Session of 2024
SENATE BILL No. 507
By Committee on Assessment and Taxation
2-13
AN ACT concerning income tax; relating to the apportionment of income;
providing for the apportionment of business income by the single sales
factor; requiring the use of single sales factor pursuant to the multistate
tax compact; amending K.S.A. 79-3269, 79-3271, 79-3279, 79-3287,
79-4301 and 79-4302 and repealing the existing sections; also repealing
K.S.A. 79-3280, 79-3281, 79-3282, 79-3283 and 79-3284.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 79-3269 is hereby amended to read as follows: 79-
3269. (a) As used in this section:
(1) "Administrative fee" means those amounts charged by the
professional employer organization to the client over and above amounts
applied to the mandatory state and federal taxes, wages of assigned
workers and amounts applied to premiums or contributions for benefits
provided for assigned workers.
(2) "Assigned worker" means a person having an employment
relationship with both the professional employer organization and the
client.
(3) "Client" means a person who contracts with a professional
employer organization to obtain employer services from another person
through a professional employer arrangement.
(4) "Person" means an individual, an association, a company, a firm,
a partnership, a corporation or any other form of legally recognized entity.
(5) "Professional employer arrangement" means an arrangement,
under contract or whereby:
(A) A professional employer organization agrees to employ all or a
majority of a client's workforce;
(B) the arrangement is intended to be, or is, ongoing rather than
temporary in nature;
(C) employer responsibilities for workers under the arrangement are
in fact shared by the professional employer organization and the client;
and
(D) for the purposes of this act, a professional employer arrangement
shall not include:
(i) Arrangements wherein a person, whose principal business activity
is not entering into professional employer arrangements, shares employees
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with a commonly owned company within the meaning of section 414(b)
and (c) of the federal internal revenue code of 1986, as amended, and
which does not hold itself out as a professional employer organization.
(ii) Arrangements in which a person assumes full responsibility for
the product or service performed by such person or such person's agents
and retains and exercises, both legally and in fact, a right of direction and
control over the individuals whose services are supplied under such
contractual arrangements, and such person and such person's agents
perform a specified function for the client which is separate and divisible
from the primary business or operations of the client.
(iii) Any person otherwise subject to this act if, during any fiscal year
of the person commencing after July 1, 2000, the person pays total gross
wages to employees employed by the person in the state under one or more
professional employer arrangements which do not exceed 5% of the total
gross wages paid to all employees employed by the person in the state
during the same fiscal year under all arrangements described in paragraph
(4) and that each person does not advertise or hold itself out to the public
as providing services as a professional employer organization.
(6) "Professional employer organization" means any person engaged
in providing the services of employees pursuant to one or more
professional employer arrangements or any person that represents itself to
the public as providing services pursuant to a professional employer
arrangement.
(b) (1) A professional employer organization shall be considered an
employer for the purposes of withholding state income tax of the assigned
workers pursuant to the Kansas income tax act. Commencing after
December 31, 1999, The client shall be considered as the employer of an
assigned worker under the terms of the professional employer arrangement
between the client and the professional employer organization, for
purposes of:
(1) subsection (d) of (A) K.S.A. 79-32,154(d), subsection (d) of
K.S.A. 74-50,114(d), K.S.A. 79-32,160a or K.S.A. 74-50,131, and
amendments thereto; and
(2) (B) calculating the client's payroll factor under K.S.A. 79-3283
that shall be a fraction, the numerator of which is the total amount paid in
this 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.
(2) The client shall provide to the department of revenue the payroll
information for assigned workers needed for purposes of administering the
above provisions.
Sec. 2. K.S.A. 79-3271 is hereby amended to read as follows: 79-
3271. As used in this act, unless the context otherwise requires:
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(a) For tax years commencing prior to January 1, 2008, "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, except that a taxpayer may elect that
all income constitutes business income. For tax years commencing after
December 31, 2007, "Business income" means: (1) Income arising from
transactions and activity in the regular course of the taxpayer's trade or
business; (2) income arising from transactions and activity involving
tangible and intangible property or assets used in the operation of the
taxpayer's trade or business; or (3) income of the taxpayer that may be
apportioned to this state under the provisions of the Constitution of the
United States and laws thereof, except that a taxpayer may elect that all
income constitutes business income. Any election made under this
subsection shall be effective and irrevocable for the tax year in which the
election is made and the following nine tax years and shall be binding on
all members of a unitary group of corporations.
