Multistate Tax Commission

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On March 5, 2013, the Multistate Tax Commission’s Income and Franchise Tax Uniformity Subcommittee declined to move forward with a transfer pricing project and instructed its Financial Institutions Working Group to examine the inclusion of loans in the property apportionment factor. For full details, read our legal alert, “Update from the MTC’s Winter Committee…

Sutherland’s SALT Poll, “MTC Considering Broad Throwout Rule Under Cloak of Redefining ‘Sales,’” revealed that more than 80% of those surveyed oppose narrowing the scope of the type of “sales” used to calculate the receipts factor. The vast majority of respondents were opposed to altering the sales factor because they believed all receipts used to calculate business income should be reflected in the apportionment formula. The MTC’s proposal and the poll results are not surprising based on Sutherland’s experience with escalating attempts by state auditors to “throwout” certain types of receipts from the sales factor.Continue Reading SALT Poll Results: Most Oppose MTC’s Proposal to “Throwout” Receipts

On April 26, the Multistate Tax Commission (MTC) Income & Franchise Tax Uniformity Subcommittee (Subcommittee) held the first of three scheduled meetings to revise corporate income tax apportionment. Specifically, the MTC is seeking to limit the definition of “sales” under Article IV.1(g) of the Uniform Division of Income for Tax Purposes Act (UDITPA) for purposes…

The Multistate Tax Commission (MTC) is proposing to significantly change how the sales factor is calculated for apportioning corporate income. Currently, most states define “sales” includable in the sales factor as “all gross receipts of the taxpayer” (except those receipts related to nonbusiness income). MTC members are considering a proposal to limit the definition of “sales” to…

The Multistate Tax Commission (MTC) is in the midst of two projects that focus on the financial services industry. The first project is an effort to amend the recommended formula for the apportionment and allocation of the net income of financial institutions, first adopted by the MTC in 1994. The second project, referred to as the “non-income taxpayer project,” involves the MTC’s drafting of a model statute that would subject certain partnerships and other pass-through entities to an entity level state income tax to the extent their income passes through to an entity that is not itself subject to the state’s income tax.Continue Reading The Multistate Tax Commission Restructures Apportionment of Financials, Seeks to Tax Pass-Throughs

The Utah State Tax Commission has amended its rules for apportioning financial institution receipts attributable to services from a costs-of-performance sourcing rule to a market-based sourcing rule (Utah Admin. R. R865-6F-32(3)(l)). Effective December 9, 2010, financial institutions must include in the sales factor numerator receipts from services not otherwise specifically addressed in the regulation “if the purchaser of the services receives a greater benefit of the services in Utah than in any other state.” 

The change in sourcing methodology is consistent with Utah’s recently amended general corporation apportionment statute, Utah Code Ann. § 59-7-319, which similarly provides for the market sourcing of services (based on where the purchaser receives a greater benefit of the service). The change to market sourcing for financial institutions is another departure by Utah from the Multistate Tax Commission’s (MTC) model regulations for the apportionment of financial institution income. Continue Reading Utah Goes Market for Sourcing of Financial Institution Services

The Multistate Tax Commission (MTC) held its Fall Uniformity Committee Meetings in Atlanta, Georgia on December 7-9. With a significant turnover in state tax commissioners expected as a result of the November elections, it will be interesting to see if any of the decisions made by MTC representatives the last few years are revisited at…