LEADBETTER, Judge.
Unisys Corporation petitions for review of three orders of the Board of Finance and Revenue (Board) which affirmed the Department of Revenue’s (Department) settlement of Unisys’ 1986 franchise tax and Sperry Corporation’s 1 1985 and 1986 franchise tax. The Pennsylvania franchise tax, which is imposed on the capital stock value of every out of state corporation that does business within Pennsylvania, is designed to tax business activity conducted within the Commonwealth only. Section 602(b) of the Tax Reform Code of 1971 (Tax Code), Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7602(b). In calculating the franchise tax, the reporting corporation must first calculate its capital stock value [“actual value”] by a statutory formula based upon the corporation’s net worth,2 which includes the net worth of any entity in which the corporation owns common stock, and the corporation’s average net income, which includes dividends received from [1099]*1099investee corporations.3 Section 601(a) of the Tax Code, 72 P.S. § 7601(a); 61 Pa.Code §§ 155.26, 155.27. After determining the capital stock value, the corporation must arrive at taxable value, 72 P.S. § 7602(b), by applying an apportionment factor to the actual value.
Since a state may not constitutionally tax value earned outside its borders, the Tax Code sets forth two methods by which a corporation may apportion the value of its capital stock attributable to business activities within and without the Commonwealth, namely, the single-factor method4 and the three-factor method. The choice of method is left to the taxpayer.5
The three-factor apportionment formula averages three fractions — property, payroll and sales — to determine the taxable portion of a foreign corporation’s capital stock value:
[[Image here]]
72 P.S. § 7602(b)(1). As consistently interpreted and applied by the Department, the property, payroll and sales figures that comprise the three fractions represent only the property, payroll and sales of the taxpayer itself, and not of the taxpayer’s subsidiaries. Thus, under this method, while the net worth of and dividends paid by certain subsidiaries of a corporation are included in the corporation’s actual value, the property, payroll and sales of those subsidiaries are not considered in the apportionment formula.
Unisys, a Delaware corporation with its principal office in Blue Bell, Pennsylvania, does business in all states of the United States. During the tax years at issue, Uni-sys owned, directly or indirectly, the stock of more than 100 domestic and foreign subsidiaries doing business in more than 100 countries around the world. In the franchise tax [1100]*1100returns at issue, Unisys reported its average net income on a separate company, unconsolidated basis and did not include as income dividends it received from subsidiaries or other investee corporations. Unisys likewise reported its net worth on a separate company, unconsolidated basis and elected to apportion its capital stock value using the three-factor formula, rather than the single-factor asset apportionment fraction. In settling Unisys’ franchise tax for the applicable years, the Department increased the amount reported by Unisys as net worth to include the value of Unisys’ investments in its subsidiaries and increased the amount reported as average net income by adding the amount of dividends paid to Unisys by its subsidiaries and investee corporations. The Department calculated Unisys’ property, payroll and sales apportionment factors on a separate company basis, that is, the factors included only the property, payroll and sales of Unisys itself and not the property, payroll and sales of its subsidiaries. Unisys appealed the Department’s settlements, requesting refunds. The Board affirmed the Department’s settlements and denied Unisys’ refund requests. This appeal followed.6 The question presented is whether the interstate commerce and due process clauses of the United States Constitution require the Commonwealth to include property, payroll and sales of subsidiaries in the three-factor apportionment formula and, if not, whether the Pennsylvania statutory scheme mandates administrative relief.7
The commerce clause prohibits a state from taxing value earned outside its borders. Where the value attributable to a particular location is not capable of precise definition, the state’s method of determining its share of total value is tested by the requirements of due process. Thus, although the requirements of the commerce clause and due process are distinct — the former imposing a substantive limitation upon the state’s power to tax and the latter regulating the procedures by which the states may comply with that substantive law — they are closely interrelated. As a practical matter, if the method used to apportion total income between in state (taxable) and out of state (nontaxable) components is fair, the substantive requirements of the commerce clause will ordinarily be met. Hence, most cases analyze these separate constitutional requirements jointly, focusing primarily on the due process issue. As the court noted in Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983), the interstate commerce clause “has not in practice required much in addition to the requirement of fair apportionment.” Id. at 171, 103 S.Ct. 2933.