(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, or any type
of insurance company, but such term shall not be deemed to include any
business entity, other than those hereinbefore enumerated, whose primary
business activity is making consumer loans or purchasing retail installment
contracts from one or more sellers.
(e) "Nonbusiness income" means all income other than business
income.
(f) "Public utility" means any business entity which owns or operates
for public use any plant, equipment, property, franchise, or license for the
transmission of communications, transportation of goods or persons, or the
production, storage, transmission, sale, delivery, or furnishing of
electricity, water, steam, oil, oil products or gas.
(g) "Original return" means the first return filed to report the income
of a taxpayer for a taxable year or period, irrespective of whether such
return is filed on a single entity basis or a combined basis.
(h) "Receipts" or "sales" means, except as otherwise provided in
K.S.A. 79-3285, and amendments thereto, all gross receipts of the taxpayer
not allocated under K.S.A. 79-3274 through 79-3278, and amendments
thereto.
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(i) "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.
(j) "Telecommunications company" means any business entity or
unitary group of entities whose primary business activity is the
transmission of communications in the form of voice, data, signals or
facsimile communications by wire or fiber optic cable.
(k) "Distressed area taxpayer" means a corporation which: (1) Is
located in a county which has a population of not more than 45,000
persons and which, as certified by the department of commerce, has
sustained an adverse economic impact due to the closure of a state hospital
in such county pursuant to the recommendations of the hospital closure
commission; and (2) which has a total annual payroll of $20,000,000 or
more for employees employed within such county.
(l) For the purposes of this subsection and subsection (b)(5) of K.S.A.
79-3279, and amendments thereto, the following terms are defined:
(1) "Administration services" include clerical, fund or shareholder
accounting, participant record keeping, transfer agency, bookkeeping, data
processing, custodial, internal auditing, legal and tax services performed
for an investment company;
(2) "distribution services" include the services of advertising,
servicing, marketing, underwriting or selling shares of an investment
company, but, in the case of advertising, servicing or marketing shares,
only where such service is performed by a person who is, or in the case of
a closed end company, was, either engaged in the services of underwriting
or selling investment company shares or affiliated with a person who is
engaged in the service of underwriting or selling investment company
shares. In the case of an open end company, such service of underwriting
or selling shares must be performed pursuant to a contract entered into
pursuant to 15 U.S.C. § 80a-15(b), as in effect on the effective date of this
act;
(3) "investment company", means any person registered under the
federal Investment Company Act of 1940, as in effect on the effective date
of this act, or a company which would be required to register as an
investment company under such act except that such person is exempt to
such registration pursuant to § 80a-3(c)(1) of such act;
(4) "investment funds service corporation" includes any corporation
or S corporation headquartered in and doing business in this state which
derives more than 50% of its gross income from the provision of
management, distribution or administration services to or on behalf of an
investment company or from trustees, sponsors and participants of
employee benefit plans which have accounts in an investment company;
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(5) "management services" include the rendering of investment
advice to an investment company making determinations as to when sales
and purchases of securities are to be made on behalf of the investment
company, or the selling or purchasing of securities constituting assets of an
investment company, and related activities, but only where such activity or
activities are performed:
(A) Pursuant to a contract with the investment company entered into
pursuant to 15 U.S.C. § 80a-15(a), in effect on the effective date of this
act; or
(B) for a person that has entered into such contract with the
investment company;
(6) "qualifying business income" is business income derived from the
provision of management, distribution or administration services to or on
behalf of an investment company or from trustees, sponsors and
participants of employee benefit plans which have accounts in an
investment company; and
(7) "residence" is the fund shareholder's primary residence address.
Sec. 3. K.S.A. 79-3279 is hereby amended to read as follows: 79-
3279. (a) All business income of railroads and interstate motor carriers of
persons or property for-hire shall be apportioned to this state by
multiplying the business income by a fraction, in the case of railroads, the
numerator of which is the freight car miles in this state and the
denominator of which is the freight car miles everywhere, and, in the case
of interstate motor carriers, the numerator of which is the total number of
miles operated in this state and the denominator of which is the total
number of miles operated everywhere.
