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Reaction to MTC Nexus Bulletin Tepid

Reaction to MTC Nexus Bulletin Tepid

The February/March 1996 issue of the Tax, Accounting & Regulatory Bulletin reported on the Multi-State Tax Commission bulletin describing when the sale of computer equipment and computer-related items by direct marketing companies is taxable for sales and use tax and franchise tax purposes. Twenty-six states signed on to the release. The release has come under attack.

First, the Committee on State Taxation (COST), a trade association originally formed to advise the Council of State Chambers of Commerce and having a membership of 430 major multi-state corporations, issued a report opposing the bulletin. COST was unhappy with the procedures followed to issue the bulletin, in that the MTC apparently did not observe its ordinary "Uniformity Process" that would have assured more public comment than the bulletin received. Substantively, COST argues that the bulletin is based on an as-yet unsupported theory of nexus. The COST report asserted that the MTC's interpretation of the Supreme Court nexus cases was incorrect.

COST was influential in the recent decision by the California Board of Equalization (BOE) to rescind California's inclusion in the list of 26 states supporting the MTC bulletin. The BOE's disagreement with the bulletin did not go to the content of the MTC publication. Instead, the BOE took issue with the form of the guidance. The notice read as if it were a regulation rather than merely informational guidance.

Source: Letter from COST General Counsel to California BOE in opposition to MTC Nexus Bulletin 95-1.

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