In the case of a multi-state or multinational company, the Supreme Court has noted that “arriving at precise territorial allocations of value is often an elusive goal.” Id. at 164, 103 S.Ct. 2933. As a result, states must often resort to the use of formulas based upon more readily ascertainable measures of the corporation’s activities within and without the state in order to apportion the taxes. The rationale which provides the constitutional predicate for such apportionment is the notion of the “unitary business enterprise,” i.e., an enterprise which carries out distinct multijurisdictional activities resulting in ultimate profit or value derived from the entire business operation. As the court noted in Container:
The unitary business formula apportionment method rejects geographical or transactional accounting, and instead calculates the local tax base by first defining the scope of the “unitary business” of which the taxed enterprise’s activities in the taxing jurisdiction form one ... party, and then apportioning the total income of that “unitary business” between the taxing [1101]*1101jurisdiction and the rest of the world on the basis of a formula taking into account objective measures of the corporation’s activities within and without the jurisdiction.
Id. at 165, 103 S.Ct. 2933. Further, “[t]he functional meaning of [the unitary business enterprise] requirement is that there be some sharing or exchange of value not capable of precise identification or measurement ... which renders formula apportionment a reasonable method of taxation.” Id. at 166, 103 S.Ct. 2933. In Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U.S. 425, 100 S.Ct.
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LEADBETTER, Judge.
Unisys Corporation petitions for review of three orders of the Board of Finance and Revenue (Board) which affirmed the Department of Revenue’s (Department) settlement of Unisys’ 1986 franchise tax and Sperry Corporation’s 1 1985 and 1986 franchise tax. The Pennsylvania franchise tax, which is imposed on the capital stock value of every out of state corporation that does business within Pennsylvania, is designed to tax business activity conducted within the Commonwealth only. Section 602(b) of the Tax Reform Code of 1971 (Tax Code), Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7602(b). In calculating the franchise tax, the reporting corporation must first calculate its capital stock value [“actual value”] by a statutory formula based upon the corporation’s net worth,2 which includes the net worth of any entity in which the corporation owns common stock, and the corporation’s average net income, which includes dividends received from [1099]*1099investee corporations.3 Section 601(a) of the Tax Code, 72 P.S. § 7601(a); 61 Pa.Code §§ 155.26, 155.27. After determining the capital stock value, the corporation must arrive at taxable value, 72 P.S. § 7602(b), by applying an apportionment factor to the actual value.
Since a state may not constitutionally tax value earned outside its borders, the Tax Code sets forth two methods by which a corporation may apportion the value of its capital stock attributable to business activities within and without the Commonwealth, namely, the single-factor method4 and the three-factor method. The choice of method is left to the taxpayer.5
The three-factor apportionment formula averages three fractions — property, payroll and sales — to determine the taxable portion of a foreign corporation’s capital stock value:
[[Image here]]
72 P.S. § 7602(b)(1). As consistently interpreted and applied by the Department, the property, payroll and sales figures that comprise the three fractions represent only the property, payroll and sales of the taxpayer itself, and not of the taxpayer’s subsidiaries. Thus, under this method, while the net worth of and dividends paid by certain subsidiaries of a corporation are included in the corporation’s actual value, the property, payroll and sales of those subsidiaries are not considered in the apportionment formula.
