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, you will find:

    • Information about upcoming and past meetings
    • Whitepaper outline drafts
    • Written comments and feedback
    • Additional background information

Upcoming Meeting Notice

Agenda and Materials

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

Because of Juneteenth, the next meeting of the work group will be Thursday, June 20, 2024. 
The July meeting of the work group will be Wednesday, July 17, 2024

AGENDA

I.      Welcome and Introductions
II.     Initial Public Comment 
III.   Update and Status Report
– Meeting Slides (PowerPoint) (PDF)
IV.  Sourcing Partnership Income in Complex Structures –
          – Multistate Research on Tiered Partnerships – as of June 20, 2024 (Word) (PDF)
          – General Framework of State Pass-Through System – October, 2023 (Word) (PDF)
V.     Discussion of Next Steps
VI.   New Business
VII.  Adjourn

Also – the work group gave its status report to the Uniformity Committee at the in person meetings in Kansas City on April 30, 2024. See that status report here: Partnership Work Group Report to the Uniformity Committee (PDF) (PowerPoint)

 

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. 

  • Multistate Research on Tiered Partnership Sourcing –

Prior Version of Research Report – as of April 17, 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 – 

Draft Investment Partnership Model – June 15, 2023-Revised (PDF)
Draft Investment Partnership Model – June 15, 2023-Revised (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

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 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

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

Prior Meeting Agendas, Materials, and Notes

Partnership Project Work Group Agenda April 17. 2024

    • 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 Agenda March 20, 2024

    • 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 Agenda February 21, 2024

    • 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 Agenda January 17, 2024

Project Report to MTC Uniformity Committee – November 14, 2023 

Partnership Project Work Group Agenda October 18, 2023

Partnership Project Work Group Agenda September 20, 2023

Other Reports and Information from Earlier Calls and Meetings

Older Meeting Archives