Weekly Round-Up: Revisions to MTC Sourcing Rules and South Dakota’s Attempt to “Kill Quill”

Highlights from the 5/6/16 issue of the Weekly State Tax Report:


  • Hearing Officer Recommends Revisions to MTC Sourcing Rules


The Multistate Tax Commission is one step closer to modifying its model allocation and apportionment regulations to reflect a market-based approach to sourcing. Hearing officer Brian Hamer, former director of the Illinois Department of Revenue, recommended revisions to the MTC's proposed regulations implementing amendments to Article IV, Section 17 of the Multistate Tax Compact, which incorporates the Uniform Division of Income for Tax Purposes Act.


  • Court Filings Duel Over South Dakota's New Online Sales Tax


Two competing lawsuits over the constitutionality of South Dakota's recently enacted “Quill kill bill” for remote retailers have made their way to the courthouse. S.B. 106 requires out-of-state sellers with annual in-state sales exceeding $100,000, or 200 separate transactions, to collect and remit sales tax, despite their lack of a physical presence in the state.


  • Businesses Chasing Many ‘Markets' Under State Sourcing Rules


The expanding maze of markets arising from multiple market-based sourcing regimes has some practitioners anticipating further tensions between taxpayers and tax officials. The states' migration to market sourcing has shown no signs of slowing this year, with Connecticut, Kentucky and Oregon introducing legislation this session.


  • Massachusetts Court Hears Arguments in ‘First Marblehead'


Issues raised by a pair of law professors in an amicus brief drew the attention of Massachusetts Supreme Judicial Court justices during oral arguments in a case involving student loan securitizer First Marblehead Corp. The U.S. Supreme Court remanded the case in October to the SJC to reconsider the state's financial institution excise tax in light of its decision in MarylandComp. of Treas. V. Wynne.


Some notable developments from the State Tax Developments Tracker–Bloomberg BNA’s tool for monitoring important developments in all the states:


  • South Carolina DOR Issues Draft Revenue Rule for Public Comment on Income Tax Nexus Creating Activities
  • Ohio Supreme Court Holds Law Imposing Income Tax on Capital Gain Realized by Nonresident Investor Is Unconstitutional
  • New York Attorney General Announces $7 Million Settlement With Art Collector for Failing to Pay Sales and Use Taxes on Art Acquisitions
  • Arkansas Department of Finance and Administration Issues Revenue Legal Counsel Opinion on Taxability of Hazardous Waste Disposal Services
  • Wisconsin Department of Revenue Announces Online Marketplace Sellers May Be Liable for Tax on Third-Party Sales


For more information about this and other state tax issues, sign up for a free trial of the Bloomberg BNA Premier State Tax Library.


In other developments… 


Florida Corporate Income Tax: Reporting of Federal Audit Adjustments, by Deloitte LLP


Iowa Tax Reform Options: Building a Tax System for the 21st Century, by Tax Foundation