Unisys, a Delaware corporation with its principal office in Blue Bell, Pennsylvania, does business in all states of the United States. During the tax years at issue, Uni-sys owned, directly or indirectly, the stock of more than 100 domestic and foreign subsidiaries doing business in more than 100 countries around the world. In the franchise tax [1100]*1100returns at issue, Unisys reported its average net income on a separate company, unconsolidated basis and did not include as income dividends it received from subsidiaries or other investee corporations. Unisys likewise reported its net worth on a separate company, unconsolidated basis and elected to apportion its capital stock value using the three-factor formula, rather than the single-factor asset apportionment fraction. In settling Unisys’ franchise tax for the applicable years, the Department increased the amount reported by Unisys as net worth to include the value of Unisys’ investments in its subsidiaries and increased the amount reported as average net income by adding the amount of dividends paid to Unisys by its subsidiaries and investee corporations. The Department calculated Unisys’ property, payroll and sales apportionment factors on a separate company basis, that is, the factors included only the property, payroll and sales of Unisys itself and not the property, payroll and sales of its subsidiaries. Unisys appealed the Department’s settlements, requesting refunds. The Board affirmed the Department’s settlements and denied Unisys’ refund requests. This appeal followed.6 The question presented is whether the interstate commerce and due process clauses of the United States Constitution require the Commonwealth to include property, payroll and sales of subsidiaries in the three-factor apportionment formula and, if not, whether the Pennsylvania statutory scheme mandates administrative relief.7
The commerce clause prohibits a state from taxing value earned outside its borders. Where the value attributable to a particular location is not capable of precise definition, the state’s method of determining its share of total value is tested by the requirements of due process. Thus, although the requirements of the commerce clause and due process are distinct — the former imposing a substantive limitation upon the state’s power to tax and the latter regulating the procedures by which the states may comply with that substantive law — they are closely interrelated. As a practical matter, if the method used to apportion total income between in state (taxable) and out of state (nontaxable) components is fair, the substantive requirements of the commerce clause will ordinarily be met. Hence, most cases analyze these separate constitutional requirements jointly, focusing primarily on the due process issue. As the court noted in Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 103 S.Ct. 2933, 77 L.Ed.2d 545 (1983), the interstate commerce clause “has not in practice required much in addition to the requirement of fair apportionment.” Id. at 171, 103 S.Ct. 2933.
In the case of a multi-state or multinational company, the Supreme Court has noted that “arriving at precise territorial allocations of value is often an elusive goal.” Id. at 164, 103 S.Ct. 2933. As a result, states must often resort to the use of formulas based upon more readily ascertainable measures of the corporation’s activities within and without the state in order to apportion the taxes. The rationale which provides the constitutional predicate for such apportionment is the notion of the “unitary business enterprise,” i.e., an enterprise which carries out distinct multijurisdictional activities resulting in ultimate profit or value derived from the entire business operation. As the court noted in Container:
The unitary business formula apportionment method rejects geographical or transactional accounting, and instead calculates the local tax base by first defining the scope of the “unitary business” of which the taxed enterprise’s activities in the taxing jurisdiction form one ... party, and then apportioning the total income of that “unitary business” between the taxing [1101]*1101jurisdiction and the rest of the world on the basis of a formula taking into account objective measures of the corporation’s activities within and without the jurisdiction.
Id. at 165, 103 S.Ct. 2933. Further, “[t]he functional meaning of [the unitary business enterprise] requirement is that there be some sharing or exchange of value not capable of precise identification or measurement ... which renders formula apportionment a reasonable method of taxation.” Id. at 166, 103 S.Ct. 2933. In Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U.S. 425, 100 S.Ct. 1223, 63 L.Ed.2d 510 (1980), the court made clear that this is a functional concept which disregards corporate formalities:
So long as dividends from subsidiaries and affiliates reflect profits derived from a functionally integrated enterprise, those dividends are income to the parent earned in a unitary business.
Id. at 440, 100 S.Ct. 1223.
In addition to the requirement that the business must be a unitary enterprise before its total profit or value is subject to tax based upon an apportionment formula, the due process clause also requires that any such formula be fair. Initially, we note that the Supreme Court has repeatedly upheld the constitutionality of the three-factor apportionment formula. “Indeed,” the court noted in Container, “not only has the three-factor formula met our approval, but it has become ... something of a benchmark against which other apportionment formulas are judged.” 463 U.S. at 170, 103 S.Ct. 2933. Unisys’ challenge, however, lies not with the formula itself, but with the Department’s use in the formula of payroll, property, and sales data of only the parent corporation. The essence of Unisys’ argument on appeal is that it is fundamentally unfair for the Department to include as income the dividends Unisys received from its subsidiaries and as net worth the value of its investments in the subsidiaries when calculating the actual value of the corporation, but not include its subsidiaries’ property, payroll and sales in the apportionment formula.
