§255-1  Adoption of compact.  The"Multistate Tax Compact" is hereby enacted into law and entered intowith all jurisdictions legally joining therein, in the form substantially asfollows:

 

MULTISTATETAX COMPACT

Article I. Purposes.

 

The purposes of this compact are to:

1.  Facilitate proper determination of Stateand local tax liability of multistate taxpayers, including the equitableapportionment of tax bases and settlement of apportionment disputes.

2.  Promote uniformity or compatibility insignificant components of tax systems.

3.  Facilitate taxpayer convenience andcompliance in the filing of tax returns and in other phases of taxadministration.

4.  Avoid duplicative taxation.

 

Article II. Definitions.

 

As used in this compact:

1.  "State" means a State of theUnited States, the District of Columbia, the Commonwealth of Puerto Rico, orany Territory or Possession of the United States.

2.  "Subdivision" means anygovernmental unit or special district of a state.

3.  "Taxpayer" means any corporation,partnership, firm, association, governmental unit or agency or person acting asa business entity in more than one State.

4.  "Income tax" means a tax imposedon or measured by net income including any tax imposed on or measured by anamount arrived at by deducting expenses from gross income, one or more forms ofwhich expenses are not specifically and directly related to particulartransactions.

5.  "Capital stock tax" means a taxmeasured 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 ofbusiness, in terms of gross receipts or in other terms, and in thedetermination of which no deduction is allowed which would constitute the taxan income tax.

7.  "Sales tax" means a tax imposedwith respect to the transfer for a consideration of ownership, possession orcustody of tangible personal property or the rendering of services measured bythe price of the tangible personal property transferred or services renderedand which is required by state or local law to be separately stated from thesales price by the seller, or which is customarily separately stated from thesales price, but does not include a tax imposed exclusively on the sale of aspecifically identified commodity or article or class or commodities orarticles.

8.  "Use tax" means a nonrecurringtax, other than a sales tax, which (a) is imposed on or with respect to theexercise or enjoyment of any right or power over tangible personal propertyincident to the ownership, possession or custody of that property or theleasing of that property from another including any consumption, keeping,retention, or other use of tangible personal property and (b) is complementaryto a sales tax.

9.  "Tax" means an income tax,capital stock tax, gross receipts tax, sales tax, use tax, and any other taxwhich has a multistate impact, except that the provisions of Articles III, IVand V of this compact shall apply only to the taxes specifically designatedtherein and the provisions of Article IX of this compact shall apply only inrespect to determinations pursuant to Article IV.

 

Article III. Elements of Income Tax Laws.

TaxpayerOption, State and Local Taxes.

 

1.  Any taxpayer subject to an income tax whoseincome is subject to apportionment and allocation for tax purposes pursuant tothe laws of a party State or pursuant to the laws of subdivisions in two ormore party States may elect to apportion and allocate his income in the mannerprovided by the laws of such State or by the laws of such States andsubdivisions without reference to this compact, or may elect to apportion andallocate in accordance with Article IV.  This election for any tax year may bemade in all party States or subdivisions thereof or in any one or more of theparty States or subdivisions thereof without reference to the election made inthe others.  For the purposes of this paragraph, taxes imposed by subdivisionsshall be considered separately from state taxes and the apportionment andallocation also may be applied to the entire tax base.  In no instance whereinArticle IV is employed for all subdivisions of a State may the sum of allapportionments and allocations to subdivisions within a State be greater thanthe apportionment and allocation that would be assignable to that State if theapportionment or allocation were being made with respect to a State income tax.

 

TaxpayerOption, Short Form.

 

2.  Each party State or any subdivision thereofwhich imposes an income tax shall provide by law that any taxpayer required tofile a return, whose only activities within the taxing jurisdiction consist ofsales and do not include owning or renting real estate or tangible personalproperty, and whose dollar volume of gross sales made during the tax yearwithin 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 percentageof such volume and shall adopt rates which shall produce a tax which reasonablyapproximates the tax otherwise due.  The Multistate Tax Commission, not morethan once in five years, may adjust the $100,000 figure in order to reflectsuch changes as may occur in the real value of the dollar, and such adjustedfigure, upon adoption by the Commission shall replace the $100,000 figurespecifically provided herein.  Each party State and subdivision thereof maymake the same election available to taxpayers additional to those specified inthis paragraph.

