2006 Minnesota Statutes

290.171 ENACTMENT OF MULTISTATE TAX COMPACT.
The "Multistate Tax Compact" is hereby enacted into law to the extent provided in this section
and entered into with all jurisdictions legally joining therein, in the form substantially as follows:

Article I. Purposes.

The purposes of this compact are to:
1. Facilitate proper determination of state and local tax liability of multistate taxpayers,
including the equitable apportionment of tax bases and settlement of apportionment disputes.
2. Promote uniformity or compatibility in significant components of tax systems.
3. Facilitate taxpayer convenience and compliance in the filing of tax returns and in other
phases of tax administration.
4. Avoid duplicative taxation.

Article II. Definitions.

As used in this compact:
1. "State" means a state of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, or any territory or possession of the United States.
2. "Subdivision" means any governmental unit or special district of a state.
3. "Taxpayer" means any corporation, partnership, firm, association, governmental unit or
agency or person acting as a business entity in more than one state.
4. "Income tax" means a tax imposed on or measured by net income including any tax
imposed on or measured by an amount arrived at by deducting expenses from gross income, one
or more forms of which expenses are not specifically and directly related to particular transactions.
5. "Capital stock tax" means a tax measured in any way by the capital of a corporation
considered in its entirety.
6. "Gross receipts tax" means a tax, other than a sales tax, which is imposed on or measured
by the gross volume of business, in terms of gross receipts or in other terms, and in the
determination of which no deduction is allowed which would constitute the tax an income tax.
7. "Sales tax" means a tax imposed with respect to the transfer for a consideration of
ownership, possession or custody of tangible personal property or the rendering of services
measured by the price of the tangible personal property transferred or services rendered and which
is required by state or local law to be separately stated from the sales price by the seller, or which is
customarily separately stated from the sales price, but does not include a tax imposed exclusively
on the sale of a specifically identified commodity or article or class of commodities or articles.
8. "Use tax" means a nonrecurring tax, other than a sales tax, which (a) is imposed on or
with respect to the exercise or enjoyment of any right or power over tangible personal property
incident to the ownership, possession or custody of that property or the leasing of that property
from another including any consumption, keeping, retention, or other use of tangible personal
property and (b) is complementary to a sales tax.
9. "Tax" means an income tax, capital stock tax, gross receipts tax, sales tax, use tax, and any
other tax which has a multistate impact, except that the provisions of article V of this compact
shall apply only to the taxes specifically designated therein.

Article III. Elements of Income Tax Laws.

Article IV. Division of Income.

Article V. Elements of Sales and Use Tax Laws.

Tax Credit.

1. Each purchaser liable for a use tax on tangible personal property shall be entitled to full
credit for the combined amount or amounts of legally imposed sales or use taxes paid by him
with respect to the same property to another state and any subdivision thereof. The credit shall be
applied first against the amount of any use tax due the state, and any unused portion of the credit
shall then be applied against the amount of any use tax due a subdivision.
2. Whenever a vendor receives and accepts in good faith from a purchaser a resale or other
exemption certificate or other written evidence of exemption authorized by the appropriate state
or subdivision taxing authority, the vendor shall be relieved of liability for a sales or use tax with
respect to the transaction.

Article VI. The Commission.

Organization and Management.

1. (a) The multistate tax commission is hereby established. It shall be composed of one
"member" from each party state who shall be the head of the state agency charged with the
administration of the types of taxes to which this compact applies. If there is more than one such
agency the state shall provide by law for the selection of the commission member from the
heads of the relevant agencies. State law may provide that a member of the commission be
represented by an alternate but only if there is on file with the commission written notification
of the designation and identity of the alternate. The attorney general of each party state or his
designee, or other counsel if the laws of the party state specifically provide, shall be entitled to
attend the meetings of the commission, but shall not vote. Such attorneys general, designees, or
other counsel shall receive all notices of meetings required under paragraph 1(e) of this article.
(b) Each party state shall provide by law for the selection of representatives from its
subdivisions affected by this compact to consult with the commission member from that state.
(c) Each member shall be entitled to one vote. The commission shall not act unless a majority
of the members are present, and no action shall be binding unless approved by a majority of the
total number of members.
(d) The commission shall adopt an official seal to be used as it may provide.
(e) The commission shall hold an annual meeting and such other regular meetings as its
bylaws may provide and such special meetings as its executive committee may determine. The
commission bylaws shall specify the dates of the annual and any other regular meetings, and
shall provide for the giving of notice of annual, regular and special meetings. Notices of special
meetings shall include the reasons therefor and an agenda of the items to be considered.
(f) The commission shall elect annually, from among its members, a chairman, a
vice-chairman and a treasurer. The commission shall appoint an executive director who shall
serve at its pleasure, and it shall fix his duties and compensation. The executive director shall be
secretary of the commission. The commission shall make provision for the bonding of such of its
officers and employees as it may deem appropriate.
(g) Irrespective of the civil service, personnel or other merit system laws of any party state,
the executive director shall appoint or discharge such personnel as may be necessary for the
performance of the functions of the commission and shall fix their duties and compensation. The
commission bylaws shall provide for personnel policies and programs.
(h) The commission may borrow, accept or contract for the services of personnel from any
state, the United States, or any other governmental entity.
(i) The commission may accept for any of its purposes and functions any and all donations
and grants of money, equipment, supplies, materials and services, conditional or otherwise, from
any governmental entity, and may utilize and dispose of the same.
(j) The commission may establish one or more offices for the transacting of its business.
(k) The commission shall adopt bylaws for the conduct of its business. The commission shall
publish its bylaws in convenient form, and shall file a copy of the bylaws and any amendments
thereto with the appropriate agency or officer in each of the party states.
(l) The commission annually shall make to the governor of each party state a report covering
its activities for the preceding year. Any donation or grant accepted by the commission or services
borrowed shall be reported in the annual report of the commission, and shall include the nature,
amount and conditions, if any, of the donation, gift, grant or services borrowed and the identity of
the donor or lender. The commission may make additional reports as it may deem desirable.

