What is the apportionment ratio?
The apportionment ratio is a fraction, the numerator of which is (1) all costs specifically allocated to Washington and (2) all costs allocated by a sales formula. The denominator is total costs. What are specifically allocated costs? Specifically allocated costs are primarily (1) property, (2) employee, and (3) third party costs involving agents, independent contractors or other representatives who provide services on behalf of the taxpayer directly to the taxpayer’s customers. While special rules relate to each of these categories, such costs are generally assigned specifically to where they are incurred much like before Determination No. 01-006 was published. How are other costs assigned? All other costs (still only those attributable to the service activity) are allocated by a sales formula. These costs are multiplied by the ratio of sales in Washington over sales everywhere. This is very different than any prior Department interpretation. In order of priority, sales are assigned t
