HRS §255-1 Adoption of compact
255-1. Adoption of compact
The "Multistate Tax Compact" is hereby enacted into law and entered into with all jurisdictions legally joining therein, in the form substantially as follows:
MULTISTATE
TAX COMPACT
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 or 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 Articles III, IV
and V of this compact shall apply only to the taxes specifically designated
therein and the provisions of Article IX of this compact shall apply only in
respect to determinations pursuant to Article IV.
Article III.
Elements of Income Tax Laws.
Taxpayer
Option, State and Local Taxes.
1. Any taxpayer subject to an income tax whose
income is subject to apportionment and allocation for tax purposes pursuant to
the laws of a party State or pursuant to the laws of subdivisions in two or
more party States may elect to apportion and allocate his income in the manner
provided by the laws of such State or by the laws of such States and
subdivisions without reference to this compact, or may elect to apportion and
allocate in accordance with Article IV. This election for any tax year may be made
in all party States or subdivisions thereof or in any one or more of the party
States or subdivisions thereof without reference to the election made in the
others. For the purposes of this paragraph, taxes imposed by subdivisions
shall be considered separately from state taxes and the apportionment and
allocation also may be applied to the entire tax base. In no instance wherein
Article IV is employed for all subdivisions of a State may the sum of all
apportionments and allocations to subdivisions within a State be greater than
the apportionment and allocation that would be assignable to that State if the
apportionment or allocation were being made with respect to a State income tax.
Taxpayer
Option, Short Form.
2. Each party State or any subdivision thereof
which imposes an income tax shall provide by law that any taxpayer required to
file a return, whose only activities within the taxing jurisdiction consist of
sales and do not include owning or renting real estate or tangible personal property,
and whose dollar volume of gross sales made during the tax year within the
State or subdivision, as the case may be, is not in excess of $100,000 may
elect to report and pay any tax due on the basis of a percentage of such volume
and shall adopt rates which shall produce a tax which reasonably approximates
the tax otherwise due. The Multistate Tax Commission, not more than once in
five years, may adjust the $100,000 figure in order to reflect such changes as
may occur in the real value of the dollar, and such adjusted figure, upon
adoption by the Commission shall replace the $100,000 figure specifically
provided herein. Each party State and subdivision thereof may make the same
election available to taxpayers additional to those specified in this paragraph.
Coverage.
3. Nothing in this Article relates to the
reporting or payment of any tax other than an income tax.
Article IV.
Division of Income.
1. As used in this Article, unless the context
otherwise requires:
(a) "Business income" means income
arising from transactions and activity in the regular course of the taxpayer's
trade or business and includes income from tangible and intangible property if
the acquisition, management, and disposition of the property constitute
integral parts of the taxpayer's regular trade or business operations.
(b) "Commercial domicile" means the
principal place from which the trade or business of the taxpayer is directed or
managed.
(c) "Compensation" means wages,
salaries, commissions and any other form of remuneration paid to employees for
personal services.
(d) "Financial organization" means
any bank, trust company, savings bank, industrial bank, land bank, safe deposit
company, private banker, savings and loan association, credit union,
cooperative bank, small loan company, sales finance company, investment
company, or any type of insurance company.
(e) "Nonbusiness income" means all
income other than business income.
(f) "Public utility" means any
business entity (1) which owns or operates any plant, equipment, property,
franchise, or license for the transmission of communications, transportation of
goods or persons, except by pipeline, or the production, transmission, sale,
delivery, or furnishing of electricity, water or steam; and (2) whose rates of
charges for goods or services have been established or approved by a federal,
state or local government or governmental agency.
(g) "Sales" means all gross receipts
of the taxpayer not allocated under paragraphs of this Article.
(h) "State" means any State of the
United States, the District of Columbia, the Commonwealth of Puerto Rico, any
Territory or Possession of the United States, and any foreign country or
political subdivision thereof.
