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Rev 300 various; Rev 2400 various - Market Based Sourcing Rules

Chapter 346, Sections 424, 425, and 430, of the Laws of 2019 amended RSA 77-A:3, I(c) and RSA 77-E:4, I(c)(3) to adopt the market-based sourcing method of apportioning sales of services and intangibles for purposes of the Business Profits Tax (BPT) and Business Enterprise Tax (BET), effective January 1, 2021, for taxable periods ending on or after December 31, 2021. The BPT and BET currently utilizes the cost of performance method of apportioning sales of services and intangibles. This rule proposal implements this new method of apportioning sales of services and intangibles in the existing BPT and BET administrative rules.


Rev 300 contains the DRA’s BPT rules. Rev 301.11 defines “costs of performance” and is being readopted with an amendment to cross-reference the new market-based sourcing rule. Rev 301.12 is being adopted to define “delivered to a location in this state” which is used in the new market-based sourcing rule. Rev 304.04 on the sales factor provides for a method of cost of performance based sourcing and is being readopted with amended to make clear that the existing rules relative to the cost of performance method of apportionment is applicable to taxable periods ending before December 31, 2021. Rev 304.041 on the sales factor provides for a market-based method of sourcing is being adopted to provide a rulemaking framework for the new market-based method of apportionment for taxable periods ending on or after December 31, 2021. Rev 304.06 through Rev 304.11 are being readopted with amendment to update the DRA’s special industry-specific apportionment rules to cross reference the new market-based sourcing rules. Rev 308.01 on taxpayer records and information is being readopted with an amendment to cross-reference the new market-based sourcing rule.


Rev 2400 contains the DRA’s BET rules. Rev 2401.05 “defines “costs of performance” and is being readopted with an amendment to cross-reference the new market-based sourcing rule. Rev 2401.07 is being adopted to define “delivered to a location in this state” which is used in the new market-based sourcing rule on utilization of deductions in arriving at the taxable amount of the enterprise value tax base. Rev 2403.03 is being readopted with an amendment to cross reference the new market-based sourcing on the dividends apportionment factor rule. Rev 2404.06 is being readopted with amended to make clear that the existing rules relative to the cost of performance method of apportionment is applicable to taxable periods ending before December 31, 2021. Rev 2404.061 is being adopted to provide a rulemaking framework for the new market-based method of apportionment for taxable periods ending on or after December 31, 2021.


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