Groups Critique Model State Law for Taxing Partnership Income

Two trade groups and a law firm are pushing the Multistate Tax Commission to refine its proposed framework governing how states source partnership income across multiple jurisdictions.

The three comment letters will be discussed Wednesday during MTC’s partnership work group meeting. While the comments were generally supportive of the overall project, their critiques zeroed in on several provisions of the Combined Draft Model for sourcing partnership income. Sourcing is the process of determining where income, gains, and losses are distributed across several states.

Apportioning income across multiple states is particularly complex for pass-through entities, such as partnerships or S-corporations, which ...