Committees.

2. (a) To assist in the conduct of its business when the full commission is not meeting, the
commission shall have an executive committee of seven members, including the chairman, vice
chairman, treasurer and four other members elected annually by the commission. The executive
committee, subject to the provisions of this compact and consistent with the policies of the
commission, shall function as provided in the bylaws of the commission.
(b) The commission may establish advisory and technical committees, membership on
which may include private persons and public officials, in furthering any of its activities. Such
committees may consider any matter of concern to the commission, including problems of special
interest to any party state and problems dealing with particular types of taxes.
(c) The commission may establish such additional committees as its bylaws may provide.

Powers.

3. In addition to powers conferred elsewhere in this compact, the commission shall have
power to:
(a) Study state and local tax systems and particular types of state and local taxes.
(b) Develop and recommend proposals for an increase in uniformity or compatibility of state
and local tax laws with a view toward encouraging the simplification and improvement of state
and local tax law and administration.
(c) Compile and publish information as in its judgment would assist the party states in
implementation of the compact and taxpayers in complying with state and local tax laws.
(d) Do all things necessary and incidental to the administration of its functions pursuant
to this compact.

Finance.

4. (a) The commission shall submit to the governor or designated officer or officers of each
party state a budget of its estimated expenditures for such period as may be required by the laws
of that state for presentation to the legislature thereof.
(b) Each of the commission's budgets of estimated expenditures shall contain specific
recommendations of the amounts to be appropriated by each of the party states. The total
amount of appropriations requested under any such budget shall be apportioned among the party
states as follows: one-tenth in equal shares; and the remainder in proportion to the amount
of revenue collected by each party state and its subdivisions from income taxes, capital stock
taxes, gross receipts taxes, sales and use taxes. In determining such amounts, the commission
shall employ such available public sources of information as, in its judgment, present the most
equitable and accurate comparisons among the party states. Each of the commission's budgets of
estimated expenditures and requests for appropriations shall indicate the sources used in obtaining
information employed in applying the formula contained in this paragraph.
(c) The commission shall not pledge the credit of any party state. The commission may
meet any of its obligations in whole or in part with funds available to it under paragraph 1(i) of
this article, provided that the commission takes specific action setting aside such funds prior
to incurring any obligation to be met in whole or in part in such manner. Except where the
commission makes use of funds available to it under paragraph 1(i), the commission shall not
incur any obligation prior to the allotment of funds by the party states adequate to meet the same.
(d) The commission shall keep accurate accounts of all receipts and disbursements. The
receipts and disbursements of the commission shall be subject to the audit and accounting
procedures established under its bylaws. All receipts and disbursements of funds handled by the
commission shall be audited yearly by a certified or licensed public accountant and the report of
the audit shall be included in and become part of the annual report of the commission.
(e) The accounts of the commission shall be open at any reasonable time for inspection by
duly constituted officers of the party states and by any persons authorized by the commission.
(f) Nothing contained in this article shall be construed to prevent commission compliance
with laws relating to audit or inspection of accounts by or on behalf of any government
contributing to the support of the commission.

Article VII. Uniform Regulations and Forms.

