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Multistate Businesses Take Note: The Apportionment Landscape is Changing


Monday, October 21, 2013
12:45 PM - 2:15 PM ET
Product Code - TMW124
Speaker(s): Richard Pomp, Professor, University of Connecticut School of Law; Shirley Sicilian, General Counsel, Multistate Tax Commission; and Prentiss Willson, Of Counsel, Sutherland, Asbell & Brennan LLP
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Top Experts Weigh the Impact of the Proposed Revisions to the Multistate Compact, Share Insights on the Latest Trends and Issues in State Allocation and Apportionment Laws

The Uniform Division of Income for Tax Purposes Act (UDITPA) provides a model law for assigning the total taxable income of a multistate corporation among various states in which it is doing business. It is also one of the central elements of the Multistate Compact, which is an agreement among states aimed at achieving uniformity in the income tax treatment of corporations doing business in more than one jurisdiction.

Promulgated in 1957, the model law was designed for a business environment that has radically evolved to the one that exists today. Many states have responded to this disconnect by modifying important elements of the Compact. The result for taxpayers has been a patchwork of conflicting rules and requirements. Recently, litigation has emerged in some states that calls into question the Compact’s validity.

In an effort to update UDITPA, the Multistate Tax Commission has proposed several revisions now being considered by the organization’s executive committee.

As part of this process, Richard Pomp, professor at the University of Connecticut School of Law, on March 28 conducted a wide-ranging hearing on the MTC’s proposed amendments to Multistate Tax Compact Article IV, which contains UDITPA. At the hearing Professor Pomp received testimony from some of the most well-known experts in the field of state taxation.

In an Oct. 21, 2013 Bloomberg BNA webinar Professor Pomp will discuss the findings he made in his hearing officer’s report for the MTC Executive Committee. Joining him will be Shirley Sicilian, general counsel for the MTC and Prentiss Willson, a prominent state tax practitioner with Sutherland Asbill & Brennan LLP in Sacramento.

In the Webinar, the speakers will share their conclusions on the proposed amendments that would:

  • Broaden the definition and scope of “business income” to all income that is apportionable under the U.S. Constitution (Compact Art. IV.1(a));
  • Move from cost-of-performance to market-based sourcing for services and intangibles (Compact Art. IV.17);
  • Narrow the definition of sales to exclude hedging transactions and treasury receipts from the sales factor (Compact Art. IV.17);
  • Give states the option to choose their own factor weighting, but include a recommendation that states double-weight the sales factor (Compact Art. IV.9); and
  • Revise the distortion relief provision to allow states to adopt alternative apportionment rules for taxpayers involved in a particular industry, transaction, or activity (Compact Art. IV. 18).

After completing this course, you will be able to:

  • Know the latest developments and trends regarding state requirements regarding the allocation and apportionment of income by multistate corporations;
  • Identify the types of transactions that can be especially problematic under the most states’ apportionment provisions;
  • Understand how states are using apportionment formula factor weighting as an economic development incentive.
  • Compare the allocation and apportionment policies adopted by different jurisdictions; and
  • Be aware of the controversy surrounding the states’ administration of distortion relief provisions, which were designed to allow taxpayers to use an alternative apportionment method for a particular transaction or activity.

Prerequisite: None
Level: Intermediate to Advanced
Delivery method: Group Interactive Live
Recommended CPE credit: 1.5 credits

Richard Pomp, Professor, University of Connecticut School of Law; Shirley Sicilian, General Counsel, Multistate Tax Commission; and Prentiss Willson, Of Counsel, Sutherland, Asbell & Brennan LLP

Richard Pomp, is Professor of Tax Law at the University of Connecticut School of Law. An internationally known expert on local taxation, he is the author of State and Local Taxation, a casebook that has been used in more than ninety law schools and translated into several languages, Joining the Law School in 1976, Pomp also has taught tax law at Harvard, New York University, the University of Texas and Boston College. Author of more than eighty articles, his views on tax law are regularly solicited by local, state and national and international media.

Professor Pomp has served as a consultant to cities, states, the Multistate Tax Commission, the Navajo Nation, the U.S. Congress, the U.S. Treasury, the Department of Justice, the IRS, the United Nations, the IMF, the World Bank, and numerous foreign countries. In 2012, he conferred with government officials in Iceland about the challenges they face collecting a value-added tax on items purchased outside the country via the Internet.

Professor Pomp also frequently serves as an expert witness in courts, and as counsel and a litigation consultant to law firms, corporations, accounting firms, and state tax administrations. The 2011 recipient of the BNA Lifetime Achievement Award, Professor Pomp was a member of the California Commission on the 21st Century Economy. He serves on numerous advisory and editorial boards and is chairman of the board of the Institute on Taxation and Economic Policy. In 2012, he was awarded the University of Connecticut’s Faculty Excellence in Teaching Award.

Shirley Sicilian is General Counsel for the Multistate Tax Commission, an intergovernmental agency whose membership includes forty-seven states and the District of Columbia. She previously served as General Counsel for the Kansas Department of Revenue. Prior to taking that position she was Director of Policy and Research for the Department, during which time she was also the principle liai-son to the Kansas legislature on tax matters. Before working in the area of taxation, Ms. Sicilian worked in public utility regulation, serv-ing as Chief of Economic Policy and as Assistant General Counsel for the Kansas Corporation Commission. Ms. Sicilian has a juris doctorate and a masters degree in economics from the University of Kansas. She has been appointed to serve on a variety of advisory and deliberative boards; is a frequent writer, instructor, and speaker on state tax topics; and has authored several briefs before various State Supreme Courts and the U.S. Supreme Court.

Prentiss Willson is Of Counsel to Sutherland LLP in their Sacramento office. He has 41 years of experience in state and local tax and is widely recognized as the dean of California taxation. He has been involved in approximately a dozen state and local tax cases before the U.S. Supreme Court and has represented hundreds of taxpayers in disputes in California and across the country.

Prentiss began his career at Morrison & Foerster LLP, where at various times he was managing partner of the San Francisco office, chair of the firm’s tax department, and chair of the firm’s state and local tax group. In 1998, he moved to Ernst & Young LLP as partner and national director of state and local tax. Since retiring from Ernst & Young in 2002, Prentiss has had his own law practice advising clients across the country.

Prentiss is a frequent speaker and author on state and local taxation, and he has also taught tax courses at Stanford Law School, University of San Francisco Law School and Golden Gate University Graduate School of Taxation.