(i) "This State" means the State in
which the relevant tax return is filed or, in the case of application of this
Article to the apportionment and allocation of income for local tax purposes,
the subdivision or local taxing district in which the relevant tax return is
filed.
2. Any taxpayer having income from business
activity which is taxable both within and without this State, other than
activity as a financial organization or public utility or the rendering of
purely personal services by an individual, shall allocate and apportion the
taxpayer's net income as provided in this Article. If a taxpayer has income
from business activity as a public utility but derives the greater percentage
of the taxpayer's income from activities subject to this Article, the taxpayer
may elect to allocate and apportion the taxpayer's entire net income as
provided in this Article.
3. For purposes of allocation and
apportionment of income under this Article, a taxpayer is taxable in another
State if (1) in that State the taxpayer is subject to a net income tax, a
franchise tax measured by net income, a franchise tax for the privilege of
doing business, or a corporate stock tax, or (2) that State has jurisdiction to
subject the taxpayer to a net income tax regardless of whether in fact, the
State does or does not.
4. Rents and royalties from real or tangible
personal property, capital gains, interest, dividends or patents or copyright
royalties, to the extent that they constitute nonbusiness income, shall be
allocated as provided in paragraphs 5 through 8 of this Article.
5. (a) Net rents and royalties from real
property located in this State are allocable to this State.
(b) Net rents and royalties from tangible
personal property are allocable to this State: (1) if and to the extent that
the property is utilized in this State, or (2) in their entirety if the
taxpayer's commercial domicile is in this State and the taxpayer is not
organized under the laws of or taxable in the State in which the property is
utilized.
(c) The extent of utilization of tangible
personal property in a State is determined by multiplying the rents and
royalties by a fraction, the numerator of which is the number of days of
physical location of the property in the State during the rental or royalty
period in the taxable year and the denominator of which is the number of days
of physical location of the property everywhere during all rental or royalty
periods in the taxable year. If the physical location of the property during
the rental or royalty period is unknown or unascertainable by the taxpayer,
tangible personal property is utilized in the State in which the property was
located at the time the rental or royalty payer obtained possession.
6. (a) Capital gains and losses from sales of
real property located in this State are allocable to this State.
(b) Capital gains and losses from sales of
tangible personal property are allocable to this State if (1) the property had
a situs in this State at the time of the sale, or (2) the taxpayer's commercial
domicile is in this State and the taxpayer is not taxable in the State in which
the property had a situs.
(c) Except in the case of the sale of a
partnership interest, capital gains and losses from sales of intangible
personal property are allocable to this State if the taxpayer's commercial
domicile is in this State.
(d) Gain or loss from the sale of a
partnership interest is allocable to this State in the ratio of the original
cost of partnership tangible property in the State to the original cost of
partnership tangible property everywhere, determined at the time of the sale.
If more than fifty per cent of the value of a partnership's assets consists of
intangibles, gain or loss from the sale of the partnership interest shall be
allocated to this State in accordance with the sales factor of the partnership
for its first full tax period immediately preceding its tax period during which
the partnership interest was sold.
7. Interest and dividends are allocable to
this State if the taxpayer's commercial domicile is in this State.
8. (a) Patent and copyright royalties are
allocable to this State: (1) if and to the extent that the patent or copyright
is utilized by the payer in this State, or (2) if and to the extent that the
patent copyright is utilized by the payer in a State in which the taxpayer is
not taxable and the taxpayer's commercial domicile is in this State.
(b) A patent is utilized in a State to the
extent that it is employed in production, fabrication, manufacturing, or other
processing in the State or to the extent that a patented product is produced in
the State. If the basis of receipts from patent royalties does not permit
allocation to States or if the accounting procedures do not reflect States of
utilization, the patent is utilized in the State in which the taxpayer's
commercial domicile is located.
(c) A copyright is utilized in a State to the
extent that printing or other publication originates in the State. If the
basis of receipts from copyright royalties does not permit allocation to States
or if the accounting procedures do not reflect States of utilization, the
copyright is utilized in the State in which the taxpayer's commercial domicile
is located.
