NINTH

ANNUAL REPORT

MULTISTATE TAX COMMISSION

For the FI-I Vmr

01

July 1 . (976 - JUM 30,1978

Rlchrd R. Heath Arb-s Dbmov 01 Finance

and *dmlnlstr&n Chmlnnan

TARLEOFCONTENTS

TRANSMITTAI. LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OFFICER vi

EXECUTIVE COhlMlTTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

hl th lHEK STATE TAX ADMINISTRATOR

ALTERNATES

ASSOCIATE MEMBER STATE TAX ADMINISTRATORS . . . . . . . . . . . . . . . . . . . . . . . . . . x i \

NON MEMBER STATE TAX ADhllNISTRATORS . . . . . . . . . . . . . . . . . . . . . . . . . . . rv i l

MEMBERSHIP MA

REPORT O F THE CHAIRMAN

REPORT OF THE EXECUTIVE DIRECT0

S lANDlNG COMMITTEES

APPORTlONhltNT OF 1976~77 BUDGET

PLANNED ADMINISTRATION BUDGETS

PLANNED AUDIT BUDClEr

RUUGEI PERFORMANCE REPOHI

CPA AUDIT REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Balance Shcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Srillcnwtl d Revenue and Incurred Enpcnio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ih

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement oi Changes in Financial Postlion 17

Statement of Change, m Fund Balances ............................................... 18

APPENDIX A - Sales & Uw Tar Exemption Cenificate . . . . . . . . . . . . . . . . . . . . . . . . 2 2

APPENDIX B - Sales & Use T a r Information Sharing Agrecmenl .................... 23

Ill

December 1 . 1976

TO the Honorable Governors and State Legcslators of Member Stales 01 the Multistate Tax Commtssion:

I r e ~ p . d ~ l l y submit to YOU the ninth annual report of the Munistate Tax Cammission

c his repolt covers the firal year beginning Juiy 1 . 1975 and ending June 30. 1976.

Eugene F. Cdgan Executive Director

MULTISTATE TAX COMMISSION

OFFICERS

Richard Heath, Chairman Direclor 0, Finance and *dmmlaaat,on

Arkansas

EXECUTIVE COMMITTEE MEMBERS

Joseph Dolan Allison Green, Treasurer ~mrectai or aevenue state ~rearvrer

Caiarado Mlchgan

Martin Huff Executive onlcpr

Calilorma Franchme Tax Board

F. Kent Kalb Secretary o l Revenue

Kansas

EX OFFlClO MEMBERS OF EXECUTIVE COMMITTEE - - --

FORMER COMMISSION CHAIRMEN

Byron L. Dorgan Donald H. Clark William E. Peters Tax Mmmloaaner c c m m t ~ m r I Rwmw Tax CMmm-r

Nwth Dakota lndmna Neb,&*

MULTISTATE TAX COMMISSION MEMBERS REPRESENTING PARTY STATES OF THE

MULTlSTATE TAX COMPACT

, . Excc,,t,vc sccrc,.i,y C ~ i ~ l o m i a Slate Hoard i,i hlu;ili,arion P. O Hnx 1799 S.tcr.immto. C a l > i i , m ~ ~ 95808

Joseph F . Uolan (303) 892~3091 Erei .ut$ie Olrector Collrr;do D r p i m n e o t 101 Rc\enuc I375 Shmnao Slrecr Denver. Colorildii H112hl

Gordoo Y. 11. Wonf (80x1 548-76x Dlrcctor o l T a r s l ~ m H a u a i l Dcpwrnenr of l 'uxmon P 0 Bur 259 Hunolulu. H;iwau YhX09

F Ken! Kdh (9 13) 296-101 1 Sccierary ol Rcrcnuc K a n w Dcpanmml 01 Rcvenuc S!alc Oft8ce Rulld8ng Tnpcka. Kiinba, 66625

\\'illiarn A . Groff (4061 449-24hC Dlrecror of Revsniw hlontana Depanmcn! o f Rricnue Mitchell Budding Helena. Montma 59601

I

NEBRASKA

John J . Shechan 1702) XX5~4892 Fxecurivr Dmclur Depavtmenl nf Taxation 1100 E. William?. Capital Plaza Building Carsoti Clry. Nevada 89710

NEW MEXICO

Fred O'Cherke? 15051 827-3221 Cnrnrniui,mrr nl Rrvcnue Vcu ,Me\rcc Bureau of Kevcnue Smm Fe. New Mcxlcn H7101

Hob Bullockf ' (5121 475~bWI Compmller of P u h l ~ Accounli LHJ Slate Otl'lcc Building Aumn. 'Tera, 7871 1

M q Ellcn McCaffrcc (2061 7515512 D~rcc lor washnpton Department ul Kevenoe 415 Gsncrd Admnir lral ion Building Olymp~s, Washmgton 9x504

Tax Comrnwoncr Nonh Dakou Srslc Tdr Depanment Rirrnarck, North Dakota 58501

SOUTH DAKOTA

1.yIe Wcndell Secretary of K e ~ c n u c C;mtol Lake Plaza PI&, South Dakota Z.

ALTERNATES

ALASKA

ARKANSAS

COLORADO

HAWAII

IDAHO

INDIANA

KANSAS

Iohn Messenger (907) 465-2320 Deputy Comrnlr~loner Depairnenl of Revenue Alaska Stale Office Building Pouch SA Juneau. Alaska 99801

F. Nolan Humphrey f J O 0 371- I626 Admmrlralor Office o f T d x Adrn8nlslrarion Arkansas Denaiment of F~nancr and

~dministr i t lon P. 0. Box 1272 Lmle Rock. Arkan,& 72?03

Frank B e e k w ~ h (103) 892-3038 C h d of Taxarwn Cnlorado Depmmcnr ul Rwcnue 1375 Shennan Strcel Denver. Caloradu 80261

~ c p r y Directbi Depanmenr of Taxarton P. 0. Box 259 Honolulu. Hawaii 96809

Larry G . Looney (208) 384-3149 Commissioner Depanmenr of Revenue and Taxation Idaho Srate Tax Colnmlsslon P. 0. Box 36 Boise. ldnho 83707

Howard John,on (317) 633~4986 Audtr Admmirlraror Depmmcnt o f Revenue 21 1 State Office Budding Indtanapolls, lndranil 46204

Benjamin J . Neill (913) 296-2381 General Counsel Devanmmt of Rcvcnue Stale Oftice Building Topeka, Kansas 66625

MICHIGAN

MISSOURI

MONTANA

NEBRASKA

NEVADA

NEW MEXICO

Laun Lruls (4061 I4%24hO Deputy Director < I ( Kcicnuc Xllichsll Building Helena, hlonr.ina 59601

John L. Decker (4021 4712971 Adniin~straiur Tdl PuIIF). D i ~ l l i l l , , Dcpann lcn l 111 Rcienue P. 0 HUY 9.1818 Llnculn. Ncbrmka 6RSW

Theodore W dc Lome I5OZj 378-4497 Chief T a x Counsel

SOUTHDAKOTA

TEXAS

UTAH

WASHINGTON

WYOMING

Salem. Oregon 9 7 i i 0

-~~ ~

Salt Lake Cit). I t a h X ~ D J

J a m c D. Douglasr (307) 777~7841 Assirmnt Alturnry General Office of the Attorney General Stale Capitol Chcycnnr, Wyoming 82001

TAX ADMINISTRATORS, ASSOCIATE MEMBER STATES

13. Asueiate Membership

(b) Keprcwnlauves ofsuch a w x l a l c mcrnhcn shall nor be enlltled u, rcw <,rro hold a C~rnn,lr\~on ofllce. bur >hall 01hcnr.m haw d l (he nghrr uf Civmmcrrmn rrremben.

