Uniformity Recommendations

Title Category Background/Related
Documents
Date Adopted by the Commission (and Dates of Significant Amendments) Function States Statutes and Regulations Addressing the Topic
Model General Allocation and Apportionment Regulations Business Income Tax - Apportionment Document Library Adopted February 21, 1973 and revised through July 29, 2010;
amended February 24, 2017
   
Special Rule: Airlines Business Income Tax - Apportionment N/A July 14, 1983
FunctionLays out a three-factor formula for apportioning business income from airlines. The aircraft is included in the property factor; payroll of flight personnel in the payroll factor; and transportation revenues in the sales factor in a ratio of departures from locations in each state compared to total departures.
CCH Chart: Airlines
Special Rule: Construction Contractors Business Income Tax – Apportionment   July 10, 1980 Sets out a three-factor formula for apportioning business income from construction contractors, and provides for the different methods of accounting for contracts. The property factor includes the average value of the taxpayer's cost, to the extent they exceed progress billings. It also includes rent paid for the use of equipment, at eight times the annual net rental rate, even if capitalized into the cost of construction. The payroll factor includes compensation attributable to particular construction projects (even though capitalized into the cost of construction) and compensation paid to employees who in the aggregate perform most of their services in a state to which their employer does not report them for unemployment tax purposes. The sales factor is based on the ratio of construction costs, with variations depending on the method of accounting. CCH Chart: Construction
Special Rule: Publishing Business Income Tax – Apportionment   July 30, 1993 Establishes a three-factor formula for apportioning business income from publishers. The property factor includes outer-jurisdictional (e.g., orbiting satellites and undersea transmission cables) property used by the publisher in its trade or business. The outer-jurisdictional property is measured by uplink and downlink transmissions, or – if this information is unavailable – pro-rata to the state based on the ratio of the amount of time the property was used to make transmissions in the state to the total amount of time the property was used for transmissions everywhere. The payroll factor is unchanged. Gross receipts derived from the sale of printed materials are sourced to the state in which the material is delivered or shipped to the purchaser or subscriber. A throwback rule applies if the purchaser or subscriber is the U.S. government or the taxpayer is not taxable in a state in which the printed materials are shipped or delivered. Gross receipts derived from advertising and the sale or rental of the taxpayer’s customer lists are pro-rated to the state based on the taxpayer’s circulation factor. A separate circulation factor is computed for each publication of printed material, and equals the ratio of the in-state purchasers and subscribers to the purchasers and subscribers everywhere, as determined by reference to rating statistics. CCH Chart: Publishing
Special Rule: Railroads Business Income Tax – Apportionment     Implements a variation on the standard three-factor formula to account for the ways a railroad functions. The regulation provides a special rule for sourcing mobile property, such as passenger cars, freight cars, locomotives and freight containers, which are located within and without the state during the year. Railroad cars owned by other railroads and temporarily used by the taxpayer for a per diem charge are not included in the property factor as rented property, but railroad cars owned by the taxpayer and temporarily used by other railroads for a per diem charge are included in the property factor. A special rule is created for sourcing compensation paid to enginemen and trainmen performing services on interstate trains. The payroll of such employees is included in the state’s payroll factor numerator based on the compensation required to be reported by such employees for purposes of determining their state personal income tax liabilities. As far as sales factor, in-state revenues from hauling freight, mail and express include the entire amount of the receipts from intrastate shipments, and a pro-rata portion of the receipts from interstate shipments, determined by the ratio of miles traveled. The same ratios apply for passenger trains. CCH Chart: Railroads
Special Rule: Television and Radio Broadcasting Business Income Tax – Apportionment
Hearing Officer Report (original, 1989)
Hearing Officer Report (amendments, 1995)
