This week, the Multimedia Tax Commission (MCC) held its Fall Executive Committee and Unity Committee meetings (in person) in Alexandria, Virginia. During the executive committee meeting, MTC employees endorsed California’s participation as a sovereign. The meeting of the Unity Committee focused on discussing the status of the projects, held a state round table and proposed to study the special industry division regulations.
Executive Committee Meeting Amendment: California Return to MTC
The executive committee meeting announced that California would join MTC as a member of the sovereign state, giving it the right to vote and comment on important state and local tax issues for California. California used to be a full-fledged member, but in 2012 California withdrew its MTC compact.
California membership increases MTC revenue, and MTC plans to raise additional funds to fill at least two additional positions. California state legislators have been involved in MTC projects for the past few years, and Lauri McLehaton (California Tax Board) has been elected vice president of the steering committee. Lauri has been chairing the MTC Government Tax Partnership Project and worked on the MTC Public Law 86-272 project, which was completed earlier this year.
Update of the Unity Committee Meeting
Project Improvement – Partnership and Sales Tax on Digital Products Government Tax
The MCC Uniform Committee has two current projects on significant issues: statewide Partnership Tax and Digital Products Sales Sales Project.
Project on Partnership State Tax
The State Partnership Tax Determination Project focuses on the following four areas of public partnership taxation: (1) the acquisition of joint venture income and joint ventures for state tax purposes; (1) The source and tax on profits and losses from the sale of joint ventures; (3) corporate level tax issues, including transfer costs or consolidated issues; And (4) other administrative and enforcement matters, including reporting and retention of information.
During the discussion, MTC staff provided an overview of the project history, analyzed the issues, discussed the project survey results, and provided a roadmap for the project.
Eversheds Sutherland’s lawyers have been following the project since its inception. You can read more about it over here.
Project on sales tax on digital products
The Sales Tax Project on Digital Products analyzes state sales and uses digital products tax. MCC staff has been working with Washington state representatives to review state laws on the subject and to consider changes that may be more similar between states.
During the meeting, project representatives highlighted the need for interpretations to determine product taxation. The moderators confirmed that they have spoken to a number of taxpayers and business representatives as part of the first data collection phase. Studies show that there are two contradictory approaches.
Finally, the facilitators emphasized that they would welcome participation (including anonymous participation) for those who wish to share their views or issues. You can read more details on the project on sales of digital products over here.
State round table
One of the main activities of the MCC Unity Committee meetings is the State Roundtable – an opportunity to present legislative and litigation amendments to the states. Almost all state representatives who attended the meeting said that their state has implemented (or is currently implementing) a tax system. Most of those states are currently creating or updating reporting forms to manage legal entities.
Below are some other popular government developments.
- The state of New Jersey has announced that it is participating in a study of state tax laws related to the digital economy. The purpose of the study is to determine which of their rules have not been developed. A New Jersey representative confirmed that a report would be submitted once the study was completed; However, no specific date has been set.
- Iowa has reaffirmed its commitment to ensure a coordinated return of legal entities. He said last year’s profits would lead to further tax cuts in the near future.
- Voters in Louisiana decide to support two constitutional amendments that would drastically re-enact state sales tax laws to make it more relevant to congressional regimes in other states.
- The Michigan State Representative confirmed that he expects 100 percent credit to taxpayers and expects to pass through a legal entity. The taxpayer election lasts for three years and the legal entity is taxed by the federal and local tax authorities.
- Alabama’s representative said the state would accept the MTC Partnership Audit Model.
Industrial panel upgrade
The Coherence Committee heard from an industry panel led by Eversheds-Sutherland partner Nicki Dobay. The panel included representatives of the Wikipedia and Taxar, Strip Company. The panel is fromWayfair Challenges of implementation. In particular, the panel noted the many challenges faced by taxpayers at the regional level; These include the inadequacy of some state tax systems, the inability to handle file returns, the lack of consistent power of attorney, and access to third-party accounts. The panel also discussed constitutional issues that may arise in light of the expansion of domestic taxation and the significant burden of compliance. The panel was well received by the committee and held a series of discussions.
Review of Special Industrial Regulations
At the end of the meeting, MTC staff asked for their opinion on the review of the MTC Special Industry Division rules. In particular, MTC staffers asked if there was any reason why their staff should not review these regulations to determine the need for improvement: The participants did not object. Therefore, MTC staff will conduct a special industry review and report back in the future. During this discussion, MCC staff acknowledged that issues related to the interaction with general source laws and special industry laws may be raised. Concerns have led MTC staff to suggest a case study (as opposed to an official project).