ALABAMA

ARIZONA

GEORGIA

LOUISIANA

Charles Borwell (2051 832~5760 Corninusmter Depanrnent of Revenue Muntgamery. Alabama 361 3U

Neal G Trucnte (6021 271L1391 Dirccror Dcpmment of Revrnuc Capitol Budding, West Wang Phwnix. Armma X5W7

Nick Ch i l i v i~ (401) 656-4016 Commisa<oncr Depanment o i Revenue 410 Trinily-Washington Building Atlanta. Ccurgla 30334

Shirley McNvinsrn (504) 389-6933 Secrerari Dcparlrnenr of Rcvcnue md Taxatton State of 1.oulsiand P 0 Box 201 Baton Rouge. Lnuistana 70821

MARYLAND

MASSACHUSElTS

MINNESOTA

NEW JERSEY

OHIO

Louis L. Cold>wn t3011 269-3801 Comprrollrr of i t c Treasury Stare Treasury Buildin$ P. 0 Box 1 6 6 Annapolis, Marylmd 214M

Owen L. Clarke (617) 727-4201 Commissioner Depanment of Colporations and

Taxation I W Cambridge Street Boston, Massachuseaa 0220?

Anhur C . Roemer (612) 296~3401 Commissioner 01 Revenue Depanrnent of Rcvenur Centrnntal Office Building St. Paul, M i n n o o u 55145

Sidney Cl.ser (609) 292-5185 Director Dlvir~on or Taxalmn Depanmcnc of Treaury W e s ~ Sra~e & Willow Street, Trcnlim. New Jersey 08625

Edgar I. 1.1ndley (614) 466-2lhh Tax Comm~rr!onrr DcpanmcnL of 'Taxation P. 0. Hox 530 Columbu\. Ohio 43210

OKLAHOMA

PENNSYLVANIA

D. M . Rrny ,4051 521-1115 Chamnan Sutc Tax C o m m w ~ m The hl C. Connora Hu8ldtne Oklahma Clr). Oklahoma 73191

Javnc Ann Wood, (615) 741 2461

! Anhrrw Jackrun Srae Oiticc Ruildmg Nashville. Tennerrue 37211)

Kxhilid L. Dililey (104) 14X2501 Tax Con~rnlssioncr Room 301, Capml Buildrng

WEST VIRGINIA Charleston. W r r ~ Virglnrn 25305

PRIOR

MULTISTATE TAX COMMISSION

CHAIRMEN

GEORGE KINNEAR, Washington June 1967-January 1970

JAhlES T. McDONALD, Kansas Januav IY70~Junr 1971

CHARLES H , MACK. Oregon July 1971June 1972

BYRON L. DOKGAN, Nonh Dalota July 1972-June 1974

DONALD H. CLARK, Indiana July 1974-June 1975

WILLIAM E. PETERS, Nebraska July 1975-Junc 1976

TAX ADMINISTRATORS, NON-MEMBER STATES

Gerald J . Hefieman 1203) 566~7120 ('ommisrionri 'Pax Dcpmmi.nt 92 Fmmingtnn Avrnuc Hmlord, Connectlrut 061 15

Kenneth Back (202) 629~2317 Dirccrar of Finance & Revmue Uiblnci u i Columbir Room 4116 Mun~clp.1 Center 100 lndrilna Avenue. N W. Warhmgrun, D C. 2WOI

Ruben H. Allphin (217) 525~6330 Dircclor Illinon Dfpanment of Rrvmitc Room 312, Srate Office Buildmp Springfield, lllbnuis 62706

Gerald D. Rair (515) 281~3205 Dkrector loua Dcpanment of Revrnue Lucar Strtc Olitce Budding Deb M o m s , Iowa 50319

Drpnrnmt of Revenue State Office Budding Frankion, Kentucky 5W01

Raymond I.. Halpeiin (207) 289-2076 ' l ax Asicaaor Bureau of Taxation State Offlce B u i l d q Augusta, Maine 04333

Lloyd M Prim (603) 2712191 Commiwoner Depnnmcnt of Revenue Admm>stratian I9 Pillsbury Strecr Concurd. New Hampshire 03301

l a m e H Tully, J r . (518) 457~2244

Albany, New York 12227

J . Howard Cohle (919) 829-721 1 Secretary o i Revcnue Depanrnent of Revenue P. 0. Bor 25000 Rale~gh. Nonh Carolina 27M0

. Adminwrator Division of Tax Depanrnent of Adniiniarrmon State Office Bullding Provtdence. Rhode laland 02903

Robert C . Wason 18031 758-2691

Tar Commission State Office Bullding Columbta. South Carolma 2921 I

Knben G. Lathrop (802) 828~2505 Cornrniraioner o f Tarea Depanrnent of Taxer Pavil!un Office Buildfne Muntpellcr. Vermont 05M)Z

William H. Font (8041 786-8968 State Tar Cornmiwon Commonwealth of Virginla Depanmenr of T a r a r m Richmond, Virginla 23215

Dennis J . Cunta (608) 266-161 1 Secrailrv of Revenue

Tax Commission W w l f o k Stale Office Building Jackson. hlissirsippi 39205

MULTISTATE TAX_ COMMISSION MEMBERSHIP JANUARY 1.1977

REPORT OF THE CHAIRMAN

The outlook for the success of the Multmtate Tax Commission appears brighter at this lime than it has in years. The dcciimns in thcHerri and 11.S Srerl cases [see Repon of the Executwr Directorj have removed roadblocks that have frustrated the Commission fur a number of years. Our nudlr staff has been expanded rufficicntly lo begin some really significant productton. Progress towards uniformity among the member states in thetr laws. regulatlonr and farms ha\ been made and is accelcratmx. But most imponant. there is

noticeably stronger commitmem from theTar Admin~strators to m&r theCommission hve up to its origind guals.

On June 2 and 3. 1976, at an Executive Committee m e t i n g called by then Chiliman William Peren, acvrn major goals were idemified for the Cornminion:

I . To foster uniformity in lax administration among the member srater. 2. To carry out an effectwe program of multintate auditr of mul~iatate and multina-

tional corporations whlch will result inequitable apportionment of taxes among the m e m k r states and will avoid duplicative raxation.

