Seems most government agencies love initials, and tax agencies are no different. MTC stands for Multistate Tax Commission, and if you do business in more than one state, you may want to get familiar with it.
The job of the MTC is to try and clarify/unify state taxation issues, especially for businesses who operate in more than one state. From your perspective, as a multi-state business owner, you want to pay as little tax as possible. From a state’s perspective, they want to make sure you pay them everything they’re owed. MTC tries to walk the line and keep it fair for everyone. You can read more about the MTC at their website, www.mtc.gov.
The MTC created something called a Multistate Tax Compact. It’s an agreement on how states apply tax laws and determine your business tax nexus. Full members of the MTC are those states that have made the Compact part of state law. That means if you’re audited by one of those states, they must abide by MTC rules. There are also 2 other classes of members. Some states haven’t made the Compact law, but generally go along with it. Other states are still in the toe-dipping stage. They participate in parts of the program, but aren’t bound by anything.
There are only 3 states that have no connection to the MTC: Nevada, Delaware and Virginia. All of the other states belong to one of the 3 membership levels.
Right now, MTC’s big project is trying to develop a workable tax plan for the Internet. States are enacting laws left and right, each trying to find a way to tax the millions of dollars being spent every year on the Internet by state residents.
MTC is also heavily involved in training state level auditors on what they can and can’t do, and how to apply the rules to establish business nexus. If you’re a business located in (or have some business connection to) Alabama, Alaska, Arkansas, California, Colorado, D.C., Hawaii, Idaho, Kansas, Michigan, Minnesota, Missouri, Montana, New Mexico, North Dakota, Oregon, South Dakota, Texas, Utah or Washington, your audit must comply with the Compact.
Whether or not your business will be impacted by MTC rules is dependent on the kind of business you’re operating, and the state(s) you’re operating in. But it certainly is in your best interests to explore their website and learn more. If the MTC is going to become a part of your tax world, best to know what’s coming at you.