Process for Recommending Uniform or Model Tax Statutes and Regulations
Promoting uniformity or compatibility in significant components of state tax systems is one of the four expressed purposes of the Multistate Tax Compact. (See Compact Art. I.) The Commission’s Uniformity Committee is the body devoted to this work. The Committee studies aspects of state and local tax systems and develops proposals for increased uniformity and compatibility with a view toward encouraging the simplification and improvement of state and local tax law and administration. (See Compact Art. VI, Sec. 3.) All states may participate in the Uniformity Committee’s deliberations and decision-making. States may also observe and provide input or comments on the Committee’s work if they choose.
The Committee’s Charter describes the process used by the Committee to perform its work. The Committee often studies state tax issues without undertaking the drafting of a model statute or regulation. But when the Committee does decide to draft a model, that work fits into a larger process used by the Commission for recommending such models to the states, which is described below. Note that the Committee’s work is done publicly, in accordance with the Commission’s Public Participation Policy.
Step One – Initiating a Drafting Project
The Uniformity Committee has established a Standing Subcommittee to assist with identifying and prioritizing potential new projects, including updating existing models. (The Standing Subcommittee has its own webpage.) Anyone can propose a project to the Standing Subcommittee or directly to the Uniformity Committee. A new project is initiated when the Uniformity Committee votes to take up that project and determines the scope of the project. The Executive Committee may also direct the Uniformity Committee to take up a project.
Step Two – Drafting a Model
The Uniformity Committee may direct staff or a work group, established for the purpose, to draft a model in accordance with the Committee’s policy choices. The drafters will often seek input from states and from the public on the best, most workable approaches.
Step Three – Approving the Draft Model
The Uniformity Committee will determine whether to approve the draft model, with or without changes, and send it to the Executive Committee for its consideration.
Step Four – Consideration by the Executive Committee
The Executive Committee may consider any draft model sent to it by the Uniformity Committee and may take whatever action it deems appropriate. But before any draft model can be approved by the Commission for recommendation to the states, that model must be submitted to a public hearing. Therefore, the Executive Committee will often ask the Executive Director to hold a public hearing before making a final decision on whether to send the model to the Commission for its consideration.
Step Five – Public Hearing
A public hearing on a draft model may be held by the Commission or the Executive Committee or by a hearing officer (or other committee). Notice of at least 30 days must be given for the hearing and comments may be submitted orally or in writing. If the Executive Committee directs a hearing to be held, the report from that hearing must be submitted to the Executive Committee for its consideration. The Executive Committee may then take any action it deems appropriate, including sending the draft model to the Commission with a recommendation that the Commission adopt the model. (See Compact Art. VII and Commission Bylaw 7.)
Step Six – Survey of Compact and Sovereignty Members
Once a draft model is approved by the Executive Committee, but before it can be considered by the Commission, the Compact and Sovereignty Members must be surveyed to determine if a majority of these states would consider adopting the model. If a majority agree, then the Commission will consider approving the draft model for recommendation to the states. (See Compact Art. VII and Commission Bylaw 7.)
Step Seven – Consideration by the Commission
The Commission may take any action deems appropriate with respect to a draft model. 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) at least 60 percent of the combined total number of compact and sovereignty member states. (See Bylaw 5(c).)
Step Eight – Recommendation to the States
If the Commission adopts a draft model for recommendation to the states, the approved model will then be 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 model through its own legislative or regulatory process.