Nexus & Apportionment 3. Does the CIT provide for "throw back sales"?
No, the CIT does not provide for "throw back sales." A "throw back sale" describes a situation in which the income or activity from a Michigan taxpayer's sale of tangible personal property to an out-of-state purchaser is not taxable in the state of the purchaser. The sale would then be "thrown back" to Michigan for inclusion in the sales apportionment factor's numerator, thereby increasing the sales apportionment factor.
Sales to sourced destinations outside Michigan need not be included in the CIT sales factor numerator regardless of whether nexus exists or tax is paid in the destination jurisdiction. MCL 206.665(1)(a). However, if the taxpayer does not have nexus in at least one other state, it cannot apportion its tax base, and any corporate income or net capital tax base must be allocated to Michigan. MCL 206.661(3). The direct premiums tax base for insurance companies is not subject to apportionment.