3 . To facilitate taxpayer cunventencs in the filing of stare tax returns. 4. To guard agamst restnctwe ledrral legislation and other federal action which

impinges uwn !he ability of rcaLr rax admin!straton to cany out thc laws of [hex states effectively

5 . To retam our existing membership ilnd to tncrease the number of states which are full mcmben of the Commmmn.

6. To help states achieve the maximum tax collection lo which they areentitled under slate law

7. To train state tan personnel so they may more effecrkvely admmisler the tar lawsof their states.

It was dectded that maximum emphasis over the next year should be placed on achieving objectives relating to the first rwo goals; namely, increasing umformity in state tax sdministration. and increasing the effectiveness of the Joint Audit Program.

The number of standmg committees w u trimmed tu two, a Joint Audit 1.raison Committeecumiating ma~nly ot Fteld Audlt Managers of member states and asales and Use Tax C u m m m e consiatlng of Salca and Use Tax admmtstraton. These cornmitrees are developmg specific objectives for conridsration of the Executive Comminee. Those ohjec- lwei should prowde sign~ficant progress towards our two prmrity goals Their work and progress to date have been mast gratfying.

There ia a strong desire in t h s country to decentralize government. Over the past Cony years drcismns, respons~bility. power and authority have hem pushed up the governmental ladder trom local and state governments to Washington. It is abundantly clear that many programs which are now run by the federal government ought to be returned to the states. Managerial and technical competence at rhr stare level has dramaticnlly improved since World War 11, and the argumentofthr Thirtics that state governments lacked thecapacity to hrndlecom~lex problemr is today drmonstrably false. In noarea ia this more truc rhm in the . . area of rax administration. Instance after instance can be cited where~n slate tax personnel have proved rhemselro more competent, more efficient. more nophinicsted and better equipped to deal with the cumplexit~ea of equitably applying tar laws to multistate and mullinati~nill corporalions than their federal counterpan,.

Given this climate of opinion; givrn the strong commitment of the mrmher stale Tm Administruton: g l w n the effective work of our committees, r,ur administrative staff and joint audit staff; and givrn our ovewhelmiog victo"er in the courts, the Commission w l l move forward rapidly toward the achievemmtufia goals. The result wtll be ,more equitable tax udministmtion for the r t m , and for d i corporate taxpayerr.

REPORT OF THE EXECUTIVE DIRECTOR

I. MEMBERSHIP

As of J a n u a I. 1977, rhr Conuiush~on has 21 Member Slaws and 13 Aswciac Member Statca. During the year the Compact was enacted i n South D&om and rcpealcd in

i'lunda: and Vlrglnia ceased to he an A w x i a t e Member S~ale.

II. UNIFORM REGULATIONS

A. A d o p t i o n o f R e g u l a t i o n s 'The Multist&lc Tar Cammlsslun approved Vnlfoim Al locat~on and ,\pp*m,>nment

Kcgulatiom Ssptemkr 10. 1971. On F e b r w y 21. 1971, 11 approved a slighil) icviscd vcrvon. B y then Indiana had adopted the flrat \er. uhlcI8 is s t ~ l l in effecr i n char SMC Ten orhcj hlemher Svaaa have adidoplecl the rev~scd Kegulsrions They dn: Arkansii,. Caldurnta ( c ~ c e p l ah todiuidzndi l . Idaho. M~rsoun. Montana. Nrbril\ka (encludcs exampl~s). New hlrx~co. Nonh Dakoia, Oregon and iJ?ah. Aiabama u ~ i l i z e l chr regulauom il\ g u ~ d e l ~ n c i alrhough tomral ~ i lopc ion ha\ not raken place. Texas I, applbmg the regula~~ons ro 11%

Franch!~r Tax to the extent pu~a~b le . Copte, ui the Regulartons arc aiadahle at the Commir,mn's hc.~dquiincrs upon

request.

6. Sa les A n r i b u t i o n R u l e 111 the Eighth Annual Repon, wc noted the pendency o f a dcciiion by lhe Apprilate

Courr o f Illbnulr' in a case in uh ich ihr v d l ~ d ~ l y o f the \<I~cIIIIc~ throwhilck and douhlc throubauh ruler u a i invohed. Th f i c ruler arc rctlected in Multtstatc Tan C u m n m i u n Kegulrrium I V . 16(al(61 dnrlI7). reapectwel). ThcCnun decided ihccarr. in h4a) ut 1976. but d d ,u on a procedural haiis whxh awlded the iswes to whtch we h a w rcfencd.

The Supreox Cuuno isou th Carolina, however. had ruled carher upon [hi. thruuback rule, upholdmg it\ \ a l i d l t y2

III. UNIFORM SALES & TAX CERTIFICATE

I h n n p ihc ycar, i ive additional Slalci have mdicatrd thci i will inpncir to accept thc u n m n n csn~rtcare i b r r rmes the lord to rhmy-r i r . ncarly 80% o f all S l a m wh~ch have salel and usctaxes. 'The t o m o f t h e cenihcatcandthc ndmesofthc th inyx i x Sotus appear st Appcndlr A nl ' rhlr Annud Repon.

IV. AUDIT ACTIVITIES

Thc C o m m l w m ' s otficc in New Yorb currently conscrts o f four audltorr. includmg the A r m Audit Mdnagcr. Ib Chlcctgo otllce also conslrh u f foor audmn, lncludlng ihc Commission', Audit Coordinator. Cuncnf plans are to add two additional auditors in Janiirrv. and one nmrc plus p l r v b l y lhree rrameer in latc Sprmp I t is anr#c~palcd that $he itre 01 the audit staff wdl more than doublc hy the cnd of Ftrcd Year 1478

lG~EAuiurnuricElu~~rrcIncorpurutrd, v . Roherr H. Ailphm as D~recturofRevenueofrhe State o f il l inols, 61725, Appcllatc Coun of Il l inois, May 14. 1976. TovingronFobrics C u r p v . SourhCarollno Tar Cornmisston. March 10. 1975. 212 S.E. 2d 524, U S . Supreme Coun D m 741521. Appeal dtern~swd October 6 . 1975, 14 L W 3198.

V. FEDERAL ACTIVITY

&0 acuon was taken hy Congress durmg the year on any b t l l diicctl) aticcting rhz applicah~lity 01 sviltc ralcs and u,r taws to interstaw transactmnror aftcct~ng atatc u,raliun <>I rn~l l is ta t r LnCOrne

For the past ,evcral ycdri , rrprcrcntatives o f some large corporatmns hars sought enaclrnenl o i f c d r r d hills' whlch, among other thmgs. would hars interfered rahatanlially with the judicially e*tabIbhed unitary bumesb concept. The u t i l i ~a tmn o f this concept requlrer lhr w e o i an accounting approach called cornhination. T h n approach involves lrrarmg a unitary husiness a> one r i m y whcihc i i t is operated ar one corpmmon w d l many d~vlr~uns,,r as a g r n u p o f c q o i . i t ~ o n ~ T h e d e t e m m & m of thc ~ncnmclax l l a h d q o f any one of thorc curpuratlons to a Stale is then made on the basis of the act lv i tm o f the e n t m husincss.