 

Coverage.

 

3.  Nothing in this Article relates to thereporting or payment of any tax other than an income tax.

 

Article IV. Division of Income.

 

1.  As used in this Article, unless the contextotherwise requires:

(a)  "Business income" means incomearising from transactions and activity in the regular course of the taxpayer'strade or business and includes income from tangible and intangible property ifthe acquisition, management, and disposition of the property constituteintegral parts of the taxpayer's regular trade or business operations.

(b)  "Commercial domicile" means theprincipal place from which the trade or business of the taxpayer is directed ormanaged.

(c)  "Compensation" means wages,salaries, commissions and any other form of remuneration paid to employees forpersonal services.

(d)  "Financial organization" meansany bank, trust company, savings bank, industrial bank, land bank, safe depositcompany, private banker, savings and loan association, credit union,cooperative bank, small loan company, sales finance company, investmentcompany, or any type of insurance company.

(e)  "Nonbusiness income" means allincome other than business income.

(f)  "Public utility" means anybusiness entity (1) which owns or operates any plant, equipment, property,franchise, or license for the transmission of communications, transportation ofgoods or persons, except by pipeline, or the production, transmission, sale,delivery, or furnishing of electricity, water or steam; and (2) whose rates ofcharges for goods or services have been established or approved by a federal,state or local government or governmental agency.

(g)  "Sales" means all gross receiptsof the taxpayer not allocated under paragraphs of this Article.

(h)  "State" means any State of theUnited States, the District of Columbia, the Commonwealth of Puerto Rico, anyTerritory or Possession of the United States, and any foreign country orpolitical subdivision thereof.

(i)  "This State" means the State inwhich the relevant tax return is filed or, in the case of application of thisArticle to the apportionment and allocation of income for local tax purposes,the subdivision or local taxing district in which the relevant tax return isfiled.

2.  Any taxpayer having income from businessactivity which is taxable both within and without this State, other thanactivity as a financial organization or public utility or the rendering ofpurely personal services by an individual, shall allocate and apportion thetaxpayer's net income as provided in this Article.  If a taxpayer has incomefrom business activity as a public utility but derives the greater percentageof the taxpayer's income from activities subject to this Article, the taxpayermay elect to allocate and apportion the taxpayer's entire net income asprovided in this Article.

3.  For purposes of allocation andapportionment of income under this Article, a taxpayer is taxable in anotherState if (1) in that State the taxpayer is subject to a net income tax, afranchise tax measured by net income, a franchise tax for the privilege ofdoing business, or a corporate stock tax, or (2) that State has jurisdiction tosubject the taxpayer to a net income tax regardless of whether in fact, theState does or does not.

4.  Rents and royalties from real or tangiblepersonal property, capital gains, interest, dividends or patents or copyrightroyalties, to the extent that they constitute nonbusiness income, shall beallocated as provided in paragraphs 5 through 8 of this Article.

5.  (a)  Net rents and royalties from realproperty located in this State are allocable to this State.

(b)  Net rents and royalties from tangiblepersonal property are allocable to this State: (1) if and to the extent thatthe property is utilized in this State, or (2) in their entirety if thetaxpayer's commercial domicile is in this State and the taxpayer is notorganized under the laws of or taxable in the State in which the property isutilized.

(c)  The extent of utilization of tangiblepersonal property in a State is determined by multiplying the rents androyalties by a fraction, the numerator of which is the number of days ofphysical location of the property in the State during the rental or royaltyperiod in the taxable year and the denominator of which is the number of daysof physical location of the property everywhere during all rental or royaltyperiods in the taxable year.  If the physical location of the property duringthe rental or royalty period is unknown or unascertainable by the taxpayer,tangible personal property is utilized in the State in which the property waslocated at the time the rental or royalty payer obtained possession.

6.  (a)  Capital gains and losses from sales ofreal property located in this State are allocable to this State.

