TEI Urges the Multistate Tax Commission to Update Its Model Statute Governing the Reporting of Federal Income Adjustments

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On December 14, 2016, TEI Tax Counsel Pilar Mata, along with Nikki Dobay of the Council on State Taxation (COST), presented at the fall meeting of the Multistate Tax Commission (MTC) and urged the MTC’s uniformity committee to update its 2003 model statute governing the reporting of federal income adjustments. Mata and Dobay noted the problems with current state statutes and the lack of uniformity among states. They also maintained that now is an appropriate time to update the 2003 model statute, because states will soon need to consider how to update their reporting statutes to reflect changes in federal partnership audit rules.

Mata and Dobay also presented a draft model reporting statute, which was developed by a working group comprising members of TEI, COST, the American Bar Association’s state and local tax committee, and the American Institute of Certified Public Accountants (AICPA). Proposed changes to the current model statute include updating the definition of a “final determination,” requiring at least 180 days to report federal changes to states, allowing a streamlined model report to report federal adjustments, providing an exception for de minimis changes to state tax liabilities, and allowing taxpayers to make estimated tax payments prior to a federal final determination to toll the accrual of interest. The MTC’s uniformity committee will decide whether to open a new project at its next meeting in March. However, Greg Matson, the MTC’s executive director, commented that the project was a good example of the uniformity the MTC should strive to achieve.

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