Comhinauon was used by only two Sratcs as recently as 1972 Today. at least I 6 Stiltcs arc n l h i r u m g i t i,r intending to do so to iornc dcprez. O f thchr, at least r l r i e n are eithcr applying i t or inrendmi: l a do h u on a n intsrnar~onitl basi,. Somc expen, k k v r that any State which a p p l m cornhinatmn on a damcstii. basla can be curnpellcd to do so on an ~ n c m a l i o n d haall and, thereiorc. should also require i t on an ~ntemnt~vnal ba,ih.

The Treasury Dcpmmznt ha\ >ncluded i n the pcndlsg tax treiny wl th thr United K ingdompru r~ r~ons which would ~ubstmual ly i h i~ck l c the States in thc!rcfion\ to impruvz t k ! r van adrnmistratlon capahilitnb. The ohjectionilblc p r o v ~ o n i o f t h r proporcd Un i r rd K~ngdom'Trcilly would prohihlr ihc use olcumbinxtiun at thc inr r rnat~onr l level in insrancss

uhcrcm [he parents are located in thc L'ntled Kmgdoni. S~mliar pnr\iscon, are being ~ncorpuratrd l n l o treatics which are currcaly I h n g n c g a t ~ e d wi th orhcr nations Th l r Is especially unionunatc i n \leu of thc nccd la u x intrmation,il comhin;lrlon not only at the Stale level hul ill the Falsral lcvcl as well. The rru,un fur Federal suppun o f thc reatrlrrive provmons i, difficult to comprehend.

Many reprsscnmrcs not onl) o f mternarional corporauon, hut o f rhe Treasury Drpmment i trcl ihdvs b n g mdinlacned that Internd Kei rnucCode Section182 prmidcs an adcquxe mean5 of deirrmlning multicorp<rrdtc huiinesa incrmc nttrihurahle to thih c w o t r y Tbcy xou ld h;w thc Stater [use the hame sppruach for state purposes That rrcr ion provider ihal rile I K S ,hall make adju*tmrne when 11 fmds that trm>.ictionr betwrcn furcign and dorncatir atilliatcs h a w not beeti effected in rhc same manner a, would have been thc r a c

had those transaction$ h e m made "at a m ' s length " A long Haivard Law Rebicw Eictte:' rmcntly dcult rhal coi~rention asrrong b low. That note po~nred out that ihc Internal Revenue Serrlcc iac l f generally ubes cornhinatiun concepts in applying thc ami' i - length appruach.

The Multt*latc Tax Cornrnirsion has taken the lead in crirr~ng opporitiun to the ohjectionahle provi,inns of the pruporcd treaties I t hope\ that Treasury officials will soon come lo r r d w c thur rhoac prov imn \ wuuld largely hnrnatrmg not only rhcStaiei but the I R S a i well.

Vl. LITIGATION

A l l uthrr l it igation involving the Multisvate Tax Conimirr ian has been overihadowed hy dccis~ons upholding the valtdlty o f the Multirtate Tax Compact.

On January 29. 1976. the Supreme Cuun of the Statc of Washington rulcd the

Mult~state Tax Compact valid. The nine judges were unanimous i n upholding a lower c o u n

'See previous Moltistale Tax Commission Annual Repotrs. 3"Mullinational Corporalionn and Income Allocation Under Section 482 o f the Internal Revenue Code," H o ~ o r d Law Review LVol. 89:1202], pp. 1202-1238.

decibion i n rhr c a r . niK~tr,icur et oi I Ilerr: C o i p o r a r i ~ ~ n Hcnr dad nut q p c a l the decwon I,, {he I! S. Supremc Coun.

Five days later, on F c h r u q 3, uthree~judge paneloithe Fcderd D is r r x rCr~un fo r the Southern Di r t t ic t o f New York heard argument in the cure o f U S . Srrd ui ui v . Muitmore Tar Crirnrnisrivn PI u I . Thc r ~ m l l was the same, on July 8, that coon unanimoosly agreed that the Compact IS conallllltiollal.

Tho H e m decision was the narrower o f the two sincc it purponed m con,idrr the \d id i t ) of only Anlcle V l l l and supponmg snclca o f the Compact. Thc U S Sirel car?

cunt inedthe rn lmCompvc t and rclatcd lasue in d r t a ~ l . Thecorpuiarionr in i h c l ' 5 Siccl cmc had the b c n c l ~ l o f extensive discwcry proccedmgs before rhe Detcndanv finally fdcd a

Muuon fur Summary Judgment. Bulthe rilrporauunb used little ofthe dwovcred in fanna~ non to suppm the dlegationa inthclr p leadmp I n the Her!: c a x the C o m m ~ r w x tiled 8 1 ,

M o w n for Sumnmr) Judgmem bdure any di\cwer) jm~ceeding* wcre mm&d b) Hmz. I n h w h c a m . the couns grmtcd the Mut8ons lor Summary Iudgmrnt

The spccllic i h w r hefurc the Washingtun cwnr wdh whether ur not the Comrrl8siwn has the nowcr and authont\ l~iconduct a d e r and me lax audlr o f Henr nunudm lo Ancclc V l l l The Washington SuprsmcCoun r q e f a d Henr'acunrcnt~un that t h e c o n ~ r i r u l i ~ ~ n ~ l ~ t y or Anjcle V l l l must be detemmrd h) look~ne, at rhe Compact ar a whole Citing thr. Compact's severability p r o v w m . the Coun r i d rhnr m y potcniially inbald Compact provis~on would he severable in m y went sncr " . . . the Compact ~!selfcnd#cato an inrmr topresene andcnforcesomuchol~hr Compact 4s ir runwtutional." Inthr. New York case. the curporarlons contended that thr c n c ~ r c C o m p x t 15 ~ n % J d

Both cnuns addrrsrcd the r m i m l quemon in the cabe. whaher nr not C h u t e 3 o f Sectmn 10 o f Anlcle 1 o f the U S . C u n w t u m n rtqulrc, congrcr,ionul approval 31 a

picrequisite lo the validity of the Mult~,iace Tax Conip.tct. That languagc reads: TheCouns circdthe IXY3cacoI l i r p i w r i i Ttrwrrrre'm whuh. lnahiirrdr~r,,m, ,he

L ' S . Supreme Coun had said tharcongrerrional rppruvd 8 , nor r prrrcqulii lc lo !he v&d#ty of a cornpncr un laa that c o m p m trndr tv inrre.w the po l iucd power uf lhc Sldur at rhc rxpsnse of the Frdcral Government. The ccvprdtnmr hrd contended char. \ i n m the lsnpuage to that effect i n that case us, r h i r r ciw~rrz. 11 had 1~ hindmg etlect a, la*. The Cummission, on theother hand, contended that \ r \c ra l case,. i nc lud in~ the U S Suprelne CouncaseoflVhurronr. Wi.se%adorher rtaw ,uprcmccouncaseswh#chihc U S . Supreme C ~ l u n hild refused to r e i ~ c w , had rbtahli,hd that ihu Vir~8nto I,. Tcnnrr~ue language reflected the law ut the land. Both the W,t,hn~i.ton coun and the New York Court agrccd with rhc C u r n m m ~ o n on t h ~ r poini in mlmg the Compact valid.