(b)  Capital gains and losses from sales oftangible personal property are allocable to this State if (1) the property hada situs in this State at the time of the sale, or (2) the taxpayer's commercialdomicile is in this State and the taxpayer is not taxable in the State in whichthe property had a situs.

(c)  Except in the case of the sale of apartnership interest, capital gains and losses from sales of intangiblepersonal property are allocable to this State if the taxpayer's commercialdomicile is in this State.

(d)  Gain or loss from the sale of apartnership interest is allocable to this State in the ratio of the originalcost of partnership tangible property in the State to the original cost ofpartnership 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 ofintangibles, gain or loss from the sale of the partnership interest shall beallocated to this State in accordance with the sales factor of the partnershipfor its first full tax period immediately preceding its tax period during whichthe partnership interest was sold.

7.  Interest and dividends are allocable tothis State if the taxpayer's commercial domicile is in this State.

8.  (a)  Patent and copyright royalties areallocable to this State: (1) if and to the extent that the patent or copyrightis utilized by the payer in this State, or (2) if and to the extent that thepatent copyright is utilized by the payer in a State in which the taxpayer isnot taxable and the taxpayer's commercial domicile is in this State.

(b)  A patent is utilized in a State to theextent that it is employed in production, fabrication, manufacturing, or otherprocessing in the State or to the extent that a patented product is produced inthe State.  If the basis of receipts from patent royalties does not permitallocation to States or if the accounting procedures do not reflect States ofutilization, the patent is utilized in the State in which the taxpayer'scommercial domicile is located.

(c)  A copyright is utilized in a State to theextent that printing or other publication originates in the State.  If thebasis of receipts from copyright royalties does not permit allocation to Statesor if the accounting procedures do not reflect States of utilization, thecopyright is utilized in the State in which the taxpayer's commercial domicileis located.

9.  All business income shall be apportioned tothis State by multiplying the income by a fraction, the numerator of which isthe property factor plus the payroll factor plus the sales factor, and thedenominator of which is three.

10.  The property factor is a fraction, thenumerator of which is the average value of the taxpayer's real and tangiblepersonal property owned or rented and used in this State during the tax periodand the denominator of which is the average value of all the taxpayer's realand tangible personal property owned or rented and used during the tax period.

11.  Property owned by the taxpayer is valuedat its original cost.  Property rented by the taxpayer is valued at eight timesthe net annual rental rate.  Net annual rental rate is the annual rental ratepaid by the taxpayer less any annual rental rate received by the taxpayer fromsubrentals.

12.  The average value of property shall bedetermined by averaging the values at the beginning and ending of the taxperiod but the tax administrator may require the averaging of monthly valuesduring the tax period if reasonably required to reflect properly the average valueof the taxpayer's property.

13.  The payroll is a fraction, the numeratorof which is the total amount paid in the State during the tax period by thetaxpayer for compensation and the denominator of which is the totalcompensation paid everywhere during the tax period.

14.  Compensation is paid in this State if:

(a)  the individual's service is performedentirely within the State;

(b)  the individual's service is performed bothwithin and without the State, but the service performed without the State isincidental to the individual's service within the State; or

(c)  some of the service is performed in theState and (1) the base of operations or, if there is no base of operations, theplace 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 orcontrolled 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, thenumerator of which is the total sales of the taxpayer in this State during thetax period, and the denominator of which is the total sales of the taxpayereverywhere during the tax period.

16.  Sales of tangible personal property are inthis State if:

(a)  the property is delivered or shipped to apurchaser, other than the United States Government, within this Stateregardless 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) thepurchaser is the United States Government or (2) the taxpayer is not taxable inthe State of the purchaser.

17.  Sales, other than sales of tangiblepersonal property, are in this State if:

(a)  the income-producing activity is performedin this State; or

(b)  the income-producing activity is performedboth 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 oncosts of performance.