Since the purpose of the formula is to apportion the value of the unitary business enterprise among different jurisdictions, it can hardly be subject to dispute that an apportionment formula which includes data from the entire enterprise will yield a more accurate result than a formula based solely upon the parent corporation’s operations. That is not the question before this court, however, but rather whether this approach is constitutionally mandated. Although never addressed by the full court,8 an affirmative answer was urged by Justice Stevens in his dissent in Mobil Oil Corp.:
Either Mobil’s worldwide “petroleum enterprise,” ... is all part of one unitary business, or it is not; if it is, Vermont must evaluate the entire enterprise in a consistent manner. As it is, it has indefensibly used its apportionment methodology artificially to multiply its share of Mobil’s 1970 taxable income.
445 U.S. at 449, 100 S.Ct. 1223. The gist of the issue presented — whether the data used to determine the total apportionable business value subject to tax and the apportionment factors must be drawn from the same universe — has been addressed, however, by several state courts. These courts have reached different results based upon their analyses of the varying tax structures and business enterprises under review, but they have consistently eschewed the sort of per se or “bright line” test urged by Unisys in favor of the traditional due process analysis. See, e.g., NCR Corp. v. Commissioner of Revenue, 438 N.W.2d 86 (Minn.1989), cert. denied, 493 U.S. 848, 110 S.Ct. 144, 107 L.Ed.2d 103 (1989); E.I. DuPont deNemours & Co. v. State Tax Assessor, 675 A.2d 82, 88-91 (Me.1996); American Tel. and Tel. Co. v. Department of Revenue, 143 Wis.2d 533, 422 N.W.2d 629, 636-37 (App.1988).
In analyzing whether an apportionment formula complies with due process, the United States Supreme Court has developed a two-part test. The first prong of this test [1102]*1102(sometimes referred to as “internal consistency”) seeks to determine whether, on its face, the formula is reasonably calculated to reach only the profits earned within the state, i.e., is not inherently arbitrary. This standard will be met where the formula, “if applied by every jurisdiction ... would result in no more than all of the unitary business’ income being taxed.” Container, 463 U.S. at 169, 103 S.Ct. 2933. If this test is met, the formula will be disturbed only “when the taxpayer has proved by ‘clear and cogent evidence’ that the income attributed to the State is in fact ‘out of all appropriate proportions to the business transacted ... in that State’ or has ‘led to a grossly distorted result.’ ” Moorman Mfg. Co. v. Bair, 437 U.S. 267, 274, 98 S.Ct. 2340, 57 L.Ed.2d 197 (1978), quoting Hans Rees’ Sons, Inc. v. North Carolina ex rel. Maxwell, 283 U.S. 123, 135, 51 S.Ct. 385, 75 L.Ed. 879 (1931) and Norfolk & W. Ry. Co. v. Missouri State Tax Comm’n, 390 U.S. 317, 326, 88 S.Ct. 995, 19 L.Ed.2d 1201 (1968) [citations omitted]. This latter standard, which looks to the practical effect of the formula, is sometimes characterized as “external consistency.” It is upon the external consistency test that Uni-sys bases this appeal.9 We conclude that Unisys has not met its burden under the standard set forth above.
In Hans Rees’ Sons, a taxpayer corporation challenged the constitutionality of North Carolina’s corporate income tax apportionment method, the single-factor method.10 The foreign corporation demonstrated that, while approximately 80% of the taxpayer’s income was allocated to North Carolina under the single-factor method, less than 22% of the corporation’s income actually had its source in the corporation’s operations within North Carolina. 283 U.S. at 134, 51 S.Ct. 385. As a result, the taxes assessed pursuant to the formula were more than three times that which was factually justified. Under these circumstances, the Court held unconstitutional the application of the single-factor apportionment method to the corporation there, stating that:
[T]he statutory method, as applied to the appellant’s business for the years in question operated unreasonably and arbitrarily, in attributing to North Carolina a percentage of income out of all appropriate proportion to the business transacted by the appellant in that State. In this view, the taxes as laid were beyond the State’s authority.
Id. at 135-36, 51 S.Ct. 385. Thus, a more than 250% difference between an assessment calculated under a state’s apportionment formula and the amount of income actually attributable to a corporation’s operations carried on within a state is outside the allowable margin of error, and therefore offends due process.
