TEI Advocates Need to Update State Statutes Governing the Reporting Federal Income Adjustments at the National Conference of State Legislatures Meeting

On January 14, 2017, TEI Tax Counsel Pilar Mata, along with Fred Nicely and Nikki Dobay of the Council on State Taxation (COST) and Tom Shimkin of the Multistate Tax Commission (MTC), presented at the National Conference of State Legislatures (NCSL) Taskforce on State and Local Taxation. The panel discussed the need for state legislators to update state statutes governing the reporting of federal income adjustments, noting the problems with current state statutes and the lack of uniformity among states.

The panel also referenced proposed updates to the MTC’s 2003 model reporting statute, which were prepared by a working group consisting of members of TEI, COST, the ABA’s State and Local Tax Committee, and the AICPA. Pilar and Nikki presented changes to the draft model statute to the MTC at its December 2016 meeting and urged the MTC’s Uniformity Committee to open a new project to update the 2003 model statute. Proposed changes to the MTC’s model statute include updating the definition of a “final determination,” requiring a minimum of 180 days to report federal changes to states, allowing the use of 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. Tom noted that the MTC’s Uniformity Committee has not yet decided whether to open a new project to update the MTC’s 2003 model statute but concurred that further consideration was appropriate and greater uniformity among states would benefit states and taxpayers.