18.  If the allocation and apportionmentprovisions of this Article do not fairly represent the extent of the taxpayer'sbusiness activity in this State, the taxpayer may petition for or the taxadministrator may require, in respect to all or any part of the taxpayer'sbusiness activity, if reasonable:

(a)  separate accounting;

(b)  the exclusion of any one or more of thefactors;

(c)  the inclusion of one or more additionalfactors which will fairly represent the taxpayer's business activity in thisState; or

(d)  the employment of any other method toeffectuate 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 ontangible personal property shall be entitled to full credit for the combinedamount or amounts of legally imposed sales or use taxes paid by him withrespect to the same property to another State and any subdivision thereof.  Thecredit 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 amountof any use tax due a subdivision.

 

ExemptionCertificates, Vendors May Rely.

 

2.  Whenever a vendor receives and accepts ingood faith from a purchaser a resale or other exemption certificate or otherwritten evidence of exemption authorized by the appropriate State orsubdivision taxing authority, the vendor shall be relieved of liability for asales or use tax with respect to the transaction.

 

Article VI. The Commission.

Organizationand Management.

 

1.  (a)  The Multistate Tax Commission ishereby established.  It shall be composed of one "member" from eachparty State who shall be the head of the State agency charged with theadministration of the types of taxes to which this compact applies.  If thereis more than one such agency the State shall provide by law for the selectionof the Commission member from the heads of the relevant agencies.  State lawmay provide that a member of the Commission be represented by an alternate butonly if there is on file with the Commission written notification of thedesignation and identity of the alternate.  The attorney general of each partyState or his designee, or other counsel if the laws of the party Statespecifically provide, shall be entitled to attend the meetings of theCommission, but shall not vote.  Such attorneys general, designees, or othercounsel shall receive all notices of meetings required under paragraph 1(e) ofthis Article.

(b)  Each party State shall provide by law forthe selection of representatives from its subdivisions affected by this compactto consult with the Commission member from that State.

(c)  Each member shall be entitled to onevote.  The Commission shall not act unless a majority of the members arepresent, and no action shall be binding unless approved by a majority of thetotal number of members.

(d)  The Commission shall adopt an officialseal to be used as it may provide.

(e)  The Commission shall hold an annualmeeting and such other regular meetings as its bylaws may provide and suchspecial meetings as its Executive Committee may determine.  The Commissionbylaws shall specify the dates of the annual and any other regular meetings,and shall provide for the giving of notice of annual, regular and specialmeetings.  Notices of special meetings shall include the reasons therefor andan agenda of the items to be considered.

(f)  The Commission shall elect annually, fromamong its members, a chairman, a vice chairman and a treasurer.  The Commissionshall appoint an executive director who shall serve at its pleasure, and itshall fix his duties and compensation.  The executive director shall besecretary of the Commission.  The Commission shall make provision for thebonding 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 directorshall appoint or discharge such personnel as may be necessary for theperformance of the functions of the Commission and shall fix their duties andcompensation.  The Commission bylaws shall provide for personnel policies andprograms.

(h)  The Commission may borrow, accept orcontract for the services of personnel from any State, the United States, orany other governmental entity.

(i)  The Commission may accept for any of itspurposes and functions any and all donations and grants of money, equipment,supplies, materials and services, conditional or otherwise, from anygovernmental entity, and may utilize and dispose of the same.

(j)  The Commission may establish one or moreoffices for the transacting of its business.

(k)  The Commission shall adopt bylaws for theconduct of its business.  The Commission shall publish its bylaws in convenientform, and shall file a copy of the bylaws and any amendments thereto with theappropriate agency or officer in each of the party States.

(l)  The Commission annually shall make to theGovernor and legislature of each party State a report covering its activitiesfor the preceding year.  Any donation or grant accepted by the Commission orservices borrowed shall be reported in the annual report of the Commission, andshall include the nature, amount and conditions, if any, of the donation, gift,grant or services borrowed and the identity of the donor or lender.  TheCommission may make additional reports as it may deem desirable.

 

Committees.

 

2.  (a)  To assist in the conduct of itsbusiness when the full Commission is not meeting, the Commission shall have anExecutive Committee of seven members, including the chairman, vice chairman,treasurer and four other members elected annually by the Commission.  TheExecutive Committee, subject to the provisions of this compact and consistentwith the policies of the Commission, shall function as provided in the bylawsof the Commission.

