Utah State Tax Commission Rules on Freight Forwarder Apportionment Issues

The Utah State Tax Commission recently released a private letter ruling clarifying the appropriate apportionment methodology for freight forwarders. In this ruling, the Commission held that the taxpayer requesting the ruling was not eligible to use a single sales factor for purposes of apportionment, and was required to source its revenue stream from freight forwarding to the location of its direct customers.¹ The direct customer approach taken by the Commission with respect to sourcing revenue is distinctive from other states that often look to the ultimate destination of a transaction.

Freight Forwarding and Typical Apportionment Treatment

A broker or forwarder arranges for the transportation of freight from the origination to destination point. However, unlike trucking companies who transport goods using their own trucks and personnel, forwarders arrange for the movement of the freight by rail, air, water and/or truck by another company. This makes the process