MultiTax Commission

An intergovernmental state tax agency whose mission is to promote uniform and consistent tax policy and administration among the states, assist taxpayers in achieving compliance with existing tax laws, and advocate for state and local sovereignty in the development of tax policy.

State Taxation of Partnerships 

Project Description

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:

    • Sourcing of partnership operating income and partnership items for state tax purposes;
    • Sourcing and taxation of gains and losses from the sale of partnership interests;
    • Entity level taxation issues including transfer pricing or combined filing issues; and
    • Other administrative and enforcement issues including information reporting and withholding.

On this project page and the links below, you will find:

    • Information about upcoming and past meetings
    • Project materials including whitepaper outline drafts
    • Written comments and feedback
    • Additional background information

Upcoming Meeting Notice

The project issue outline has been updated. See that Issue Outline as of 1/1/2025 here: (PDF) (Word)

Agenda and Materials

Meetings are held each month on the third Wednesday at 3:00 p.m. Eastern

The  next meeting of the work group will be May 21, 2025 at 3:00 p.m. Eastern.

AGENDA

(TBD)

—Current Excel Workbook – Sourcing Exercise – March 25, 2025
—Draft White Paper on Sourcing Partnership Income – April 14, 2025 (WORD) (PDF)

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SOURCING EXERCISE

Comparing Blended Apportionment to
Other Sourcing Approaches

This workbook was prepared by MTC staff to show how sourcing approaches,
including blended apportionment might be applied to a simple fact-scenario
with a corporate partner. The workbook allows the users to modify the data inputs
to show how the results of the sourcing methods may differ.

Excel Workbook – Sourcing Exercise – Amended as of March 25, 2025

Notes from February 19, 2025 Meeting (On PowerPoint Slides) Select View – Notes Pages

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MOST RECENT DOCUMENTS

The most recent versions of the project documents are here. Prior versions along with meeting agendas and materials are posted further below on this page. 

  • Project Issue Outline –

–The project issue outline has been updated. See that Issue Outline as of January 1, 2025 here: (PDF) (Word)

  • Multistate Research on Tiered Partnership Sourcing –

– Research Section of White Paper – December 18, 2024 (PDF)
– Research Section of White Paper – September 18, 2024 (PDF)
– Updated Multistate Research on Tiered Partnership Sourcing – July 17 2024 (PDF)(Word)
– Research – Tiered Partnership Sourcing – June 20, 2024 (PDF

  • Sourcing Guranteed Payments for Services –

– White Paper on Sourcing of Guaranteed Payments – October 12, 2023 (PDF)
– White Paper on Sourcing of Guaranteed Payments – October 12, 2023 (Word) 
– Draft Models on Sourcing of Guaranteed Payments and Additional Credits (PDF)
– Draft Models on Sourcing of Guaranteed Payments and Additional Credits (Word)

  • Sourcing Investment Partnership Income – Draft Model – 

– REVISED Draft Model Rule in Regulation Form as of June 21, 2023 (PDF)
– REVISED Draft Model Rule in Regulation Form as of June 21, 2023 (Word)

  • Proposal to Consider General Framework – 

– Discussion draft of Proposed General Framework (Word)
– Discussion draft of Proposed General Framework (PDF)

Dial-in/Log-in Information 

Log-In or Use App to Join ZoomGov Meeting

https://www.zoomgov.com/j/1614807575?pwd=aVFrOG5CbFBsTmR0bDdoZFZSY0J1Zz09

Meeting ID: 161 480 7575 – Passcode: 503412

Dial by your location

+1 669 254 5252 US (San Jose)
+1 669 216 1590 US (San Jose)
+1 646 828 7666 US (New York)
+1 551 285 1373 US (New Jersey)

 Meeting ID: 161 480 7575

Find your local number: https://www.zoomgov.com/u/aex6yGIX03

If you experience any kind of difficulty participating in the meeting, please contact events@mtc.gov.

Project Materials

Latest Documents – By Subject

Partnership Issue Outline

The work group began this project by drafting a Partnership Issue Outline that identifies and generally describes a comprehensive list of potential issues and notes the relationships between those issues.

Current Version

Partnership Issue Outline as of January 1, 2025 (PDF) (Word)

Past Versions (Word)

Subchapter K Training

The work group directed MTC staff to provide an online basic training on Subchapter K.  The free training is available to state tax administrators who request access by emailing Chris Barber.