(b)  The Commission may establish advisory andtechnical committees, membership on which may include private persons and publicofficials, in furthering any of its activities.  Such committees may considerany matter of concern to the Commission, including problems of special interestto any party State and problems dealing with particular types of taxes.

(c)  The Commission may establish suchadditional committees as its bylaws may provide.

 

Powers.

 

3.  In addition to powers conferred elsewherein this compact, the Commission shall have power to:

(a)  Study state and local tax systems andparticular types of state and local taxes.

(b)  Develop and recommend proposals for anincrease in uniformity or compatibility of state and local tax laws with a viewtoward encouraging the simplification and improvement of state and local taxlaw and administration.

(c)  Compile and publish information as in itsjudgment would assist the party States in implementation of the compact andtaxpayers in complying with state and local tax laws.

(d)  Do all things necessary and incidental tothe administration of its functions pursuant to this compact.

 

Finance.

 

4.  (a)  The Commission shall submit to theGovernor or designated officer or officers of each party State a budget of itsestimated expenditures for such period as may be required by the laws of thatState for presentation to the legislature thereof.

(b)  Each of the Commission's budgets ofestimated expenditures shall contain specific recommendations of the amounts tobe appropriated by each of the party States.  The total amount ofappropriations requested under any such budget shall be apportioned among theparty States as follows: one-tenth in equal shares; and the remainder inproportion to the amount of revenue collected by each party State and itssubdivisions from income taxes, capital stock taxes, gross receipts taxes, salesand use taxes.  In determining such amounts, the Commission shall employ suchavailable public sources of information as, in its judgment, present the mostequitable and accurate comparisons among the party States.  Each of theCommission's budgets of estimated expenditures and requests for appropriationsshall indicate the sources used in obtaining information employed in applyingthe formula contained in this paragraph.

(c)  The Commission shall not pledge the creditof any party State.  The Commission may meet any of its obligations in whole orin part with funds available to it under paragraph 1(i) of this Article: provided that the Commission takes specific action setting aside such fundsprior to incurring any obligation to be met in whole or in part in suchmanner.  Except where the Commission makes use of funds available to it underparagraph 1(i), the Commission shall not incur any obligation prior to theallotment of funds by the party States adequate to meet the same.

(d)  The Commission shall keep accurateaccounts of all receipts and disbursements.  The receipts and disbursements ofthe Commission shall be subject to the audit and accounting proceduresestablished under its bylaws.  All receipts and disbursements of funds handledby the Commission shall be audited yearly by a certified or licensed publicaccountant and the report of the audit shall be included in and become part ofthe annual report of the Commission.

(e)  The accounts of the Commission shall beopen at any reasonable time for inspection by duly constituted officers of theparty States and by any persons authorized by the Commission.

(f)  Nothing contained in this Article shall beconstrued to prevent Commission compliance with laws relating to audit orinspection of accounts by or on behalf of any government contributing to thesupport of the Commission.

 

Article VII. Uniform Regulations and Forms.

 

1.  Whenever any two or more party States, orsubdivisions of party States, have uniform or similar provisions of law relatingto an income tax, capital stock tax, gross receipts tax, sales or use tax, theCommission may adopt uniform regulations for any phase of the administration ofsuch law, including assertion of jurisdiction to tax, or prescribing uniformtax forms.  The Commission may also act with respect to the provisions ofArticle IV of this compact.

2.  Prior to the adoption of any regulation,the Commission shall:

(a)  As provided in its bylaws, hold at leastone public hearing on due notice to all affected party States and subdivisionsthereof and to all taxpayers and other persons who have made timely request ofthe Commission for advance notice of its regulation-making proceedings.

(b)  Afford all affected party States andsubdivisions and interested persons an opportunity to submit relevant writtendata and views, which shall be considered fully by the Commission.

3.  The Commission shall submit any regulationsadopted by it to the appropriate officials of all party States and subdivisionsto which they might apply.  Each such State and subdivision shall consider anysuch regulation for adoption in accordance with its own laws and procedures.

