On April 23, 2020, the Multistate Tax Commission (MTC), as part of its 2020 Spring Committee Meetings, held a meeting of its Executive Committee by teleconference. Over the prior two days, the MTC also held meetings of its Uniformity, Nexus, and Audit Committees.
The Eversheds Sutherland SALT group attended the Executive Committee’s public meeting. This committee is the “primary policy and administrative decision-making body of the MTC between meetings of the full Commission.” Keith Richardson, the Deputy Chief Financial Officer for the District of Columbia chairs the committee. In particular, the committee: (1) discussed the MTC’s recent decision to allow taxpayers to provide their own narratives during MTC audits; (2) announced MTC staffing changes; (3) approved potentially holding the annual meeting electronically; and (4) approved the Uniformity Committee’s Finnigan and P.L. 86-272 projects for public hearings.
Audit Committee – Taxpayer Narratives
Acting on a request from Eversheds Sutherland attorneys, the Audit Committee voted to allow taxpayers under audit to provide their own audit narratives. These audit narratives would be included with the MTC staff narratives in the confidential audit packet provided to the Audit Committee members.
MTC Staffing Changes
The MTC is undergoing a couple of imminent staffing changes. Helen Hecht, the current general counsel, is transitioning to a new role focused on state tax uniformity. Nancy Prosser, formerly the general counsel for the Texas Comptroller of Public Accounts, will soon begin as the new MTC general counsel.
The MTC Deputy Executive Director, Marshall Stranburg, will retire at the end of April. Scott Pattison, previously the Executive Director of the National Association of State Budget Officers and the National Governors Association, will be replacing him.
Annual Meeting Quorum Requirements
The Executive Committee approved an amendment to Bylaw 5 to allow for the MTC’s annual meeting to be held electronically.
Previously, while members could participate and vote at the annual meeting by telephone or similar means, only physically present members could establish a quorum. The April 23rd amendments dispense of the physical presence requirement only if “the Executive Committee has directed an annual meeting be held exclusively by telephone, videoconference, or similar technological means.” Thus, every member must participate electronically.
The MTC has not yet decided whether to hold the meeting in person or electronically. But numerous state representatives expressed concern about not being able to attend the annual meeting because of COVID-related travel restrictions and state budget difficulties.
Executive Committee Voting
The Executive Committee approved two projects to be submitted for a public hearing. They were previously approved by the Uniformity Committee on April 22nd.
First, the Uniformity Committee drafted a Finnigan option in the MTC’s Model Statute for Combined Reporting, as an alternative to the model’s pre-existing “Joyce” approach. Unlike the Joyce approach, the Finnigan approach does not exclude from the sales factor numerator group members lacking nexus or protected by P.L. 86-272. Rather, it will include the in-state sales of all unitary group members. Following meetings of the Finnigan/Combined Filing Work Group, the language is now in its final form.
Second, the Uniformity Committee drafted a revision to the MTC’s current statement of information on P.L. 86-272, which was last updated in 2001. The revision would classify numerous activities as not protected by P.L. 86-272. The MTC views these amendments as addressing changes to the economy and the way in which companies do business in the last two decades. As during the April 22nd Uniformity Committee meeting, COST reiterated its opposition, along with the opposition of the business committee.