The New YorkCoun had hcforc it the June 14. 1976, U S . SupremcCoundecwm i n

rhr case n l New Hnmprhirr v . M u m In ruling the compact ~n that m c tu he valid, the

Supreme Coun y x c i f i c d l y invokcd the language in the V i rp t ra r Tennerrce case T~L. u 5 Sirel caaejudgcs werequick mcitc theNrw Hatnpshire r. iMuinr d c c ~ r m i n ruling the

Multxxate Tax Cumpact valid. The fact that the Supranc Cuun ha> ao rccently ruled upon the current applicabhty o f

theViryiniu v Tennrnee language har made the M T C tax administrators andtheirattorneys opt~miatictharrheCuun wi l l ~ u m n l m l ) disporeoftheUS. Sire1 care i n FavoruftheMTC.

The Warhmgton Coun s a d that rhc p n t audit provtsmns " . . . do no, increase the polltlcal power o f i h r sarea. in fact, the Mul rNarr T d x Cc,mmi,smn, when i t pedorms an oud~t, ha, no greater power than the i nd~> idud states themselves." The New York Coun

noled rhdt the Comm~sston ". . . i s vrarcd wcth nu la r ing authonry; the laxer which i t admmmcrr are only those ~rnpored by rhc rcqxcttve starea and suhdivtrions i n accordance with rtr te law. . Nor doe, the Conlrnc>iam have legislative power. . . ."

Hmr argued that the j a m rudtr pro\wons encroach upon or inenere wi th the just ruprcrnscy ot i h r Unzred State, under the commerce clause of the U S . Conrt~tutton The Wahmgton Coun sad thiil ". . rhrrs 85 no federal upremacy wl th whlch [he Compact prercntly can mterlcrr. Thcrc arc many matem u p n which different Starer may agree that can in no respccr concern 1hc United S u e s " The New York Court said: "There is nothing inhrrenl in the problems of rnult~5tillc tar admcnirtration that would requlce federal re&- I~on . nor hd i Congrer, yct idc!mfird thcsc problems as a matter o f pecuhar federal Cll"UC,ll

The Waih8nemn Coun dmerecd wtth Henr' contention that auditine of intersrate . busmcsses for purpoicr o f state laxation i, a marcr rrquirmg unlfurm national pol icy. Thc C w n raid, "The C o m ~ s c l I, merely a cunvcnicnt vehicle ihioueh whlch legitimate state interestscan berarrlcdout. . " a n d the audit provisions ". . . dunat impuse i m p e r m m i - ble dcscnm~nah,ry burdens on inrcrrtate husmes,."

Henz contended that the pnwisiuns o f the Comoact wolrte the equal motection clause

"cannot be subnantiated." The U S . Sreri Coun wrn i further: "Whcther the audit i> performed by Cormnmiannuditor~ or state audttors, the prohlbtnunr againaldlrcluaure xe the same." Bur that Coun aald in effect that, even i f an ~ l legal dlrcluhure touk place. thc corpomtions could not complilln because "[tlhc cntorcrment of rrinlinal mIct lon5 la a

concern ot thc ~ u b l i c mosecumr, as lo which these lai in tiffs lack standmg." Also, the Washington Coun rejected H e m ' claim that i t is denled due process becdure the Campacl dvra not provide an eifcctivercmedy for lmproperdlscloaure u iconf idrnt id mfurmatiun. I t

~ ~

said that Hm, had failed to demonstrate lack o f an adequm remedy. H e n r complained thalCommission personnel may be appomtod " I i l r r r sp~c l i ve of thr'

c iw l service. personnel orother merit rystem laws of any p m y rtr te. . . ' wt th resultant dw"m~na t ion against mtentate taxpayers TheCounpoimedout that Washlnglon slaluter

p e m i r audits o f intrastate taxpayers by appotnted agents nut covered hy applcahlc slale qualification tests. TheUS. SieclCoun noted IhatcachComm~arion audmr " . . . is bound by the samelaw. . ." whenaudningon behaliofastateas wnuldhethercate's ownaudi lor . The New York Coun then stated, with some acerbity: "It is not a demonstrated prlnclple that rnx audbtois havmg civi l s e m c r sratus work wi th my grcaccr or lcrs dihgence or a b ~ l ~ y than those who lack job tenure."

Henz argued that "the C o m m i s s m ~ ' ~ audirora m q h r posriblr. be less familiar wt th rtr tc laws and less experienced than state auditors and, therefore, d~x%rninatmn could rewl t . . . ." Thc Cuun dtamlrred this con!rntion s premature. The New York C o u n vmp ly said that any dlarinclmn between quxl>tications forConrmiss~onpersonnel and those tor ,late perwnncl " . . i\ o f no con<cqucncz. . . ."

Henr argued thar t h e C o m m ~ r ~ m ! auditsconstllute unreaaonahle searches and seizures under ,he faunh amendment of the IIS . Conmtutmn. The Coun dtsagreed: "because the

Commlss~on is a validly conrrcruteli hod), i t unquestionably h a the power and authority to conducl proper incrhtalc iludlrr . ."

The Coun then granted the S u m m q Judgment, saying that Henr had presenred " . . n o dwpvled fact,. . . rh.ll arc rnxlc"l to the constttutronatlry of the Multtstare T a x C t m m l r w n . . ." I n grirn1m.l 8 i m i l a r motion, rhe New York Coun said: "No conten- tion ir r n d e that the Compacl ca bang adrninmtered orherthan according to its terms, except a\ to pmlcu lar r governed hy the ruhnmrtvc tax laws o f the respecuve parry states. The con\tmmonal irrues posed by (hi, urnp plaint reduce themselves to questions of law. . . . Cenain o f !he i r u e r o f facl whch plamtlffr would reek to raise are purely h y p t h e t i c a l and spefulatiue. . . ."

not conmtulc an mr id iow d lwiminatmn agalnsl mult~iratc taxpaycis. Vlfferent and more cc,rnpl~x p r o b k m ~ are i a m d !n the nreion of muittstale and rnulliniitmrml

t h e c o r n p u i n ~ ~ r d data S i ~ h p r r r o n n c l m d record? cannot hc ill morethan unc place at

a c t m ~ tocausc refusing corporationrto abide by both theHerr: and the U S . S l rr l decisions

and to suhmit to audit5 whlch the Stale? have direcled the C o m m n s ~ ~ n a, perform Thohe corporalinn, ucres~stingthosc swt\ pendinga decwon hy the Unlted Statca Supreme Cum in rhe U S . Sfrr l c a e

The appeal o l t h r U 5. Siud c i ~ tn the C'nltrd Stater Suprcrnc Coun was perlected on No\enihsr 4. Final picading? hg all parties haw now been filed. The Suprcnre Coon i r L . X ~ C C I C ~ to i l c c i d ~ c ~ r l ) 111 1077 whc~her to sxnmdli ly aillrm cnrd#\rncri art,, now probable

j w d d o n .