(b) All business income of any other taxpayer shall be apportioned to
this state by one of the following methods:
(1) by multiplying the business 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; or
(2) at the election of a qualifying taxpayer, by multiplying the
business income by a fraction, the numerator of which is the property
factor plus the sales factor, and the denominator of which is two.
(A) For purposes of this subsection (b)(2), a qualifying taxpayer is
any taxpayer whose payroll factor for a taxable year exceeds 200% of the
average of the property factor and the sales factor. Whenever two or more
corporations are engaged in a unitary business and required to file a
combined report, the fraction comparison provided by this subsection (b)
(2) shall be calculated by using the payroll factor, property factor and sales
factor of the combined group of unitary corporations.
(B) An election under this subsection (b)(2) shall be made by
including a statement with the original tax return indicating that the
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taxpayer elects to apply the apportionment method under this subsection
(b)(2). The election shall be effective and irrevocable for the taxable year
of the election and the following nine taxable years. The election shall be
binding on all members of a unitary group of corporations.
Notwithstanding the above, the secretary of revenue may upon the request
of the taxpayer, grant permission to terminate the election under this
subsection (b)(2) prior to expiration of the ten-year period.
(3) At the election of a qualifying telecommunications company, by
multiplying the business income by a fraction, the numerator of which is
the information carrying capacity of wire and fiber optic cable available
for use in this state, and the denominator of which is the information
carrying capacity of wire and fiber optic cable available for use
everywhere during the tax year.
(A) For purposes of this subsection (b)(3), a qualifying
telecommunications company is a telecommunications company that is a
qualifying taxpayer under paragraph (A) of subsection (b)(2).
(B) A qualifying telecommunications company shall make the
election under this subsection (b)(3) in the same manner as provided under
paragraph (B) of subsection (b)(2).
(4) At the election of a distressed area taxpayer, by multiplying the
business income by the sales factor. The election shall be made by
including a statement with the original tax return indicating that the
taxpayer elects to apply this apportionment method. The election may be
made only once, it must be made on or before December 31, 1999 and it
shall be effective for the taxable year of the election and the following nine
taxable years for so long as the taxpayer maintains the payroll amount
prescribed by subsection (j) of K.S.A. 79-3271, and amendments thereto.
(5) At the election of the taxpayer made at the time of filing of the
original return, the qualifying business income of any investment funds
service corporation organized as a corporation or S corporation which
maintains its primary headquarters and operations or is a branch facility
that employs at least 100 individuals on a full-time equivalent basis in this
state and has any investment company fund shareholders residenced in this
state shall be apportioned to this state as provided in this subsection, as
follows:
(A) By multiplying the investment funds service corporation's
qualifying business income from administration, distribution and
management services provided to each investment company by a fraction,
the numerator of which shall be the average of the number of shares
owned by the investment company's fund shareholders residenced in this
state at the beginning of and at the end of the investment company's
taxable year that ends with or within the investment funds service
corporation's taxable year, and the denominator of which shall be the
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average of the number of shares owned by the investment company's fund
shareholders everywhere at the beginning of and at the end of the
investment company's taxable year that ends with or within the investment
funds service corporation's taxable year.
(B) A separate computation shall be made to determine the qualifying
business income from each fund of each investment company. The
qualifying business income from each investment company shall be
multiplied by the fraction calculated pursuant to paragraph (A) for each
fund of such investment company.
(C) The qualifying portion of total business income of an investment
funds service corporation shall be determined by multiplying such total
business income by a fraction, the numerator of which is the gross receipts
from the provision of management, distribution and administration
services to or on behalf of an investment company, and the denominator of
which is the gross receipts of the investment funds service company. To
the extent an investment funds service corporation has business income
that is not qualifying business income, such business income shall be
apportioned to this state pursuant to subsection (b)(1).
(D) For tax year 2002, the tax liability of an investment funds service
corporation that has elected to apportion its business income pursuant to
paragraph (5) shall be increased by an amount equal to 50% of the
difference of the amount of such tax liability if determined pursuant to
subsection (b)(1) less the amount of such tax liability determined with
regard to paragraph (5).