9. All business income shall be apportioned to
this State by multiplying the income by a fraction, the numerator of which is
the property factor plus the payroll factor plus the sales factor, and the
denominator of which is three.
10. The property factor is a fraction, the
numerator of which is the average value of the taxpayer's real and tangible
personal property owned or rented and used in this State during the tax period
and the denominator of which is the average value of all the taxpayer's real
and tangible personal property owned or rented and used during the tax period.
11. Property owned by the taxpayer is valued
at its original cost. Property rented by the taxpayer is valued at eight times
the net annual rental rate. Net annual rental rate is the annual rental rate
paid by the taxpayer less any annual rental rate received by the taxpayer from
subrentals.
12. The average value of property shall be
determined by averaging the values at the beginning and ending of the tax
period but the tax administrator may require the averaging of monthly values
during the tax period if reasonably required to reflect properly the average
value of the taxpayer's property.
13. The payroll is a fraction, the numerator
of which is the total amount paid in the State during the tax period by the
taxpayer for compensation and the denominator of which is the total
compensation paid everywhere during the tax period.
14. Compensation is paid in this State if:
(a) the individual's service is performed
entirely within the State;
(b) the individual's service is performed both
within and without the State, but the service performed without the State is
incidental to the individual's service within the State; or
(c) some of the service is performed in the
State and (1) the base of operations or, if there is no base of operations, the
place from which the service is directed or controlled is in the State, or (2)
the base of operations or the place from which the service is directed or
controlled is not in any State in which some part of the service is performed,
but the individual's residence is in this State.
15. The sales factor is a fraction, the
numerator of which is the total sales of the taxpayer in this State during the
tax period, and the denominator of which is the total sales of the taxpayer
everywhere during the tax period.
16. Sales of tangible personal property are in
this State if:
(a) the property is delivered or shipped to a
purchaser, other than the United States Government, within this State
regardless of the f.o.b. point or other conditions of the sale; or
(b) the property is shipped from an office,
store, warehouse, factory, or other place of storage in this State and (1) the
purchaser is the United States Government or (2) the taxpayer is not taxable in
the State of the purchaser.
17. Sales, other than sales of tangible
personal property, are in this State if:
(a) the income-producing activity is performed
in this State; or
(b) the income-producing activity is performed
both in and outside this State and a greater proportion of the income-producing
activity is performed in this State than in any other State, based on costs of
performance.
18. If the allocation and apportionment
provisions of this Article do not fairly represent the extent of the taxpayer's
business activity in this State, the taxpayer may petition for or the tax
administrator may require, in respect to all or any part of the taxpayer's
business activity, if reasonable:
(a) separate accounting;
(b) the exclusion of any one or more of the
factors;
(c) the inclusion of one or more additional
factors which will fairly represent the taxpayer's business activity in this
State; or
(d) the employment of any other method to
effectuate an equitable allocation and apportionment of the taxpayer's 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.
Exemption
Certificates, Vendors May Rely.
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 and legislature 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. The Commission may also act with respect to the
provisions of Article IV of this compact.
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. This Article shall be in force only in those
party States that specifically provide therefor by statute.
2. 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 governments 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. In no event shall the Commission make any
charge against a taxpayer for an audit.
9. 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 a taxpayer who has elected to
employ Article IV, or whenever the laws of the party State or subdivision
thereof are substantially identical with the relevant provisions of Article IV,
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
determination 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 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 proceeding.
Article X.
Entry Into Force and Withdrawal.
1. This Compact shall enter into force when
enacted into law by any seven States. Thereafter, this compact shall become effective
as to any other State upon its enactment thereof. 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 effect
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 Jurisdiction.
Nothing in this compact shall be construed to:
(a) Affect the power of any State or
subdivision thereof to fix rates of taxation, except that a party State shall
be obligated to implement Article III 2 of this Compact.
(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 purpose 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.
[L 1968, c 30, §2;
am L 1989, c 19, §2]