VII. PUBLICATIONS

Thc hiarch 1976 ihauc of ihr Vandurbilt Law Revtcw included anlcies hy staff

~n ismbrn o f the Commia~~un . ' The Commission also publlrhed 11s Newrlctici No. 36 in Ocloher.

VIII. JUDICIAL UNIFORMITY

TheCooimjsion is hrrkmg luencourage Surecoon< losuppon SMe sflona tn achieve un! fum#t) TowmJ that m d . i t hdr made its Chief Counsel ava~lab l r for advice and l o r ~ ~ m ~ p t m n in ictigarmn uhlch in\ulvca thc r e u l t s o f j a ~ n t iludcls oiotheireiatcd lssurs. As a rrbult, hc I \ ~nvo l \ed in lingation oiauen in swcral State?

Jo~nc d o d m cunrnrute a major e f ton toward un i lorm~ty in taxat~on u f ~nterrtatc comnisrcs. The success ,ftho,e ellcmr. lhowevcr, wt l l ult8malely dcpend upon [he support u h ~ h thcy r c c e ~ v e from the couna u l the \u iuus States. The c u m 5 can give r i d , w p p o n only i f [hey uoder,iand fully the i r c h n m ~ l issue> w h c h are involved and l i t hey rrcognm that [he effect " leach dec~bion reachci beyond the borders ut the indlrdu;il Slate.

lo m k i n g the rcrvicesof la Chlef Counacl wadable tothc Sratra. the Commisswn is heelmi: to dmmnn\trillc ln the cuuns the importance ofeach decismn to thc rs tah l~rhment of 3 r i i l l ~ n d l system o f ma raration o f interstate hu\inrsr

IX. CONCLUSION

'W8Ilidm D. Dexter. C h d Counsel. Multistalc Tax Commt\sion, "Taxiltion of Income

from lntang$blra ol M u l t ~ r ~ n t r ~ M u l ~ i n a t i ~ ~ n ~ l C~rpormons:" and Eugenc F. Cumgan, Execuwe D~eclor, h.lulustntr Tax Comrniwun. "lnturrtatr Corporate Incomclaxar ion- Recent Rsiolur~ons and a Modcrn Rcsponsc," V r m d ~ r h i / i I ~ ~ ~ R r ~ i r w , V o l 29, No. 2, pp. 401-421 dnd pp. 423~442.

STANDING COMMIUEES

Frank Beclwlth. C u l m d o Rohen R o n n ~ r l . Cal~iornix Donald R. B o s h . Utdh Orville Di ron, South D&ars Paul Enkmc. C h l o r n ~ a Gerald L. Forcer, Moncana Horace Gatlcy, Urvh Sydncy Goodman. M ich igm Jay Hanky . M i s o u r i Wnlrsr Harvey. Cs l i hm ia Hen C. Holderied. Mlchlgan F Nolan Humphrey. Arkari5as Gary Jenkins. Aiaaka Howard Johnson, lndtana Norman Johnson, Arkansas Charleb W . Kel lrr . Nonh Daknu Rohrn R . Krssel. Nonh Dakota W~ l l i a rn E. Knipp, M m w r i E ~ c r r l l Learh, Arkanus

Ronald S. Loyd. New Mexlcn Frrd J Lynch, Michigan klarvey P McNu!!. Wyoming Frank Medlin, Idaho Tcd Mdd le , Colorado K o k n H. M u n r m ~ r r , Washmgran C. Dawd Newbery. Kansas Kohen Nune~. Cvlilumia Jrrcmioh F. O'Cunnor. Indiana To~nu~aru Ogm. Hawaii Bob O w n s , Teu, Roben E P~quricc. Crhiomia Oscar Q ~ o l d h d c h . Oregun Jcr Randdl. Iddh,, Humrr R R C M Idaha Jack Scuon. N c h m k a Rohrn Sondng. N c h m k a Ray T w m Wyomine

Wade Andrrson. T e x z Donald Bosch. Utah Churlci Brddley. Louisiana John Decker, Nebrarka Orvdle Dixnn. South Dakuta

I . D . Dutaon, Caliiorniii Walter H a v e y . Califomla Chandler A . Hewell, Gcorgia Ben C Holderied. M%chlgan R~chard M . Lee. Hawaii

Hrrvcy P. McNun. Wyoming Gail Price, Arkansas Anhur C. Roemer. Mmnesow Homer R. Ross. Idaho Frank O S a n d m Indiana L m y Broun. Nurda Wdlrr M Stark. honh Dakota S. E d Txedrn. Wafhlngon Wesley t. W~lbcr. M n m u r i

APPORTIONMENT OF 1976-77 BUDGET

S w r - -

.\la,kr

Aridnra,

California Colorado H a w , ,

Idaho

Indiana

Kaniils Mich lgm

Mmouri Montana Nchrirr la

Nevada Ncw Mexico

N o n h Dakota

Oregon South Dakota

'Texas lJ,rh \V.rahngron

uiyoniing

'Appur- '.4ppor-

#Revenuer noned rioned Tom! S h u r ~

Under Oc Shore S h u r ~ of 1976~

Cmpac , m 7ord O/ lOOc qf POT. i V 7 i Bud#c,i

~ -~ -

$ 57.025.664. ,3799 $ 1,05405 % 756.81 $ I.RIUX6

# For lhrcal year cndlng June 30. 1973

10% m equal shams: 90% on hasis of tar revenue

PLANNED ADMINISTRATION BUDGETS

Salaries & Payroll Cost-*

z i l %lark\

h) Empli>)c?*' Imurance

C ) Rc~mmenl

Operating Expenses a ) Ron& and Insurance

h) Oflice Rentill

C) Office Suppliel

d) [+eight and Postage

e) Prinring and Uupltcarmg

li Telephone and lelegrapll

g) R w h s and Permdiciils

11) Mwcllanwus

Conference & Committee

M r r t i n g ~ and Hearings

Contract Services

a) Accounting Fees b) Consultmg Fees c1 Olher Cwmacr SNVICCI

PLANNED AUDIT BUDGETS

BUDGET PERFORMANCE

Fircal Year July I . 1975 - lunc 30. 1976

REPORT 1975-1976

-- ~

Anuii l

iOierJ or Under

Budge1

JOHNSONANDSCHNEBERGER CERTIFIEO PUBLIC ACCOUNTANTS

METROPOLITAN BUILDING. SUITE 5W . DELIVER. COLORADO 80202 . 3031892-1841

MEMBFR AMtRICkN lNSTiTUTE OF CtRTlFlED PUBLIC ACCOUNTANTS COLORADO SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

NATIONAL ASSOCIATION OF ACCOUNTANTS

Mult~state Tax Cammlsson Boulder. Colorado

We have examlnedthe balance sheet of MuHlstateTax Commlssm at June 30 1976 and the related stalements of revenue and mu i red expense, changes in fund balances and changesinf#nancialpos~tionlorthe yearthenended Ourexam#nat#onwasmadeinaccordance wlth generally accepted auditing standarCr and accordmgly Included such tests of the acco~ntlng records and such other audltlng procedures as we considered necessary in the cmumstances

Inouropinlon theflnanc~alstatementsreferredtoabovepresentfailythef!nanc~alpasltlon of Multjstate Tax Comm~ss8on at June30 1976 andthe results of I s operations changes ln fund balances and changes inf!nanc#al positlonlor the year then ended nconlormity wlth generally *mepled accounting prlnclples appled on a basis canststent with that 01 the preceding year

MULTISTATE TAX COMMISSION Balance Sheet June 30. 1976

A S S E T S

Current Assets:

Ccnilicarc\ of Dcposll . . . . . . . . . . . . . . . . . . . . Asressmcnrs Rcfeivahlc . . . . . . . . . . . . . . . . . . . . . .