(E) When an investment funds service corporation is part of a unitary
group, the business income of the unitary group attributable to the
investment funds service corporation shall be determined by multiplying
the business income of the unitary group 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. The property factor is a fraction,
the numerator of which is the average value of the investment funds
service corporation's real and tangible personal property owned or rented
and used during the tax period and the denominator of which is the
average value of the unitary group's real and tangible personal property
owned or rented and used during the tax period. The payroll factor is a
fraction, the numerator of which is the total amount paid during the tax
period by the investment funds service corporation for compensation, and
the denominator of which is the total compensation paid by the unitary
group during the tax period. The sales factor is a fraction, the numerator of
which is the total sales of the investment funds service corporation during
the tax period, and the denominator of which is the total sales of the
unitary group during the tax period.
(F) A taxpayer seeking to make the election available pursuant to
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subsection (b)(5) of K.S.A. 79-3279, and amendments thereto, shall only
be eligible to continue to make such election if the taxpayer maintains at
least 95% of the Kansas employees in existence at the time the taxpayer
first makes such an election.
(6) At the election of a qualifying taxpayer, by multiplying such
taxpayer's business income by the sales factor. The election shall be made
by including a statement with the original tax return indicating that the
taxpayer elects to apply this apportionment method. The election may be
made only once and must be made on or before the last day of the taxable
year during which the investment described in paragraph (A) is placed in
service, but not later than December 31, 2009, and it shall be effective for
the taxable year of the election and the following nine taxable years or for
so long as the taxpayer maintains the wage requirements set forth in
paragraph (A). If the qualifying taxpayer is a member of a unitary group of
corporations, all other members of the unitary group doing business within
this state shall apportion their business income to this state pursuant to
subsection (b)(1).
(A) For purposes of this subsection, a qualifying taxpayer is any
taxpayer making an investment of $100,000,000 for construction in
Kansas of a new business facility identified under the North American
industry classification system (NAICS) subsectors of 31-33, as assigned
by the secretary of the department of labor, employing 100 or more new
employees at such facility after July 1, 2007, and prior to December 31,
2009, and meeting the following requirements for paying such employees
higher-than-average wages within the wage region for such facility:
(i) The taxpayer's new Kansas business facility with 500 or fewer
full-time equivalent employees will provide an average wage that is above
the average wage paid by all Kansas business facilities that share the same
assigned NAICS category used to develop wage thresholds and that have
reported 500 or fewer employees to the Kansas department of labor on the
quarterly wage reports;
(ii) the taxpayer's new Kansas business facility with 500 or fewer
full-time equivalent employees is the sole facility within its assigned
NAICS category that has reported wages for 500 or fewer employees to
the Kansas department of labor on the quarterly wage reports;
(iii) the taxpayer's new Kansas business facility with more than 500
full-time equivalent employees will provide an average wage that is above
the average wage paid by all Kansas business facilities that share the same
assigned NAICS category used to develop wage thresholds and that have
reported more than 500 employees to the Kansas department of labor on
the quarterly wage reports;
(iv) the taxpayer's new Kansas business facility with more than 500
full-time equivalent employees is the sole facility within its assigned
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NAICS category that has reported wages for more than 500 employees to
the Kansas department of labor on the quarterly wage reports, in which
event it shall either provide an average wage that is above the average
wage paid by all Kansas business facilities that share the same assigned
NAICS category and that have reported wages for 500 or fewer employees
to the Kansas department of labor on the quarterly wage reports, or be the
sole Kansas business facility within its assigned NAICS category that has
reported wages to the Kansas department of labor on the quarterly wage
reports;
(v) the number of NAICS digits to use in developing each set of wage
thresholds for comparison purposes shall be determined by the secretary of
commerce;
(vi) the composition of wage regions used in connection with each set
of wage thresholds shall be determined by the secretary of commerce; and
(vii) alternatively, a taxpayer may wage-qualify its new Kansas
business facility if, after excluding the headcount and wages reported on
the quarterly wage reports to the Kansas department of labor for
employees at that new Kansas business facility who own five percent or
more equity in the taxpayer, the average wage calculated for the taxpayer's
new Kansas business facility is greater than or equal to 1.5 times the
aggregate state-wide average wage paid by industries covered by the
employment security law based on data maintained by the secretary of
labor.