  Modifies the three-factor formula to more accurately reflect the nature of media broadcasting. The property factor excludes outer-jurisdictional film and radio programming property (i.e., orbiting satellites, undersea transmission cables). Discs and similar medium containing film or radio programming and intended for sale or rental by the taxpayer for home viewing or listening are included in the property factor. Payroll includes residual and profit participation payments paid to employees, including that paid to directors, actors, newscasters and other talent in their status as employees. For the sales factor, gross receipts include advertising revenue from television film or radio programming in release to or by television and radio stations, which is pro-rated to a state based on a ratio of in-state audience to out-of-state audience (the audience factor). CCH Chart: Broadcasting
Special Rule: Trucking Companies Business Income Tax – Apportionment Adopted July 11, 1986; amended July 27, 1989 Lays out a three-factor formula for apportioning business income from trucking companies. The property factor includes mobile property (i.e., motor vehicles and trailers) based on the ratio of mobile property miles in the state to total mobile property miles. Payroll is based on the same ratio. As far as sales factor, in-state revenues from hauling freight, mail and express include the entire amount of the receipts from intrastate shipments (i.e., the shipment both originates and terminates within the state). In-state revenues also include a pro-rata portion of the receipts from interstate shipments (i.e., shipments passing through, into, or out of the state), determined by the ratio of the mobile property miles traveled by the shipment in the state to the total mobile property miles traveled by the shipment from its point of origin to its destination. CCH Chart: Trucking
Special Rule: Telecommunications and Ancillary Service Providers Business Income Tax – Apportionment   Establishes a special rule to apportion business income from telecommunications and ancillary service providers. The property factor excludes outer-jurisdictional property – i.e. orbiting satellites, undersea transmission cables, and like property that is owned or rented by the taxpayer and used in its telecommunications service business, but is not physically located in any particular state. The payroll factor is unchanged from the standard UDITPA factor. And the sales factor pays out specialized sourcing rules for sales of telecommunications services CCH Chart: Telecommunications
Applicability of Sales and/or Use Tax to Sales of Computer Software Sales & Use or Excise Tax   July 14, 1988 This guideline lays out a series of definitions to establish a uniform standard by which the signatory states will distinguish between canned and custom sales of computer software.  
Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States under Public Law 86-272 Business Income Tax – General Originally adopted by the Multistate Tax Commission on July 11, 1986; Revised version adopted by the MTC Executive Committee on January 22, 1993; Second revision adopted by the Multistate Tax Commission on July 29, 1994; Third revision adopted by the Multistate Tax Commission on July 27, 2001   CCH Chart: Statement of Information re: PL 86-272
ABA Model S Corporation Income Tax Act Business Income Tax - General   June 1989 (Revised) This model act was drafted and promoted by the American Bar Association Section of Taxation Committee on S Corporations Subcommittee on the State Taxation of S Corporations. The Multistate Tax Commission subsequently recommended the model to its member states (with six modifications) on August 2, 1991.  
Collection and Remittance of Lodging Taxes by Accommodations Intermediaries Sales and Use or Excise Tax   This model is made up of two statutory options for remittance of lodging taxes by accommodations intermediaries, the single remittance track and the dual remittance track. The first option, the single track remittance model, requires the accommodations intermediary to collect all taxes due upon the customer’s purchase of accommodations, and then remit the entire tax collected to the accommodations provider, who, in turn, remits the entire tax due to the state or local taxing agency. The second option, the dual track remittance model, requires the accommodations intermediary to collect all taxes when a customer purchases an accommodation and remit the portion of the tax due on the discount room charge to the accommodations provider and remit the tax due on the accommodations fee to the state or local tax agency.  
Audit Sampling Authorization Statute and Accompanying Regulation Tax Administration   This statute allows the state tax department to use statistical sampling techniques or other sampling techniques when necessary during audit. The accompanying regulation defines judgmental, probability and statistical sampling techniques.  
Combined Reporting Business Income Tax – General
Memo to the Full Commission (August 2006)
 