Similarly, the court, in Norfolk & Western Railway, held that the state of Missouri violated due process in its rigid application of a corporate tax on the value of railroad rolling stock. Because of the mobility of rolling stock, the tax was calculated by multiplying the fraction derived from comparing the number of miles of track in Missouri to the total number of miles of track in all states by the total value of all the company’s rolling stock. The Railway produced evidence of the actual value of its rolling stock usually employed both within and outside Missouri. This evidence showed that while the percentage of the company’s track located in Missouri was over 8%, the actual value of the company’s rolling stock located within the state was only approximately 3%.11 The Railway argued that calculating the tax based on the amount of track grossly distorted the measurement of the value of the business carried on within- Missouri. The court agreed, stating:
[1103]*1103Our decisions recognize the practical difficulties involved and do not require any close correspondence between the result of computations using the mileage formula and the value of property actually located in the State, but our cases certainly forbid an unexplained discrepancy as gross as that in this case. Such discrepancy certainly means that the impact of the state tax is not confined to intrastate property even within the broad tolerance permitted.
390 U.S. at 327, 88 S.Ct. 995. Thus, a 266% difference in tax due under a state’s apportionment formula and under a formula using actual values is also outside the permissible margin of error.
In contrast, the court in Container Corp. concluded that a 14% difference between the application of the three-factor apportionment formula and an alternative formula proposed by the corporation was not sufficient to prove that the state, of California was taxing extraterritorial value.12 The court noted:
Of course, even the three-factor formula is necessarily imperfect. But we have seen no evidence demonstrating that the margin of error (systematic or not) inherent in the three-factor formula is greater than the margin of error (systematic or not) inherent in the sort of separate accounting urged upon us by appellant. Indeed, it would be difficult to come to such a conclusion on the basis of figures in this ease: for all of appellant’s statistics showing allegedly enormous distortions caused by the three-factor formula, the tables ... reveal that the percentage increase ... comes to approximately 14%, a far cry from the more than 250% difference which led us to strike down the state tax in Hans Rees’ Sons, Inc., and a figure certainly within the substantial margin of error inherent in any method of attributing income among the components of a unitary business.
463 U.S. at 183-84, 103 S.Ct. 2933.
Similarly, in Moorman, the Supreme Court concluded that Iowa’s single-factor apportionment formula was constitutionally applied where the taxpayer showed a 48% difference between the amount assessed by the state under the single-factor method and the amount of tax that would have been due were taxpayer permitted to utilize the three-factor formula. The Court noted that the taxpayer failed to show that the single-factor method produced a grossly unfair result. 437 U.S. at 275, 98 S.Ct. 2340. Thus, while not explicitly so stating, the Supreme Court has held that a 48% disparity is within the permissible margin of error.
Applying the principles of these eases, we conclude that Unisys has not demonstrated a due process violation. Unisys can claim only that were the total property, payroll and sales of the unitary business enterprise included in the fractions of the three-factor formula, its tax due would be approximately 44.5% less than the figure arrived at by the Board in its calculation under the three-factor formula set forth in the Tax Code. We do not believe that a 44.5% disparity between calculations lies outside of the constitutional margin of error delineated by the Supreme Court. A 44.5% disparity is not even remotely close to the 266% and 300% disparities cited by the Court as unconstitutional in Norfolk & Western Raihoay and Hans Rees’ Sons, and is somewhat less than the variance upheld in Moorman.
Alternatively, Unisys argues that it is entitled to statutory equitable relief under the special apportionment provision set forth in Section 401(3)2.(a)(18) of the Tax Code, 72 P.S. § 7401 (3)2.(a)(18) [Subsection (18)],13 which provides:
(18) If the allocation and apportionment provisions of this definition do not fairly represent the extent of the taxpayer’s business activity in this State, the taxpayer may petition the Secretary of Revenue or the Secretary may require, in respect to all [1104]*1104or any part of the taxpayer’s business activity:
(A) Separate accounting;
(B) The exclusion of any one or more of the factors;
(C) The inclusion of one or more additional factors which will fairly represent the taxpayer’s business activity in this State; or
(D) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer’s income. In determining the fairness of any allocation or apportionment, the Secretary of Revenue may give consideration to the taxpayer’s previous reporting and its consistency with the requested relief.