(B) For the purposes of the wage requirements in paragraph (A), the
number of full-time equivalent employees shall be determined by dividing
the number of hours worked by part-time employees during the pertinent
measurement interval by an amount equal to the corresponding multiple of
a 40-hour work week and adding the quotient to the average number of
full-time employees.
(C) When the qualifying taxpayer is part of a unitary group, the
business income of the unitary group attributable to the qualifying
taxpayer shall be determined by multiplying the business income of the
unitary group 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. The property factor is a fraction, the numerator of which is the
average value of the qualifying taxpayer's real and tangible personal
property owned or rented and used during the tax period and the
denominator of which is the average value of the unitary group's real and
tangible personal property owned or rented and used during the tax period.
The payroll factor is a fraction, the numerator of which is the total amount
paid during the tax period by the qualifying taxpayer for compensation,
and the denominator of which is the total compensation paid by the unitary
group during the tax period. The sales factor is a fraction, the numerator of
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which is the total sales of the qualifying taxpayer during the tax period,
and the denominator of which is the total sales of the unitary group during
the tax period.
(D) For purposes of this subsection, the secretary of revenue, upon a
showing of good cause and after receiving a certification by the secretary
of commerce of substantial compliance with provisions of this subsection
(b)(6), may extend any required performance date provided in this
subsection (b)(6) for a period not to exceed six months.
Sec. 4. K.S.A. 79-3287 is hereby amended to read as follows: 79-
3287.
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 the taxpayer's market for the sales is in this state. The
taxpayer's market for the sales is in this state if:
(a) (1) In the case of sale of a service, if and to the extent that the
service is delivered to a location in this state;
(2) in the case of intangible property, such property is:
(A) Rented, leased or licensed, if and to the extent that the property is
used in this state, if that intangible property utilized in marketing a good
or service to a consumer is used in this state if that good or service is
purchased by a consumer who is in this state; or
(B) that is sold, if and to the extent the property is used in this state
if:
(i) A contract right, government license or similar intangible
property that authorizes the holder to conduct a business activity in a
specific geographic area is used in this state if the geographic area
includes all or part of this state; or
(ii) receipts from intangible property sales that are contingent on the
productivity, use or disposition of the intangible property shall be treated
as receipts from rental, lease or licensing of such intangible property
under paragraph (2)(A);
(3) in the case of interest from a loan:
(A) Secured by real property, if and to the extent the property is
located in this state; or
(B) not secured by real property, if and to the extent the borrower is
located in this state; or
(b) in the case of dividends, if and to the extent the payor's
commercial domicile is located in this state.
If the state or states of assignment of receipts under subsection (a)(1)
or (2) cannot be determined, the state or states of assignment shall be
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reasonably approximated. If the state or states of assignment of receipts
cannot be reasonably approximated, then such assignment of receipts shall
be excluded from the denominator of the sales factor.
The secretary of revenue may adopt rules and regulations necessary to
administer the provisions of this section.
Sec. 5. K.S.A. 79-4301 is hereby amended to read as follows: 79-
4301. "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
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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 complimentary 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
(1) Taxpayer option, state and local taxes. 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.
(2) Taxpayer option, short form state and local taxes. 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
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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.
(3)(2) Coverage. Nothing in this article relates to the reporting or
payment of any tax other than in income tax.
ARTICLE IV.—Division of Income
(1) As used in this article, unless the context otherwise requires:
(a) "Business income" means:
(i) 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;
(ii) income arising from transactions and activity involving tangible
and intangible property or assets used in the operation of the taxpayer's
trade or business; or
(iii) income of the taxpayer that may be apportioned to this state
under the provisions of the Constitution of the United States and laws
thereof, except that a taxpayer may elect that all income constitutes
business income. Any election made under this subsection shall be
effective and irrevocable for the tax year in which the election is made and
the following nine tax years and shall be binding on all members of a
unitary group of corporations.
(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
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income.
