State contracts: multistate corporations.

Existing law authorizing contracting between state agencies and private contractors sets forth requirements for the procurement of goods and services by state agencies. The Corporation Tax Law imposes taxes measured by income and, in the case of a business with income derived from or attributable to sources both within and without this state, apportions the business income between this state and other states and foreign countries in accordance with a 4-factor formula based on the property, payroll, and double-weighted sales within and without this state, except that in the case of an apportioning trade or business that derives more than 50% of its gross business receipts from conducting one or more qualified business activities, as defined, business income is apportioned in accordance with a specified 3-factor formula. That law, for taxable years beginning on or after January 1, 2011, allows a taxpayer to elect to apportion its business income in accordance with a single sales factor formula, except as provided, pursuant to an irrevocable annual election, as specified. This bill would, except as specified, prohibit a state agency from entering into a contract for goods and services with a person or entity that apportions its business income in accordance with the 4-factor formula.