1. Whenever any two or more party states, or subdivisions of party states, have uniform or
similar provisions of law relating to an income tax, capital stock tax, gross receipts tax, sales or
use tax, the commission may adopt uniform regulations for any phase of the administration of
such law, including assertion of jurisdiction to tax, or prescribing uniform tax forms.
2. Prior to the adoption of any regulation, the commission shall:
(a) As provided in its bylaws, hold at least one public hearing on due notice to all affected
party states and subdivisions thereof and to all taxpayers and other persons who have made timely
request of the commission for advance notice of its regulation-making proceedings.
(b) Afford all affected party states and subdivisions and interested persons an opportunity to
submit relevant written data and views, which shall be considered fully by the commission.
3. The commission shall submit any regulations adopted by it to the appropriate officials of
all party states and subdivisions to which they might apply. Each such state and subdivision shall
consider any such regulation for adoption in accordance with its own laws and procedures.

Article VIII. Interstate Audits.

1. Any party state or subdivision thereof desiring to make or participate in an audit of any
accounts, books, papers, records or other documents may request the commission to perform the
audit on its behalf. In responding to the request, the commission shall have access to and may
examine, at any reasonable time, such accounts, books, papers, records, and other documents
and any relevant property or stock of merchandise. The commission may enter into agreements
with party states or their subdivisions for assistance in performance of the audit. The commission
shall make charges, to be paid by the state or local government or governments for which it
performs the service, for any audits performed by it in order to reimburse itself for the actual
costs incurred in making the audit.
2. The commission may require the attendance of any person within the state where it is
conducting an audit or part thereof at a time and place fixed by it within such state for the
purpose of giving testimony with respect to any account, book, paper, document, other record,
property or stock of merchandise being examined in connection with the audit. If the person is
not within the jurisdiction, he may be required to attend for such purpose at any time and place
fixed by the commission within the state of which he is a resident, provided that such state has
adopted this article.
3. The commission may apply to any court having power to issue compulsory process for
orders in aid of its powers and responsibilities pursuant to this article and any and all such courts
shall have jurisdiction to issue such orders. Failure of any person to obey any such order shall be
punishable as contempt of the issuing court. If the party or subject matter on account of which the
commission seeks an order is within the jurisdiction of the court to which application is made,
such application may be to a court in the state or subdivision on behalf of which the audit is
being made or a court in the state in which the object of the order being sought is situated. The
provisions of this paragraph apply only to courts in a state that has adopted this article.
4. The commission may decline to perform any audit requested if it finds that its available
personnel or other resources are insufficient for the purpose or that, in the terms requested,
the audit is impracticable of satisfactory performance. If the commission, on the basis of its
experience, has reason to believe that an audit of a particular taxpayer, either at a particular time
or on a particular schedule, would be of interest to a number of party states or their subdivisions, it
may offer to make the audit or audits, the offer to be contingent on sufficient participation therein
as determined by the commission.
5. Information obtained by any audit pursuant to this article shall be confidential and
available only for tax purposes to party states, their subdivisions or the United States. Availability
of information shall be in accordance with the laws of the states or subdivisions on whose account
the commission performs the audit, and only through the appropriate agencies or officers of such
states or subdivisions. Nothing in this article shall be construed to require any taxpayer to keep
records for any period not otherwise required by law.
6. Other arrangements made or authorized pursuant to law for cooperative audit by or on
behalf of the party states or any of their subdivisions are not superseded or invalidated by this
article.
7. In no event shall the commission make any charge against a taxpayer for an audit.
8. As used in this article, "tax," in addition to the meaning ascribed to it in article II, means
any tax or license fee imposed in whole or in part for revenue purposes.

Article IX. Arbitration.