 

ArticleVIII.  Interstate Audits.

 

1.  This Article shall be in force only inthose party States that specifically provide therefor by statute.

2.  Any party State or subdivision thereofdesiring to make or participate in an audit of any accounts, books, papers,records or other documents may request the Commission to perform the audit onits behalf.  In responding to the request, the Commission shall have access toand may examine, at any reasonable time, such accounts, books, papers, records,and other documents and any relevant property or stock of merchandise.  TheCommission may enter into agreements with party States or their subdivisionsfor assistance in performance of the audit.  The Commission shall make charges,to be paid by the State or local governments or governments for which itperforms the service, for any audits performed by it in order to reimburse itselffor the actual costs incurred in making the audit.

3.  The Commission may require the attendanceof any person within the State where it is conducting an audit or part thereofat a time and place fixed by it within such State for the purpose of giving testimonywith respect to any account, book, paper, document, other record, property orstock of merchandise being examined in connection with the audit.  If theperson is not within the jurisdiction, he may be required to attend for suchpurpose at any time and place fixed by the Commission within the State of whichhe is a resident; provided that such State has adopted this Article.

4.  The Commission may apply to any courthaving power to issue compulsory process for orders in aid of its powers andresponsibilities pursuant to this Article and any and all such courts shallhave jurisdiction to issue such orders.  Failure of any person to obey any suchorder shall be punishable as contempt of the issuing court.  If the party orsubject matter on account of which the Commission seeks an order is within thejurisdiction of the court to which application is made, such application may beto a court in the State or subdivision on behalf of which the audit is beingmade or a court in the State in which the object of the order being sought issituated.  The provisions of this paragraph apply only to courts in a Statethat has adopted this Article.

5.  The Commission may decline to perform anyaudit requested if it finds that its available personnel or other resources areinsufficient for the purpose or that, in the terms requested, the audit isimpracticable of satisfactory performance.  If the Commission, on the basis ofits 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 interestto a number of party States or their subdivisions, it may offer to make theaudit or audits, the offer to be contingent on sufficient participation thereinas determined by the Commission.

6.  Information obtained by any audit pursuantto this Article shall be confidential and available only for tax purposes toparty States, their subdivisions or the United States.  Availability ofinformation shall be in accordance with the laws of the States or subdivisionson whose account the Commission performs the audit, and only through theappropriate agencies or officers of such States or subdivisions.  Nothing inthis Article shall be construed to require any taxpayer to keep records for anyperiod not otherwise required by law.

7.  Other arrangements made or authorizedpursuant to law for cooperative audit by or on behalf of the party States orany of their subdivisions are not superseded or invalidated by this Article.

8.  In no event shall the Commission make anycharge 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 orlicense fee imposed in whole or in part for revenue purposes.

 

Article IX. Arbitration.

 

1.  Whenever the Commission finds a need forsettling disputes concerning apportionments and allocations by arbitration, itmay adopt a regulation placing this Article in effect, notwithstanding theprovisions of Article VII.

2.  The Commission shall select and maintain anArbitration Panel composed of officers and employees of State and localgovernments and private persons who shall be knowledgeable and experienced inmatters of tax law and administration.

3.  Whenever a taxpayer who has elected to employArticle IV, or whenever the laws of the party State or subdivision thereof aresubstantially identical with the relevant provisions of Article IV, thetaxpayer, by written notice to the Commission and to each party State orsubdivision thereof that would be affected, may secure arbitration of anapportionment or allocation, if he is dissatisfied with the finaladministrative determination of the tax agency of the State or subdivision withrespect thereto on the ground that it would subject him to double or multipletaxation by two or more party States or subdivisions thereof.  Each party Stateand subdivision thereof hereby consents to the arbitration as provided herein,and agrees to be bound thereby.