(f) "Public utility" means any business entity:
(1) whichThat 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) "Receipts" or "sales" means all gross receipts of the taxpayer not
allocated under paragraphs of this article. In the case of sales of business
assets, other than sales of tangible personal property sold in the ordinary
course of the taxpayer's trade or business, only the net gain from such
sales shall be included in the sales factor.
(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 his 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 his income from activities
subject to this article, the taxpayer may elect to allocate and apportion his
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 he 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 patent or copyright royalties, to the extent that
they constitute nonbusiness income, shall be allocated as provided in
paragraphs 5 through 8 of this article. Allocable nonbusiness income shall
be limited to the total nonbusiness income received in excess of any
related expenses that have been allowed as a deduction during the income
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year.
(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) 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.
(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
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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 factor is a fraction, the numerator of which is the
total amount paid in this 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)(10) 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. In the case of sales of business assets, other than sales of
tangible personal property sold in the ordinary course of the taxpayer's
trade or business, only the net gain from such sales shall be included in
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the sales factor.
(16)(11) 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)(12) 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 the taxpayer's market for the sales is in this state. The
taxpayer's market for the sales is in this state if:
(a) In the case of sale of a service, if and to the extent the service is
delivered to a location in this state;
(b) in the case of intangible property, such property is:
(i) Rented, leased or licensed, if and to the extent the property is used
in this state, if intangible property utilized in marketing a good or service
to a consumer is used in this state if that good or service is purchased by a
consumer who is in this state; or
(ii) is sold, if and to the extent the property is used in this state if:
(A) A contract right, government license or similar intangible
property that authorizes the holder to conduct a business activity in a
specific geographic area is used in this state if the geographic area
includes all or part of this state; or
(B) receipts from intangible property sales that are contingent on the
productivity, use or disposition of the intangible property shall be treated
as receipts from rental, lease or licensing of such intangible property
under paragraph (b)(i);
(c) in the case of interest from a loan:
(i) Secured by real property, if and to the extent the property is
located in this state; or
(ii) not secured by real property, if and to the extent the borrower is
located in this state; or
(d) in the case of dividends, if and to the extent the payor's
commercial domicile is located in this state.
If the state or states of assignment of receipts under paragraph (a) or
(b) cannot be determined, the state or states of assignment shall be
reasonably approximated. If the state or states of assignment of receipts
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cannot be reasonably approximated, then such shall be excluded from the
denominator of the sales factor.
(18)(13) 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
(1) Tax credit. 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) Exemption certificates, vendors may rely. 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
(1) Organization and management. (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
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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
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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.
(2) Committees. (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 laws 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.
(3) Powers. 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.
(4) Finance. (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 budget 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 of 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
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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
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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 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.
(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
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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.
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(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.
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(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 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 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 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) (1) 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 purposes
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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.
Sec. 6. K.S.A. 79-4302 is hereby amended to read as follows: 79-
4302. The provisions of article III (2) (1) of the multistate tax compact [,
K.S.A. 79-4301], and amendments thereto, shall apply to the Kansas
income tax act and to every income tax hereafter adopted by any taxing
subdivision of this state. It is the intent of the legislature that the
provisions of articles III and IV of the multistate tax compact supplement
the Kansas income tax act and any income tax hereafter adopted by any
taxing subdivision of this state and not as an alternative method of
allocating and apportioning income or classifying income in a manner
other than as specified in the Kansas income tax act or any income tax
hereafter adopted by any taxing subdivision of this state. Any amendments
to the Kansas income tax act or any income tax hereafter adopted by any
taxing subdivision of this state shall, where applicable, be deemed to have
repealed any provisions of the multistate tax compact that are inconsistent
with such amendments. In the event of a conflict between the Kansas
income tax act or any income tax hereafter adopted by any taxing
subdivision of this state and the provisions contained in the multistate tax
compact, the Kansas income tax act or income tax hereafter adopted by
any taxing subdivision of this state shall apply.
Sec. 7. K.S.A. 79-3269, 79-3271, 79-3279, 79-3280, 79-3281, 79-
3282, 79-3283, 79-3284, 79-3287, 79-4301 and 79-4302 are hereby
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repealed.
Sec. 8. This act shall take effect and be in force from and after
January 1, 2025, and its publication in the statute book.
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