Investment Partnerships

At the December 10, 2021 Partnership Work Group meeting, the Work Group decided to begin developing generally recommended practices or positions for the state tax treatment of investment partnerships. The Work Group first drafted a White Paper on Investment Partnerships and then drafted a Model Statute. Upon further discussion and comment, the work group determined that a Model Regulation would better address this issue because the treatment of investment partnership income is already supported by state law, and a regulation would provide greater certainty in fact-specific situations. Current and prior versions of the white paper and model are below, along with written public comment.

Model Rule (with Comments)

Current Version

Previous Versions

White Paper

Current Version

Previous Versions

Guaranteed Payments

At its February 15, 2023 meeting, the Work Group began addressing sourcing guaranteed payments from services. The Work Group has prepared a draft White Paper that provides background on the federal treatment of guaranteed payments, summarizes guaranteed payments issues addressed by the states, categorizes the different ways states source guaranteed payments, and provides related findings and recommendations.  A draft of the White Paper, Proposed Findings and Recommendations on Sourcing of Guaranteed Payments, and a spreadsheet demonstrating different sourcing methods currently used by the states are avaialble below.

At the September 20, 2023 meeting, the Work Group directed staff to draft a model that sources guaranteed payments for services similarly to other items of distributive share.

Current Documents

Additional Background Information

General Research & Analysis
Partnership Tax Reporting & Audit Rules
State Pass-Through Entity (PTE) Taxes

Prior Meeting Materials

Partnership Projuect Work Group – April 16, 2025 (PDF of Agenda)

Partnership Project Work Group – February 19, 2025 (PDF of Agenda)

Partnership Project Work Group – December 18, 2024 (PDF of Agenda)

    • Slides – Developments and Update on Approaches to Sourcing Partnership Income – December 18, 2024 (PDF)(Powerpoint)

Partnership Project Report to the MTC Uniformity Committee – November 19, 2024

    • Project Report to the MTC Uniformity Committee – November 19, 2024 (PDF)
    • Report on Business Income – November 19, 2024 (PDF)(PowerPoint)

Partnership Project Work Group – September 18, 2024 (PDF of Agenda)

    • Slides – Developments and Proposed White Paper – September 18, 2024 (PDF)(PowerPoint)

Project Report to the MTC Uniformity Committee – July 30, 2024

    • Project Report to the MTC Uniformity Committee – July 30, 2024 (PDF)(PowerPoint)

Partnership Project Work Group – July 17, 2024 (PDF of Agenda)

    • Slides – Proposed White Paper – Sourcing for Complex Structures – July 17, 2024 (PDF)(PowerPoint)
    • Updated Multistate Research on Tiered Partnership Sourcing – July 17, 2024 (PDF)(Word)

Partnership Project Work Group – June 20, 2024 (PDF of Agenda)

    • Meeting Slides (PowerPoint) (PDF)
    • General Framework of State Pass-Through System – October, 2023 (Word) (PDF)
    • Partnership Work Group Report to the Uniformity Committee (PDF) (PowerPoint)

Partnership Project Work Group – April 17. 2024 (PDF of Agenda)

    • Multistate Research on Tiered Partnership Sourcing as of April 2024 – REVISED (PDF) and (Word)
    • Report on Special Allocation Issues (PDF) (PowerPoint)

Partnership Project Work Group – March 20, 2024 (PDF of Agenda)

    • Multistate Research on Tiered Partnership Sourcing as of March 2024 – REVISED – (PDF) and (Word)
    • Multistate Research on Tiered Partnership Sourcing as of March 2024 (PDF) and (Word)
    • Status Report – March 20 2024 – (PowerPoint) and (PDF)

Partnership Project Work Group – February 21, 2024 (PDF of Agenda)

    • Status Report Slides – Feb. 2024 (PDF) and (PowerPoint)
    • Multistate Research on Tiered Partnership Sourcing as of February 2024 (PDF) and (Word) 

Partnership Project Work Group – January 17, 2024 (PDF of Agenda)

Project Report to MTC Uniformity Committee – November 14, 2023 (PDF)

Partnership Project Work Group – October 18, 2023 (PDF of Agenda)

Partnership Project Work Group – September 20, 2023 (PDF of Agenda)

Other Reports and Information from Earlier Calls and Meetings

Older Meeting Archives