State Taxation of Partnerships Work Group
At its meeting in April 2021, the Uniformity Committee took up a project on state taxation of partnerships based on the
recommendations of the Standing Subcommittee that a work group be established to consider issues affecting:
1. Sourcing of partnership operating income and partnership items for state tax purposes;
2. Sourcing and taxation of gains and losses from the sale of partnership interests;
3. Entity level taxation issues including transfer pricing or combined filing issues; and
4. Other administrative and enforcement issues including information reporting and withholding.
The MTC has developed a short training on Subchapter K for state tax administrators which is available online. If you would like to sign up for that training, please contact Chris Barber.
Meeting Notice and Agenda
Agenda
Next Meeting – Wednesday, March 15, 2023 – 3:00 p.m. Eastern
I. Welcome and Introductions
II. Initial Public Comment
III. Continue Discussion of Guaranteed Payments – Slides for Call
IV. Next Steps and Upcoming Meeting of the Uniformity Committee
V. Adjourn
Dial-in/Log-in Information
Join from your computer, tablet or smartphone.
https://www.gotomeet.me/LilaDisque/work-group—state-taxation-of-partnerships
You can also dial in using your phone.
United States: +1 (872) 240-3412
Access Code: 208-267-469
Telephone participants will be muted if their line causes interference with the call; to un-mute your line, please press *6.
If you experience any kind of difficulty participating in the meeting, please contact events@mtc.gov.
Latest Project Documents
- Partnership Issue Outline (Word) as of January 12, 2023
- Written Comments from the ABA Tax Section – submitted Jan. 18, 2023
- Written Comments from the AICPA on the Investment Partnership Model – submitted Sept. 12, 2022
- Updated Model on Treatment of Investment Partnership Income – as of August 18, 2022 – with notes and comments
- Updated Model on Treatment of Investment Partnership Income – as of August 18, 2022 – clean
- Additional Comments from Bruce Ely & Kelvin Lawrence – August 1 2022
Meeting Archive
- Guaranteed Payments – Staff Presentation February 15, 2023 (Slides)
- Guaranteed Payments – Staff Presentation February 15, 2023 (Video)
- Internal Revenue Bulletin: 2015-32 (which contains a history of the federal treatment of guaranteed payments)
- Presentation Work Group Slides – January 18, 2023 (PowerPoint)
- Partnership Issue Outline – August 22, 2022 (Word)
- Report to the Uniformity Committee – August 2, 2022
- Report to the Uniformity Committee – August 2, 2022 (PowerPoint)
- Slides – Recent Survey Results (PowerPoint)
- Revisions of Draft Model on Treatment of Investment Partnership Income – as of July 25, 2022 – (Word version with notes and comments)
- Revisions of Draft Model on Treatment of Investment Partnership Income – as of July 25, 2022 – (Word version clean)
- Notes from Partnership Call – July 11, 2022
- Written Comments Submitted – Bruce Ely
- Revisions to Draft Model on Treatment of Investment Partnership Income as of July 11, 2022 (Notes & Comments) and Clean Version
- Notes from June 27, 2022 Call
- Comments and Edits on Draft Model – Treatment of Investment Partnership Income – as of June 27, 2022 Meeting
- Notes from June 13, 2022 Call
- Draft Model – Treatment of Investment Partnership Income – June 8 2022 Version
- May 20, 2022 Draft of Investment Partnership White Paper (Word) – Slides for Meeting (PowerPoint)
- May 5, 2022 Draft of Investment Partnership White Paper with Findings and Recommendations and Slides for Call (PowerPoint)
- From the Uniformity Committee Meeting of April 20, 2022 – Presentation of Richard Prisinzano (PowerPoint)
- Status Report Slides April 20, 2022 (PowerPoint)
- Draft White Paper on Investment Partnerships as of March 22, 2022 and Slides for Meeting (PowerPoint)
- Update on Training and White Paper on Treatment of Investment Partnerships – Slides
- Update on White Paper on Investment Partnerships – Slides (PowerPoint )- January 18, 2022
- Update on White Paper on Investment Partnerships – Slides (PowerPoint)- January 4, 2022
- Recommendation of Staff on Next Steps – Training and White Paper on Treatment of Investment Partnerships
- Status Report to the Uniformity Committee Meeting on November 9, 2021
- Review of Updated Issue Outline – As of October 18, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of October 2, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of September 23, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of September 8, 2021 and Slides for Meeting (PowerPoint)
- Review of Updated Issue Outline – As of August 26, 2021 – Slides for Meeting (PowerPoint)
- Issue Outline – As of August 10, 2021This one needs to be added to WordPress
- Slides for First Partnership Work Group Meeting – June 15, 2021
- Staff Report – Partnership Issue Outline (March 2021) – Word Version – Partnership Issue Outline
- Recommendation on the Project from the Standing Subcommittee
Additional Information and State Guidance
Prior MTC Projects on Partnerships
- Original Proposal to Adopt Uniform Composite & Withholding Provisions – 1992
- 2004 – MTC Pass-Through Entity Compliance Work Group Report and Proposed Initiatives
General Research and Analysis
- John A. Swain, “State Income Taxation of Out-of-State Corporate Partners,” 18 Chap. L. Rev. 211 (2014).
