Minutes of TEI-MTC liaison meeting.

• Position: Tax Executives Institute, Multistate Tax Commission - Panel Discussion

On April 25, 1996, representatives of Tax Executives Institute held the organization's second annual liaison meeting with the Multistate Tax Commission. The meeting, which was held in Denver, was organized under the auspices of the Institute's State and Local Tax Committee, whose chair is Christopher W. Baldwin of TEI's Baltimore-Washington Chapter. The minutes of the meeting follow.

Tax Executives Institute's delegation to the meeting was chaired by TEI President Jack R. Skinner and by Christopher W. Baldwin, chair of the Institute's State and Local Tax Committee. The Institute's full delegation to the meeting is set forth in the accompanying box. The MTC's delegation was led by Bob Hanson, who is North Dakota's State Tax Commissioner, and by Dan R. Bucks, the MTC's Executive Director. The members of the MTC's delegation to the meeting are identified in the accompanying box.

Mr. Hanson called the meeting to order by thanking TEI's delegation for traveling to Denver. He said the meeting presented TEI and the MTC with a unique opportunity to explore issues of common concern; he added that taxpayers and tax administrators may not always agree with each other, but that did not mean they should be disagreeable. Mr. Skinner concurred. He said that the Institute's liaison relationships with the MTC, the Federation of Tax Administrators, and individual States were very important. Open communication was key to making progress on major issues of tax policy and administration.

Uniform Resale Certificate

Turning the agenda for the meeting, Mr. Bucks said that one area where tax administrators and taxpayers shared a common goal involved the development of a uniform resale certificate. If taxpayers were able to use a single form in all jurisdictions (and that form contained the information required by the jurisdictions), the overall cost of tax administration could be reduced. He said that the MTC was delighted that earlier in the year the States that had signed on to the MTC's Uniform Resale Certificate had acceded to changes necessary to make the form acceptable to California. The changes necessitated adjustments to (or the addition of) a number of footnotes on the form. At Mr. Buck's request, Michael Mazerov (the MTC's Director of Policy Research) reviewed the procedure for having proposed changes considered by the States. (The MTC's revised certificate, with the changes red-lined, is reprinted on CHANGES FROM VERSION OF CERTIFICATE INDICATED WITH STRIKE-THROUGHS AND DOUBLE UNDERLINE)

Mr. Bucks commended Mr. Mazerov for his efforts in broadening the acceptability of the model certificate and also commended the States for proving receptive to the California-supported changes. In total, 31 States had agreed to accept the model certificate.

Mr. Bucks acknowledged that TEI was desirous of other changes in the model certificate (for example, its expansion to include services), and that although such changes "should be easy" to effect, they often proved problematic. Although the model certificate was now accepted by States whose economy make up a significant percentage of the Gross Domestic Product, the MTC supported efforts to induce even more States to accept the model. He suggested that, for more progress to be made, the issue had to become "visible." He suggested that TEI (and its local chapters) could be effective in this regard, encouraging additional States to sign on to the model certificate. He commended the Institute's efforts to identify ways in which the model certificate could be expanded and simplified further.

Timothy J. McCormally said TEI was eager to increase the States' acceptance of the model certificate and, also, to work with the MTC in broadening the certificate. He asked for guidance from the MTC on which States should be targeted for action. Mr. Mazerov said that the States could be segregated into several categories. The first category -- consisting of Arizona, Connecticut, Florida, and Kentucky -- consisted of States whose laws and regulations seemingly permit the use of the model certificate without any change. The laws of two additional States -- Ohio and Pennsylvania -- permit the use of certificates "substantially similar" to the State's own form, and accordingly, the model certificate should prove acceptable in those States without any statutory or regulatory change.

The second broad category of States consisted of jurisdictions whose regulations require (or suggest) that the States' own form must be used. In these States, some administrative action is likely required before the States can accept the model certificate. Mr. Mazerov identified the following States as falling within this second category: Indiana, Louisiana, Massachusetts, New Jersey, New Mexico (other than with respect to drop shipments), New York, North Carolina, Virginia, and West Virginia.

The third category of States included those jurisdictions where a formal statutory change is required to make the model certificate acceptable.

Mr. McCormally suggested that a two-prong, coordinated approach be adopted: The MTC could encourage the States to accept the model certificate, and TEI could complement those efforts by contacting the States and underscoring the desirability of such action. TEI's communication, which might be coordinated by the Institute's local chapters, could state something like the following:

TEI is aware that the Multistate

Tax Commission has

modified its Uniform Resale

Certificate, with a view toward

making it more acceptable

to the States. The Institute

and its 5,000 members

believe there are substantial

benefits to be realized in using

a uniform, or model, certificate.

By reducing the...