"Tax Haven" Amendment
August 17, 2006
Amended July 29, 2011
This model provides uniform rules for when and how to require or allow combined reporting. The model statute is based on a world-wide unitary combination system but allows a taxpayer to elect to report its income on a unitary “water’s edge” basis, with seven specified categories of entities or income sources included in the water’s edge return – one of which is entities doing business in an area categorized as a tax haven. Until 2011, the model relied on OECD Classifications to define a “tax haven.” However, since the OECD ceased to maintain those classifications, new criteria were implemented, based primarily on the presence of no or nominal tax rates in the jurisdiction.  
Communications Transaction Tax Centralized Administration     August 1, 2012  The MTC initiated a project at its July 2007 meeting to develop a centralized administration model for state and local communications transaction taxes. Based on a review of administrative models around the country the Uniformity Sales and Use Tax Subcommittee decided to develop three approaches to the centralized collection model, each representing a distinct approach to centralization. Proposal I provides for state imposition and administration, with revenue sharing to local governments (see, e.g., the Virginia communications services tax). Proposal II provides for state and local imposition and state level administration (see, e.g., the Florida communications services tax). Proposal III provides for local imposition and centralized local administration of the taxes (see, e.g., the South Carolina telecommunications tax).  
Compilation of State Tax Return Data
 
and
 
Disclosure of Reportable Transactions
(companion models)
Business Income Tax – General
Memo to Full Commission (August 2006)

 
September 7, 2006 These models have two main purposes. The first is to promote corporate income tax compliance, and the second is to do so in as uniform a manner as possible. The proposal addresses the first purpose, compliance, in two ways: 1) by requiring taxpayers and material advisors to disclose reportable transactions and 2) by requiring taxpayers to disclose inconsistent filing positions. Penalties are imposed for failures to disclose. The proposal promotes its second purpose, uniformity, by following the existing federal law on reportable transactions as closely as possible, with modifications where necessary to reflect that this rule will apply in the context of a state, rather than the federal, tax system.  
Defining the Residence of a Funeral Trust - Statutory or Regulatory Provision Other Tax     This model provides a uniform standard for determining the location of a funeral trust.  
Factor Presence Nexus Standard for Business Activity Taxes Business Income Tax – General   Oct. 17, 2002 This model provides a simple bright-line nexus test for business activity taxes.  Pursuant to this rule, a taxpayer establishes nexus with a state for business activity tax purposes if the taxpayer exceeds any of the following apportionment factor numerator thresholds in that state during a tax period:
  • $50,000 of property;
  • $50,000 of payroll;
  • $500,000 of sales; or
  • 25% of total property, total payroll, or total sales.
 
Mobile Workforce Withholding Other Tax Hearing Officer Report (with attachments)
Status Memo to Uniformity Committee
  This model sets out proposed uniform rules establishing when an employer is required to withhold a non-resident employee’s wage income for a state. The model incorporates specific exceptions, as well as a de minimis time threshold and an employer safe harbor provision.  
Principles Governing State Transactional Taxation of Telecommunications Sales and Use or Excise Tax   July 30, 1993 This uniformity recommendation proposes uniform principles to govern state transactional taxation of basic telecommunication services, as distinguished from enhanced services.  
Proposed Statutory Language on Reporting Options for Non-resident Members of Pass-through Entities with Withholding Requirement Other Tax December 18, 2003 This model establishes uniform language for when and how pass-through entities must withhold income tax on the share of income of the entity distributed to each nonresident member.  
Recommended Formula for the Apportionment and Allocation of Net Income of Financial Institutions Business Income Tax – Apportionment Document Library
 
November 17, 1994
Amended July 29, 2015
Original version: Set out a three-factor formula for apportioning the net income of financial institutions, and a series of detailed sourcing rules, generally to the market state.  Loans were sourced for property factor purposes based on where the preponderance of the substantive contacts relating to a loan occurred. This process considered five factors: solicitation, investigation, negotiation, approval and administration of the loan (the “SINAA” test).
Amended version: The 2015 version modified the property factor to remove intangibles “loans and credit card receivables” (and therefore to dispose of the SINAA test). It also modified the receipts factor to increase “market state” orientation and to reflect changes in services provided by the financial industry including mortgage loan and credit card application processing, credit approval, account servicing, and use of ATMs
 