(Net of Allowance for Doubrful A~>es,ment, i n rhr Amount of $31 ,5001 . . .

Prepaid Expcnrc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Toral Currcn~ A x r r . . . . . . . . . . . . . . .

Fixed Assets (Note I): Lc~,rimld Improurmei~ts . . . . . . . . . . . . . . . . $ 956 O f f m Furnirure and Equipment . . . . . . . . . . . . - 22,568 ~

23.524

Other Asrels: Expenre Account Adiancc, . . . . . . . . . . . . . . . 2.700 OCOOM~ INoie 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.274

Uinn iun~red Prnilon Plan Coal (Notc 31 . . . . . . . . -~ 12.573 -

Total Orher Asscti . . . . . . . . . . . . . . . . . . . . . . . . . . 17.548 -

1.IAHII.ITII~:S A N D F U N D BALANCE

Current liabilities: A ~ c o u e s P.iyahle (Now 5 ) . . . . . . . . . . . . . . . . . . . . . . . S 10,935 Accrued Kctlrcrncnt INote 3 ) . . . . . . . . . . . . . . . . ~ -~ 8.577

Tola1 Currcn~ Li.lbclirirs . . . . . . . . . . . . . . . . . IY.512

Drfcrred Income: Assesanicntr Rrccncd in Advance . . . . . . . . . . . . . . . . . 22,106

Fund Balance: Reserve for Ernployzes' Retcrrmmt

(NOIC 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S 15.877 Cnappruprixed Fund Halance . . . . . . . . . . . . . . . . . . . . . . g?.712

Total Fund Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 IX.650 --

Total 1,iabilities and Fund Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . g60126X - .~ ~

Accornpwyiag Summary or Signillcan? Accounting Poixies and Now, to Financial State- m e m sre an integral pm of this sraternent.

JOHNSON AND SCHNEBERGER

15

MULTISTATE TAX COMMISSION Statement of Revenue and Incurred Expense

For the Year Ended June 30, 1976

Revenue: A u c ~ s r n s n t b , Grncrai Purpose\ . . . . . Olhcr:

. . . . . . . . . . . . . . . . . Rccrjpla. Othcr Purposea Inierrst . . . . . . . . . . . . . . . . . . . . . .

Toul R e i c n u ~ . . . . . . . . . . . . . . . . . . . . . . . . .

Incurred Expmce: Sidarlcr

. . . . . . . . . . . . . . . . . In\ur.uwc, Einploscr.\ . . . . . . i'cnrioo Plan md Kct8rcrncnr (Note 3)

. . . . . Dcprcclatlon (Notc 1 ) . . . . . . . . . . . .

Kxresr of Incurred Expense Over Revenue

Accornpaoymg Summary o f Signlficilnl Accounting Poltcir% and Notes to Financud Stale-

mentr ;lie an tntegral pan of this starmmenl.

JOHNSON AND SCHNEBERGER

16

MULTISTATE TAX COMMISSION Statement of Changes in Financial Position

For the Year Ended June 30, 1976

Source of Cash Funds: Op~ra l~uns:

Ercrbr o f Incurred Expense Over R c r c n u e . . . . . . . . . lncume Charge, Not Requuing Ca\h Fund,:

Amnniralmn of Pension Plan Pas1 Service Cost . . . . . . . . . . . . . . . . . . . . . . . . Dcpreciauo Pmv,,,o,, f

Tmdi From Opcratlcms .. . . . . . . . . . . . . . . . . . . . . . . . . . . Asseasmenti Rcccl\cd hn Advance . . . . . . . . . . . . . . . . . . . . . . Cenificarcr 01 DepoA Marurrd.. . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trul,sry Btlla MaLurcd . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incrcdse in Accounrr Payable

. . . . . . . . . . . . . . . . . . . . . . Increase m Accrued Rcl irernen~. Uecreare i n Lk

. . . . . . . . . . . . . . . Total Sourcc o as un r

Applicat ion of Cash Funds: Cznlfic;ile\ of Depoait P u r r h a d . . . . . . . . . . . . . . . 5 1.425.000

Trcr,ury R ~ l k Purchared . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.016 Incre.br ~n Aasebamtnh Receivable.. . . . . . . . . . . . . . . . . . . . . 35,215

Pcnrmn Pl.u Conlnbulion i n Excess of

N m n a l Corl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.679 Furoharc ol'Cliltcc Furniture and Equ~prnenr . . . . . . . . . . . l . l ?O

1ncrr.m In Erprnsr Accoun, Advi lnrcl . . . . . . . . . . . . . . . . . . XO(1

lnrrc~,c cut Prepwd Expenic . . . . . . . . . . . . . . . . . . . . . . . . - - - 139

Toral Appllca,ion of Cilrh Fonds . . . . . . . . . . . . . . . Il@L9XL)

F:xccs of Source of Cash Fund, Over . . . . . . . . A p p l m r m of Cash I'undi

. . . . . . . . . . . . . . . C jsh Baliincc. June 30. 1475 8 . 5 3

Cash Balance, June 30, 1976 . . . . . . . . . . . . . . . . . . . . . . . . . $ - 57.680 -~

Accompm)ing Summary of Significant Accuunring Policies and N o h to Fmancial SI'ate~

ments arc an integral pan of this mtement.

JOHNSON AND SCHNEBERGER

17

MULTISTATE TAX COMMISSION Statement of Changes in Fund Balances

For Ihe Year Ended June 30, 1976

JOHNSON AND SCHNEBERGER

18

MULTISTATE TAX COMMISSION Summary of S~gn~f~cant Account~ng Pol~c~es

Accounting Method

P r o p n y . Plant and Equiprnrnl

11 ia also the policy of the Cornmmsion toeccrur founeen perrent nf the gros

salaries of fhc mrsonnel on leave of absence from Slate taxine auth~ritier and m*e - contributions to thex r~spective plans if employment wtth the Commis,ion is termi- nated and the employee returns to State emdoyment before the expiration of h e leave . . . . of absence.