The Department claims that Subsection (18) is not applicable to Unisys’ situation because it “is only to be used in quirky, nonrecurring situations, and to avoid constitutional infractions_” (Brief at 23.) We disagree. First, we see nothing in the language of the statute to suggest that it is reserved for “quirky” situations. Moreover, it would make little sense for the legislature to allow correction of isolated inaccuracies, but prohibit administrative adjustment where, because of its structure, a company was overtaxed (or undertaxed) year after year. We will not assume that the legislature intended such an absurd result.
Next, while Subsection (18) certainly does provide a mechanism whereby the Department can obviate the need for court challenges in those situations rising to the level of due process violations, use of the language “do not fairly represent the extent of the taxpayer’s business activity in the state” plainly implicates the power to address a broader range of error than merely that which may be characterized as “grossly disproportionate.” It gives the Department broad discretion to make appropriate adjustments where any substantial inaccuracy results from application of the allocation and apportionment provisions.
Having determined that Subsection (18) is applicable, we must next consider whether the Department has abused its discretion in refusing to make an adjustment in this case. In support of its claim that adjustment is inappropriate, the Department states that, “Presumably, taxpayer’s intangible assets are ... managed and controlled at its corporate headquarters [in Pennsylvania]. If taxpayer were to sell one of its subsidiaries and realize nonbusiness income for corporate net income tax purposes, the gain would be entirely allocable (and therefore totally taxable in) the Commonwealth.” (Brief at 24.) The Department’s point in this regard is somewhat obscure, to say the least. If it intends to say that the Commonwealth has a closer connection with Uni-sys’ out of state subsidiaries than with those of a foreign corporation headquartered out of state, such an argument would appear more pertinent to Unisys’ initial claim that it should exclude such holdings from the total capital stock value subject to tax than to the claim that it should include those subsidiaries’ values in the apportionment formula. Moreover, this argument would seem inconsistent with the fundamental concepts underlying the unitary business enterprise theory.
Next, the Department argues that, “One has to wonder how unfair an apportionment provision can be to the taxpayer when over a 13 year period, the apportionment provisions average well under 10%.” (Brief at 24.) This argument entirely misses the point. It matters not whether the formula allocates a large or a small share of the business to the Commonwealth, but how far that allocation varies from the actual share. For instance, in Norfolk & Western Raihuay, a due process violation was found where the allocated and actual shares were 8% and 3% respectively. Here, although the allocated share may have averaged less than 10%, the discrepancy between the allocated and actual shares was nearly 45%. Even giving due deference to the Department’s interpretation of the statute, we simply cannot say that an allocation so far at variance “fairly represents the extent of [Unisys’] business activity in this State.” Accordingly, we hold that the Department abused its discretion in refusing to adjust Unisys’ allocation share under Subsection (18). We emphasize that we do not hold, as the Department argues, that Subsec[1105]*1105tion (18) relief is required “in all franchise tax cases in which the taxpayer owns subsidiaries.” (Brief at 23.) Each case must be decided on its own merits, subject to the Department’s sound discretion. We simply hold that a variance of this magnitude, although not of constitutional proportions, requires statutory relief.
Nor do we hold that the particular remedy sought by Unisys — inclusion of the subsidiaries’ data in the three factor formula — is mandated, although that would appear to be a sensible approach, and one that would serve the interests of accuracy promoted by Subsection (18). The statute gives broad discretion to the Department to use any method which will produce a fair and equitable result, and we will not here limit the method the Department must use. We hold only that some form of Subsection (18) relief must be accorded.
We reverse the orders of the Board, and remand for further proceedings consistent ■with this opinion.
ORDER
AND NOW, this 8th day of March, 1999, the orders of the Board of Finance and Revenue in the above captioned matters are hereby reversed. The Chief Clerk' is directed to remand this case to the Department of Revenue for further proceedings consistent with this opinion unless exceptions are filed within 30 days in conformity with Pa. R.A.P. 1571(i).
Judge DOYLE dissents.
Dissenting opinion by Judge PELLEGRINI.