1. (a) Generally, the business allocation percentage results in a fair allocation of the taxpayer's business capital and business income to New York State and the alternative business allocation percentage results in a fair allocation of the taxpayer's alternative business income to New York State. However, experience in this and other states which impose similar franchise taxes has shown that due to the nature of certain businesses the formulas used to compute the percentages may work hardship in some cases and not do justice either to the taxpayer or to the State. Article 9-A of the Tax Law authorizes the commissioner to use other methods to more accurately reflect the business activity within New York State. If a different method is used, it must be calculated to effect a fair and proper allocation of the business income, business capital and alternative business income reasonably attributable to the State.

2. (b) When it appears that the business allocation percentage or alternative business allocation percentage does not properly reflect the activity, nature of business, income or capital of the taxpayer in New York State, the commissioner, in his or her discretion, may adjust the business allocation percentage or alternative business allocation percentage by:

   1. (1) excluding one or more factors;
   2. (2) including one or more factors, such as expenses, purchases or contract values minus subcontract values;
   3. (3) excluding one or more assets used in computing any factor included in the business allocation percentage or alternative business allocation percentage, provided the income therefrom is also excluded in determining entire net income or minimum taxable income; or
   4. (4) any other similar or different method calculated to effect a fair and proper allocation.
3. (c) A taxpayer may not vary the statutory business allocation percentage or alternative business allocation percentage formulas described in sections 210(3)(a) and 210(3-a)(a) of the Tax Law without the consent of the commissioner. A taxpayer making a request for an adjustment of its business allocation percentage or alternative business allocation percentage that does not have such consent prior to the time it files its report must file its report and compute its tax in accordance with the statutory formulas. A request to vary the statutory formula must be submitted separately from the report as prescribed by the department and must set forth full information on which the request is based.

Tax Law, § 210(8)