The MTC’s Partnership Workgroup was formed in Fall 2016 to address how states should report federal adjustments arising the federal centralized partnership audit regime, which will go into effect for tax years beginning after December 31, 2017. TEI, as part of a working group consisting of members of the Council of State Taxation, the American Bar Association’s State and Local Tax Committee, the AICPA, and the Institute for Professionals in Taxation (Interested Parties), has been participating in the Partnership Workgroup’s efforts and advocating for changes to the MTC’s 2003 model statute on reporting of federal adjustments.
The Interested Parties presented a draft model statute at the MTC’s December 2016 meeting and revised it in June 2017 to address adjustments arising under the new federal centralized partnership audit regime, which will go into effect for tax years beginning after December 31, 2017. The Interested Parties’ draft model statute reflects their concern regarding the lack of uniformity for reporting federal adjustments to states generally and their commitment to developing rules that are workable for states and taxpayers. On August 1, 2017, the MTC’s Uniformity Committee accepted the Interested Parties’ recommendation and voted to expand the MTC’s Partnership Workgroup’s mandate to address the reporting of all federal audit adjustments and to use the Interested Parties’ draft model statute as a starting point for an update to the its model statute. TEI Tax Counsel Pilar Mata and Nikki Dobay from COST attended and participated in the Uniformity Committee’s meeting.