On February 2, the Multistate Tax Commission’s State Intercompany Transactions Advisory Service Committee (SITAS) held a public teleconference to address comments provided by Eversheds Sutherland and to schedule the first meeting of those states that have signed on to an Information Sharing Agreement (Agreement).
Eversheds Sutherland submitted a letter to the MTC Executive Committee in response to recent changes to the Agreement and the increased use of third parties as part of transfer pricing audits. Specifically, we expressed our concern about whether confidential taxpayer information, settlement agreements and advanced pricing agreements would be afforded the confidentiality that is required under state laws and whether taxpayer confidential information would be shared with third-party contractors. We also provided a number of recommendations to strengthen taxpayer confidentiality while balancing the member states’ ability to conduct fair and timely audits.
The MTC Executive Committee referred the Eversheds Sutherland letter to the SITAS Committee who issued a written response on October 25, 2021, stating that, in its view, the Agreement: (i) does not violate state laws on the exchange and use of confidential taxpayer data; (ii) does not address outside advisors and concerns about such contractors should be directed to the relevant states; and (iii) should not impose additional criteria for the exchange and use of information that may be in conflict with the existing laws and policies of the participating states.
During the February 2 teleconference, the Committee once again addressed our letter but declined to make any immediate changes to the Agreement. The Committee indicated that Alabama, Louisiana, Mississippi, New Jersey, and Washington have signed on to the Agreement and that a training and information session would be scheduled in March for those signatory states and any additional states that sign on to the agreement. The Committee will be sending out a survey to the signatory states to gather information as to what topics they would like for the Committee to cover during the upcoming session.