Uniformity Recommendation Development Process
One expressed purpose of the Multistate Tax Compact is to promote uniformity or compatibility in significant components of tax systems, and the Commission’s Uniformity Committee is the body devoted to this work. The Uniformity Committee is comprised of state revenue agency personnel appointed annually by their tax administrator, and it is responsible for developing recommendations for uniform laws, regulations and administrative practices for corporate income, sales and use, and other major business taxes. This committee does critical work to help the Commission achieve its objective of encouraging uniform taxation of multistate business activity.
Interested states — including all sovereignty and associate member states — are welcome to designate a representative to the Uniformity Committee.
The Commission develops a uniformity proposal (a recommendation to its member states and other states) by the following described process when the proposal has a significant potential impact on the proper treatment of income or transactions involving multistate commerce. While in some instances the development of a particular uniformity proposal may involve some additional steps, an understanding of the description given below will impart an appreciation that a uniformity proposal is not adopted without formal action of the Commission following stages during which public participation is sought. Only after the seventh step does a true Commission proposal exist. Even at the completion of the seventh step, actual adoption of the proposal requires the affirmative action of the states (step eight). Figure 3 summarizes the Commission’s uniformity process.
|| Proposal initiated by or assigned to Uniformity Committee
|| Uniformity Committee develops proposal, with input from relevant interest groups
|| Uniformity Committee proposal considered by Executive Committee
|| Public hearing
|| Hearing officer report considered by Executive Committee
|| Bylaw 7 survey of affected Compact states
||Proposal considered by the Commission at its annual meeting
||Adopted proposal transmitted to states for consideration
Figure 3, Summary of Uniformity Process
The uniformity process typically proceeds as follows:
A project is initiated. This may happen in one of two ways. The Executive Committee may direct the Uniformity Committee to undertake a particular project. Or, a Uniformity Committee member or member of the public may propose a project. If a project is proposed by a Committee member or member of the pubic, then the Committee will consider the proposal and vote on whether or not to initiate a project. When requested by the Committee, the staff develops an exploratory analysis of the issue prior to a vote.
The Uniformity Committee directs staff or a drafting group to draft a model in accordance with the Committee’s conceptual policy choices. The Committee will make revisions to the initial draft based on further discussion and on public comments received. With regard to uniformity matters drawing broad public interest (as partially determined from the comments received following release of the revised staff draft), or requiring industry-specific technical expertise, the Uniformity Committee may, prior to the completion of its work, establish a broad-based public participation work group to review and make additional recommendations to the Committee on the then current version of the proposal. The Uniformity Committee then votes, based on all state and public input received, on whether or not to recommend a final version of its draft to the Executive Committee for further consideration.
The Executive Committee acts on the recommendation of the Uniformity Committee, taking into account any additional public input it receives. The Executive Committee may take whatever action it deems appropriate, including terminating the project or referring the proposal back to the Uniformity Committee. One of the actions the Executive Committee may take is to refer the Uniformity Committee proposal, with or without modifications, to a public hearing.
A formal public hearing is conducted, pursuant to the requirements of Article VII of the Compact and the Commission bylaws. The hearing is conducted by a hearing officer or hearing panel, following which the officer or panel summarizes the public comment and makes a recommendation to the Executive Committee on the draft. The hearing officer or panel may recommend Commission adoption of the proposal as referred to it, with or without further modifications; reference of the proposal back to the Uniformity Committee for further work; or rejection of the proposal.
The Executive Committee reviews the hearing report and recommendation, and determines whether it will recommend approval of the uniformity proposal to the full Commission, with or without further amendment, recommend rejection of the proposal, or direct further study and consideration of the proposal.
If the Executive Committee chooses to recommend any version of the proposal to the Commission, it first authorizes (pursuant to bylaw 7) a polling of the affected Commission states to ensure that a majority of the affected states would consider adoption of the draft proposal. (This survey does not determine if the affected states will adopt the proposal, only whether the affected states will consider adoption of the proposal.) If the majority of the affected Commission states so indicate, the matter is referred to the Commission for possible adoption as a uniformity recommendation
The Commission votes on adoption of the proposal. In order to be adopted, the proposal must receive an affirmative vote of (1) at least 60 percent of the total number of Compact member states, and (2) Compact member states reflecting a majority of the total population of all member states according to the current United States Statistical Abstract.
Following adoption of the proposal as a Commission uniformity recommendation to the states, the proposal is submitted to the states for their consideration. All recommendations of the Commission are advisory to the states. For a recommendation to become effective in any state, that state must affirmatively adopt the proposal through its own legislative or regulatory process.