the sum of which shall equal the total mutual fund sales sourced to Colorado.