JOHNSON AND SCHNEBERGER

i 9

MULTISTATE TAX COMMISSION Notes to Financial Statements

June 30. 1976

I>rpreci;mon e~pensr fur l11r year ended June 10, 1976 calculated under the \tralght- Ime method amuunrrd to $2.626 Amonizsrion expenae calculated on the atratghr&linc

method over the l cnn d the lease amounted to $319.

Nate 2: The Cornmi ismn' i p n m q office faciillles at Boulder. Calmado, are lsaard under an

agreement cxplring Junc 1. 1977 Monthly rrnral under ths agrzemmt ir $567.

The Comm~ssion lcases secondary office t lc i l i t ler in New Yurk. Lllmolr, and

Washlngron under shon-tern agrccmcnt5

Deposits applicable to future icntal payments appre~dted $1.849 at Junc 30. 1976

Suhilantially iill o f the fu l l t m e cmpluyecr uf i h r Cornmiismn arc covered by u

pcnrmn p l a n The Comin~rr ion has also adopted the policy of asurning the l~dbd!t) for contnbutmns 10 the Srurr rcurcmcnt fund tor employees o f the Cornmiwon who are on a

leabe olabsence fromSialrtaxlng aprncles ifthese employee\ returnto State cmploymmt.

Unarnonired penson plan cost results frum fundmg orlglnal part serbicc cosl more rapidly than the twcnty ) e x period in whlch this cost wt l l b r cllarged to expense for

accountmg purposes under the accountmy mrrhod for penson p1.m adopted by the

Camm~rsiun.

Note 4:

In the upmionof legal counsel, the Coimnission is immiinc from Fedciai incame tax a urll as tromothcr Fcdcrd raxr, as anorganirdrmof agroupaf State, era an instrurnenral~ ~t! o f thohe Stater. Thsrefore, no prorluon has been ninde in the financial sratemcnts for Fcdeid inccmme raxer.

The Internal Revmmtc Service has d c n d the Commiabion r r rmpr amus under rhc pmvisions of Internal Revenue Code S e c f m 501(c)(6).

Nate 5:

No pruvmon has hrcn made i n the tlnancml statements for disputed legal Ires. approxiniatlng S20,OM).

JOHNSON AND SCHNEBERGER

20

APPENDICES

APPENDIX A

PROGRESS IN UNIFORMITY THROUGH ACCEPTANCE OF UNIFORM FORM

FOR SALES (L USE TAX FOR CERTIFICATE

A P P E N D I X B

ON EXCHANGE O F S A L E S A N D U S E TAX INFORMATION

In the irnerrst u f furthermg the mutual intcrcst5 nf the mdcr \~yned rtatci r c p r e w w d h) the undervgncd uf lmals rhrough benefits which can he drrcicd from the cxchangc tit

~nf<mnattan amimp rmd state5, each o f haid ufi8c1als doer hereby enter into th? tol loumg Agrermem fcr !he exchange o f infurmalion with every other undersigned official

The undersigned herehy mutually agree to exchange information. to the t'ull c u m permilred by thcir resprctiie laws, I" accortance wirh the terms itnd limitations h r luu :

I . For the purpmes uf th ls Agreement, sales rax includer general excise andlor gross receipt raxes and means a tax m p o w d un a sale or exchange o f personal prupeny and/or seriiccs, a\ well as un grw, iecciptr i i o m trade or business: and uhe t a tneilns a tan other than ad valorem tax. on the priv~lepc o f rtanng. usmg or coniummg perwnal propcny andlui services.

2. Thls Agrerment shall be appl~cahlc ucth respect to: a The in\pecti,,n o f d e b arid usc tax reruns u f any taxpayer. and h. The fur~mhing o f an ahrtract or the exchange o f computer inionnntmn rcgard-

ing the sides w use ?ax return o i m y krpayt r : and c. The iurni,hmg of any infonnationconcemlngdny llrmscontainedin any ralrh

or u w ritx return o f any rarpayer: and d. The funiirhmg o f any l n i o r n ~ t i o n dtsclosed by the repon o f any invcstication

of the \ales or use tax return o f any tanpii)er. 3. F o r purposes of r h x Agi rcmml. "laxpayrr" mrludss any indiwdual. corpora-

tion. pmnersh~p, o r p n i z a l ~ m , asociation. iiduriary, perwn or other cntlty. ~ ~ h ~ e c t to payment or colleclion and remittance o l sales or urc lax or required to

l i ie a salch or use tax ri.tum. 4 Thlr Aprecment is nut l lmitrd to a rpeclfic per~vd of t m e or to returns. docomcnt\

or in iormdion relating a, at?) specific years or priods; and i t w i l l becons8dercd ru

be in r i fcct untd rrvukcd h) unc uf the panics, h u r r \ r r , the withdrawal u f u n r

pan) herero shall not aiiect thi: Agrccmcnts among thc romainmp panics. 5 . Addmoniandchange\, includlngdcfinlt~on,. ~ n t h c p r o v ~ i ~ o r t s o l l h ~ r Agreemcnr,

may bc made h) rnuruill cunsent o f the proper offjcial$ o f the undsrrigncd \rater. m d shall hecome an attachmunl to this Agrecmmt.

6 Nil infomarion ohrained pulrunni 10 this Aprcement \hall he disclo,eJ to any

person not authonied to receive such iniurmatmn by the l a u i o f thc undcriigned

St'ltCS 7. The ~nfn imat~on ohraincd purwant to [his Apeernen1 shall he used only lor the

purpme of admlni,tralmn, and enforcement o f l k rnler and uhr tax law& o f the undersigned stater.

R TI,,, ur~ t tun Agreenmt ,hall nnt hccomc cifectwe between any ~ u u \tale? until the authorized uffmals for both such stater have ugncd i t in the space probded

below. 9, l h l r written Agreement is not intcnded to revoke or supersede an) other similar

that may have been rrreviously entcred into between any twoor <nore o f the states represented below.

10. The undersigned agree to inform each other of the current statutory provisions o f their respectwe stater concerning the confidentiality of the material erchangrd and the penaltm for unlawful disclosure thereof.

APPENDIX B

I I . Any afthe undersigned state officials may, at their discretion. refuse to furnish information disclosed in the rcportot any mveshgal>on w h k such imerngaliun ii still in progress or during such lime as hl>gat~on is contemplated or in process. i f theofficlal ofthe state makmg the invewgalion deems il in lhe best interest, of hor stale for such information to bewithheld pendmg final determlnalmn of l i l ip l ton.

12. Each of theundemignedstateofficlal~ hereby affmns that he i s the properofficial charged with the administration of the sales and use tar law$ of hm state

This Agreement may be executed in counterpans, all of which taken together ahall be deemed one origind Agreement.

The ahove agreement has been executed by the following rmen under rhr ~nimnat lon sharing authurity granted by their sratutes. The execution ofthc Agreement by these rrates oonsucutes the equivalent of 274 individual agrermentr

SIGNATORY STATES

Missi\sippn Mi i ioun Montana Nebraska Nonh Dakota Pennsylvanm South Dakota Tennessee Texas

Utah Washington Wyommg