Reporting Federal Tax Adjustments (with Accompanying Model Regulations) Tax Administration Hearing Officer Report August 1, 2003 This model sets out uniform rules by which a taxpayer can notify states of a federal tax adjustment. Under the MTC model, a taxpayer who owes additional tax has 180 days after the final federal determination (defined in the accompanying regulation) to notify the state and provide proper documentation. More time is given in the case of a refund.  
Requiring the Add-back of Certain Intangible and Interest Expenses  Business Income Tax – General
 
August 17, 2006 This model addresses the use of intangible holding companies to shift income earned in the state to another jurisdiction in which that income was not taxed. The proposal deals with the add-back of expenses for intangibles and for interest (in separate sections), incorporating specific exceptions.  
Sales and Use Tax Nexus (Engaging in Business) Sales and Use or Excise Tax July 27, 2016 This model definition of “retailer engaged in business”/ “engaged in business” is intended to be used in conjunction with the state law provision(s) imposing on particular persons an obligation to pay or to collect and remit sales or use taxes where certain activities are conducted in the state.  
Sales and Use Tax Priority: Construction Inventory Sales and Use or Excise Tax     This model provides for a credit on certain building materials that are resold or incorporated into other building components that are resold/installed in a construction project/placed into inventory and then withdrawn.  
Sales and Use Tax Priority: Leasing Transactions Sales and Use or Excise Tax     When leased property is moved from one state to another during the lease term, an unfair burden can be placed on taxpayers because duplicative state taxes may be imposed on the same lease. This model establishes standard rules for claiming tax credits to avoid double or multiple taxation of portions of a single leasing transaction, and provides a basis for comparing the impact of different forms of state transaction taxes on a leasing transaction.  
Tax Avoidance Transaction Voluntary Compliance Program Business Income Tax – General   August 17, 2006 This model, adopted near in time to the Compilation of State Tax Return Data model and the Disclosure of Reportable Transactions model, provided for the creation of a program via which a taxpayer could remedy a previous filing that reflected tax avoidance strategies. In return, the state would waive most penalties on the underreported income.
 
 
Taxation of Captive Real Estate Investment Trusts Business Income Tax – General January 3, 2008 This model requires a “captive REIT” – that is, a real estate investment trust the shares or beneficial interests of which are not regularly traded on an established securities market and more than fifty percent of the voting power or value of the beneficial interests or shares of which are owned or controlled, directly or indirectly, or constructively, by a single nonexempt corporation -- to add back its dividends paid deduction.  
Disallowance of Certain Payments to Captive REITs Business Income Tax – General   This model disallows deductions like rent and interest for payments made by affiliates to a captive REIT.  
Uniform Protest Statute Tax Administration   August 31, 1990 This model lays out the procedure by which a taxpayer may contest an assessment.  
Model Direct Payment Permit Regulation Sales and Use or Excise Tax July 28, 2000 This provision allows the holder to accrue and pay state and local taxes directly to the department.  This relieves vendors of the responsibility of collecting the sales tax on sales made to the permit holder.  
Model Recordkeeping and Retention Regulation Tax Administration   January 15, 1998 The purpose of this model is to define the requirements imposed on taxpayers for the maintenance and retention of books, records, and other sources of information. It also addresses requirements where all or a part of the taxpayer’s records are received, created, maintained or generated through various computer, electronic and imaging processes and systems.  
Provision for the Collection of Tax on Fundraising Transactions Sales and Use or Excise Tax   July 28, 2000 This model provides that nonprofit or charitable organizations are not required to collect sales tax on the sales of tangible personal property for fundraising purposes.