Mtc nexus program bulletin

Discussion of protected and unprotected activities as interpreted by court cases that apply this federal law.

A discussion of the constitutional limitations on establishment of nexus for taxes and activities that fall outside the protection of P. Will review theories of economic presence, nexus through intangibles, nexus created by financial services, and the emerging nexus issues applicable to electronic commerce. Review of court and administrative interpretations, and applications of those standards.

While COST and MTC are still divided over important state tax policy issues, over the years the two organizations have attempted to find common ground, especially when the issues involve reducing the costs of administering and complying with state taxes. The MTC planned other courses in the various phases of tax administration, all of which would focus on practical aspects.

The Commission has been conducting training ever since. Current courses include legal, sampling, audit and technology plus other topics that enhance the knowledge and practical skills of state and local government personnel. The authority of the states to do so would eventually be challenged by taxpayers arguing that the states were not free to alter the Compact in this way.

To date, the states have prevailed in those challenges. February During its formative years, the MTC benefited by a number of individuals touting the Multistate Tax Compact and advocating for more states to enact it. Commission officers and others wrote letters, op-eds and articles to increase awareness and extol the benefits of joining the MTC. Dorgan, then chair of the Commission and later a U.

The litigation not only emboldened corporations selected for joint audit routinely to routinely refuse to provide records, it nearly bankrupted the Commission. Up to that point, the Commission was represented by the legendary Jerome Hellerstein. On April 14, , the Commission opted to part ways with counsel, and instead, hired William D. Dexter to represent the Commission. Dexter not only achieved renown for winning that case and beating Erwin Griswold, former dean of the Harvard Law School.

He was a noticeably unique character. Dexter was physically striking, tall, thin and with a shock of white hair. But within a month he had so disrupted the place that the faculty asked him to leave. Dexter returned to the MTC. He soon met an ex-nun, however, and after a few dates, she agreed to marry him.

The two then sailed away — literally, on his sailboat, and figuratively, in his RV — and lived happily ever after until his death in Constitution in any way. This was the first definitive win for the Commission in litigation that would eventually involve 16 of the largest corporations in the country, litigating in multiple state and federal courts.

The Washington case had been brought by the Commission as a declaratory judgment action when taxpayers that were selected for joint audit on behalf of Washington and other states declined to cooperate with those audits. While this victory did not mark the end of that litigation — not by any means — the Commission had taken an important step in hiring its first general counsel, William Dexter, who not only prevailed in this case but would also prove his mettle in future litigation.

Jon Rowe graduated from law school in , but he never took a bar exam and never practiced law. Instead, he moved to Washington, D. He gained notoriety for his writings on economics and being an advocate of the notion of community commons.

In , he started and hosted a weekly radio show. He passed away in Bair from the Iowa Supreme Court to the U. Supreme Court's hearing of the case and that the MTC be consistent in seeking uniformity among state taxing statutes and, particularly, to oppose the drastically inequitable results which the single factor formula produces when only one state is using that formula. The Supreme Court did decide to hear the case, and ultimately, the MTC filed an amicus brief on the merits in support of neither party, but encouraging the court, if it struck down the single-factor formula, to adopt UDITPA as the constitutional standard to resolve multiple or discriminatory tax burden questions under the commerce clause.

February On February 21, , the U. Multistate Tax Commission case. Their claims: 1 the Compact, never having received the consent of Congress, is invalid under the Compact Clause; 2 it unreasonably burdens interstate commerce; 3 it violates the rights of multistate taxpayers under the Fourteenth Amendment; and 4 its audit provisions violate the Fourth and Fourteenth Amendments. But the U. Supreme Court rejected all of these claims, vindicating the MTC as intergovernmental state tax agency in general, and its multistate joint audit program in particular.

This early discussion highlights the ongoing effort to make the MTC joint audit program more efficient through the use of technology. See Letter Ruling No. See Sales Tax Bulletin No. Department of Revenue, December 1, Most states make little distinction between the activities of employees and independent contractors.

See e. Carson U. Occasionally, however, the use of an independent contractor or similar third-party representative will not be regarded as creating nexus in circumstances where an in-state employee providing similar services would result in a different outcome.

Generally these disparities in treatment are restricted to in-state activities that are not related to sales. For example, the Florida Department of Revenue held that hiring a third party management consultant that worked from her Florida residence did not result in nexus.

Technical Assistance Advisement No. A firm that proposed to set up a facility in Illinois to receive and process books that were rejected by customers of an out-of-state publishing company would not create Illinois nexus for the publisher.

The only services the processer would provide to the publisher were receipt from the customers and delivery to the publisher of the rejected books. The processer would not solicit sales or be otherwise authorized to act for the publisher, and the books would only be transported by common carrier or the U.

Postal Service. Illinois Private Letter Ruling No. Similarly, the Florida Department of Revenue held that an independent consultant that advised an out-of-state mail order company on personnel matters did not create nexus. Technical Assistance Advisement, No.

Several examples follow. Nexus was asserted in Illinois for an out-of-state company that utilized an Illinois answering service. In Kansas, nexus was asserted for an out-of-state company that used in-state independent commissioned sales representatives to take orders from customers.

The orders were sent outside the state to the company for approval; the company had no physical presence in Kansas; and the merchandise was shipped directly to the customers by common carrier from outside the state.

Nonetheless, a court found that the company was doing business in Kansas based solely on the activities of the in-state representatives. Accordingly, the taxpayer was required to register with the state and file sales and use tax returns.

In a conclusion that would be similar in virtually any state with a sales tax, the Kansas Department of Revenue informed an in-state installer that its installation of signs sold and shipped into the state created nexus for the out-of-state seller of the signs.

The seller was doing business in the state because it retained the Kansas installer to fulfill its contractual obligations to its Kansas customers. The same position was expressed in a bulletin issued by Multistate Tax Commission in which the Commission indicated that the performance of in-state warranty repair services for an out-of-state company will create nexus for the out-of-state seller. See Chapter 7.

New York does not participate in the Streamlined Sales Tax Program, but it shares the aforementioned interpretation. Amendments The committee will review this charter every year during the annual meetings of the MTC and may adopt policies consistent with this charter to guide the performance of its duties and responsibilities.

The committee may, with the approval of the Executive Committee, amend this charter. See Article VI, paragraph 2 b and c , of the Compact, and bylaw 6 b. Approved by the Executive Committee August 5,