1. Whenever the commission finds a need for settling disputes concerning apportionments
and allocations by arbitration, it may adopt a regulation placing this article in effect,
notwithstanding the provisions of article VII.
2. The commission shall select and maintain an arbitration panel composed of officers and
employees of state and local governments and private persons who shall be knowledgeable and
experienced in matters of tax law and administration.
3. Whenever the laws of the party states or subdivisions thereof are substantially identical
with the relevant provisions of this chapter, the taxpayer, by written notice to the commission
and to each party state or subdivision thereof that would be affected, may secure arbitration of
an apportionment or allocation, if he is dissatisfied with the final administrative determination
of the tax agency of the state or subdivision with respect thereto on the ground that it would
subject him to double or multiple taxation by two or more party states or subdivisions thereof.
Each party state and subdivision thereof hereby consents to the arbitration as provided herein, and
agrees to be bound thereby.
4. The arbitration board shall be composed of one person selected by the taxpayer, one by
the agency or agencies involved, and one member of the commission's arbitration panel. If the
agencies involved are unable to agree on the person to be selected by them, such person shall be
selected by lot from the total membership of the arbitration panel. The two persons selected for
the board in the manner provided by the foregoing provisions of this paragraph shall jointly select
the third member of the board. If they are unable to agree on the selection, the third member shall
be selected by lot from among the total membership of the arbitration panel. No member of a
board selected by lot shall be qualified to serve if he is an officer or employee or is otherwise
affiliated with any party to the arbitration proceeding. Residence within the jurisdiction of a party
to the arbitration proceeding shall not constitute affiliation within the meaning of this paragraph.
5. The board may sit in any state or subdivision party to the proceeding, in the state of the
taxpayer's incorporation, residence or domicile, in any state where the taxpayer does business, or
in any place that it finds most appropriate for gaining access to evidence relevant to the matter
before it.
6. The board shall give due notice of the times and places of its hearings. The parties shall be
entitled to be heard, to present evidence, and to examine and cross-examine witnesses. The board
shall act by majority vote.
7. The board shall have power to administer oaths, take testimony, subpoena and require
the attendance of witnesses and the production of accounts, books, papers, records, and other
documents, and issue commissions to take testimony. Subpoenas may be signed by any member
of the board. In case of failure to obey a subpoena, and upon application by the board, any judge
of a court of competent jurisdiction of the state in which the board is sitting or in which the person
to whom the subpoena is directed may be found may make an order requiring compliance with
the subpoena, and the court may punish failure to obey the order as a contempt. The provisions of
this paragraph apply only in states that have adopted this article.
8. Unless the parties otherwise agree the expenses and other costs of the arbitration shall be
assessed and allocated among the parties by the board in such manner as it may determine. The
commission shall fix a schedule of compensation for members of arbitration boards and of other
allowable expenses and costs. No officer or employee of a state or local government who serves
as a member of a board shall be entitled to compensation therefor unless he is required on account
of his service to forego the regular compensation attaching to his public employment, but any
such board member shall be entitled to expenses.
9. The board shall determine the disputed apportionment or allocation and any matters
necessary thereto. The determinations of the board shall be final for purposes of making the
apportionment or allocation, but for no other purpose.
10. The board shall file with the commission and with each tax agency represented in the
proceeding: the determination of the board; the board's written statement of its reasons therefor;
the record of the board's proceedings; and any other documents required by the arbitration rules of
the commission to be filed.
11. The commission shall publish the determinations of boards together with the statements
of the reasons therefor.
12. The commission shall adopt and publish rules of procedure and practice and shall
file a copy of such rules and of any amendment thereto with the appropriate agency or officer
in each of the party states.
13. Nothing contained herein shall prevent at any time a written compromise of any matter
or matters in dispute, if otherwise lawful, by the parties to the arbitration proceedings.

Article X. Entry Into Force and Withdrawal.

1. This compact shall become effective as to any other state upon its enactment. The
commission shall arrange for notification of all party states whenever there is a new enactment
of the compact.
2. Any party state may withdraw from this compact by enacting a statute repealing the
same. No withdrawal shall affect any liability already incurred by or chargeable to a party state
prior to the time of such withdrawal.
3. No proceeding commenced before an arbitration board prior to the withdrawal of a state
and to which the withdrawing state or any subdivision thereof is a party shall be discontinued or
terminated by the withdrawal, nor shall the board thereby lose jurisdiction over any of the parties
to the proceeding necessary to make a binding determination therein.

Article XI. Effect on Other Laws and Jurisdictions.

Nothing in this compact shall be construed to:
(a) Affect the power of any state or subdivision thereof to fix rates of taxation.
(b) Apply to any tax or fixed fee imposed for the registration of a motor vehicle or any tax
on motor fuel, other than a sales tax, provided that the definition of "tax" in article VIII 9 may
apply for the purposes of that article and the commission's powers of study and recommendation
pursuant to article VI 3 may apply.
(c) Withdraw or limit the jurisdiction of any state or local court or administrative officer or
body with respect to any person, corporation or other entity or subject matter, except to the
extent that such jurisdiction is expressly conferred by or pursuant to this compact upon another
agency or body.
(d) Supersede or limit the jurisdiction of any court of the United States.

Article XII. Construction and Severability.

This compact shall be liberally construed so as to effectuate the purposes thereof. The
provisions of this compact shall be severable and if any phrase, clause, sentence, or provision
of this compact is declared to be contrary to the constitution of any state or of the United States
or the applicability thereof to any government, agency, person or circumstance is held invalid,
the validity of the remainder of this compact and the applicability thereof to any government,
agency, person or circumstance shall not be affected thereby. If this compact shall be held
contrary to the constitution of any state participating therein, the compact shall remain in full
force and effect as to the remaining party states and in full force and effect as to the state affected
as to all severable matters.
History: 1983 c 342 art 16 s 1; 1987 c 268 art 1 s 74; 1997 c 7 art 2 s 49