- Walter Hellerstein, “Substance and Form in Jurisdictional Analysis: Corrigan v. Testa” (State Tax Notes) – June 13, 2016
- Helen Hecht and Lila Disque, “A State Tax Administrator’s Perspective on Partnership Taxation” (Journal of Multistate Taxation and Incentives) – Aug. 2017
- Martin J. McMahon, Jr., “Rethinking Taxation of Privately Held Businesses,” (ABA, The Tax Lawyer) – Winter 2016
- Andrea Monroe, “What We Talk About When W alk About When We Talk About Talk About Tax Complexity,” 5 Mich. Bus. & Entreprenurial L. Rev. 193 (2016)
- Andrea Monroe, “Taxing Reality: Rethinking Partnership Distributions,” 47 Loy. L.A. L. Rev. 657 (2014)
- Andrea Monroe, “Integrity in Taxation: Rethinking Partnership Tax,” 64 Ala. Law Rev. 289 (2012)
- Andrea Monroe, “Too Big to Fail: The Problem of Partnership Allocations,” 30 Va.Tax Rev. 465 (2011)
- Andrea Monroe, “What’s in a Name: Can the Partnership Anti-Abuse Rule Really Stop Partnership Tax Abuse?,” 60 Case W. Res. L. Rev. 401 (2010)
- Tax Policy Center, “A New Analysis Shows How Much Business Income Goes Untaxed,” Jan. 11, 2022.
Important Federal Information
General Information:
- IRS – Partnership Statistics
- Large Partnerships: With Growing Number of Partnerships, IRS Needs to Improve Audit Efficiency, GAO, GAO-14-732, Sep. 2014
- U.S. Treasury Department Presentation – Partnerships and Partners – Who and How Much? (MTC Uniformity Committee – July 2016)
- Report – Business in the United States: Who Owns It and How Much Tax do They Pay? (2016)
- The Use of Schedule K-1 Data to Address Taxpayer Noncompliance Can Be Improved, Treasury Inspector General Report (Partially Redacted – 2019)
- IRS – Report on Attacking the Tax Gap (noting the importance of passthrough information reporting) – Sep. 7, 2021
- Centralized Partnership Audit Regime Rules Have Been Implemented; However, Initial No-Change Rates Are High and Measurable Goals Have Not Been Established, Treasury Inspector General Report, Mar. 17, 2022
Withholding on Sale of Partnership Interest by Foreign Partners:
- General Information – IRS Webpage – Partnership Withholding
- Final Regulations – Withholding of Tax and Information Reporting With Respect to Interests in Partnerships Engaged in a United States Trade or Business
Pass-Through Entity (PTE) Taxes – Information and State Guidance
General Information:
- Article on State PTE Taxes (Wlodychak – State Tax Notes) – August 2021
- IRS Notice 2020-75 – Forthcoming Regulations Regarding the Deductibility of Payments by Partnerships and
S Corporations for Certain State and Local Income Taxes
State Agency Information or Legislation:
- Alabama – PTE Info – Agency Website
- Arkansas – House Bill 1209 and Agency Website
- Arizona – Senate Bill 1783
- California FTB – PTE Info – Agency Website
- Colorado – House Bill 1327
- Connecticut – PTE Info – Agency Website
- Georgia – House Bill 149 and Agency Website (regulations)
- Idaho – House Bill 317
- Illinois – PTE Info – Agency Website
- Kansas – House Bill 2239
- Louisiana – PTE Info – Agency Website
- Maryland – PTE Info – Agency Website and PTE Instructions
- Massachusetts – House 4009
- Michigan – House Bill 5376 and Agency Website
- Minnesota – PTE Info – Agency Website
- Mississippi – House Bill 1691
- Missouri – House Bill 2400
- New Jersey – PTE Info – Agency Website
- New Mexico – House Bill 102
- New York – PTE Info – Agency Website
- North Carolina – Agency Website
- Ohio – House Bill 246
- Oklahoma – PTE Info – Agency Website
- Oregon – Senate Bill 727
- Rhode Island – PTE Info – Agency Website
- South Carolina – Senate 627 and Agency Guidance
- Utah – House Bill 444
- Wisconsin – PTE Info – Agency Website
- Virginia – House Bill 1121 PENDING (available information)