The concept includes four-factor formula
at the borders, namely communication, cooperation, coordination, and collaboration.
The 2005/2006 New York State Budget Act marks the end of the long-standing four-factor formula used in computing the business allocation factor for the corporation business franchise tax under Article 9-A of the New York Tax Law and the entire net income (ENI) allocation percentage for the bank franchise tax under Article 32.
The Budget Act replaces the four-factor formula used in the corporation business franchise tax and the bank franchise tax with a single-factor, receipts-based formula.
Iowa, for example, uses only a single factor (sales), while New Mexico uses the prototypical three-factor formula and, in the case of manufacturers, allows for the use of a four-factor formula
by double weighting the sales factor.
The four-factor formula used in computing the business allocation percentage was repealed and replaced with a single-factor sales formula that will be phased in over a three-year period, beginning with taxable years beginning on or after January 1, 2006, as follows:
The four-factor formula used in computing the allocation percentage was repealed and replaced with a single-factor sales formula.