4.  The Arbitration Board shall be composed ofone person selected by the taxpayer, one by the agency or agencies involved,and one member of the Commission's Arbitration Panel.  If the agencies involvedare unable to agree on the person to be selected by them, such person shall beselected by lot from the total membership of the Arbitration Panel.  The twopersons selected for the Board in the manner provided by the foregoingprovisions of this paragraph shall jointly select the third member of theBoard.  If they are unable to agree on the selection, the third member shall beselected by lot from among the total membership of the Arbitration Panel.  Nomember of a Board selected by lot shall be qualified to serve if he is anofficer or employee or is otherwise affiliated with any party to thearbitration proceeding.  Residence within the jurisdiction of a party to thearbitration proceeding shall not constitute affiliation within the meaning ofthis paragraph.

5.  The Board may sit in any State orsubdivision party to the proceeding, in the State of the taxpayer'sincorporation, residence or domicile, in any State where the taxpayer doesbusiness, or in any place that it finds most appropriate for gaining access toevidence relevant to the matter before it.

6.  The Board shall give due notice of thetimes and places of its hearings.  The parties shall be entitled to be heard,to present evidence, and to examine and cross-examine witnesses.  The Boardshall act by majority vote.

7.  The Board shall have power to administeroaths, take testimony, subpoena and require the attendance of witnesses and theproduction of accounts, books, papers, records, and other documents, and issuecommissions to take testimony.  Subpoenas may be signed by any member of theBoard.  In case of failure to obey a subpoena, and upon application by theBoard, any judge of a court of competent jurisdiction of the State in which theBoard is sitting or in which the person to whom the subpoena is directed may befound may make an order requiring compliance with the subpoena, and the courtmay punish failure to obey the order as a contempt.  The provisions of thisparagraph apply only in States that have adopted this Article.

8.  Unless the parties otherwise agree theexpenses and other costs of the arbitration shall be assessed and allocatedamong the parties by the Board in such manner as it may determine.  TheCommission shall fix a schedule of compensation for members of ArbitrationBoards and of other allowable expenses and costs.  No officer or employee of aState or local government who serves as a member of a Board shall be entitledto compensation therefor unless he is required on account of his service toforego the regular compensation attaching to his public employment, but anysuch Board member shall be entitled to expenses.

9.  The Board shall determine the disputedapportionment or allocation and any matters necessary thereto.  Thedeterminations of the Board shall be final for purposes of making theapportionment or allocation, but for no other purpose.

10.  The Board shall file with the Commissionand with each tax agency represented in the proceeding: the determination ofthe Board; the Board's written statement of its reasons therefor; the record ofthe Board's proceedings; and any other documents required by the arbitrationrules of the Commission to be filed.

11.  The Commission shall publish thedetermination of Boards together with the statements of the reasons therefor.

12.  The Commission shall adopt and publishrules of procedure and practice and shall file a copy of such rules and of anyamendment thereto with the appropriate agency or officer in each of the States.

13.  Nothing contained herein shall prevent atany time a written compromise of any matter or matters in dispute, if otherwiselawful, by the parties to the arbitration proceeding.

 

Article X. Entry Into Force and Withdrawal.

 

1.  This Compact shall enter into force whenenacted into law by any seven States.  Thereafter, this compact shall becomeeffective as to any other State upon its enactment thereof.  The Commissionshall arrange for notification of all party States whenever there is a newenactment of the compact.

2.  Any party State may withdraw from thiscompact by enacting a statute repealing the same.  No withdrawal shall effectany liability already incurred by or chargeable to a party State prior to thetime of such withdrawal.

3.  No proceeding commenced before anArbitration Board prior to the withdrawal of a State and to which thewithdrawing State or any subdivision thereof is a party shall be discontinuedor terminated by the withdrawal, nor shall the Board thereby lose jurisdictionover any of the parties to the proceeding necessary to make a bindingdetermination therein.

 

Article XI. Effect on Other Laws and Jurisdiction.

 

Nothing in this compact shall be construed to:

(a)  Affect the power of any State orsubdivision thereof to fix rates of taxation, except that a party State shallbe obligated to implement Article III 2 of this Compact.

(b)  Apply to any tax or fixed fee imposed forthe registration of a motor vehicle or any tax on motor fuel, other than asales tax; provided that the definition of "tax" in Article VIII 9may apply for the purpose of that Article and the Commission's powers of studyand recommendation pursuant to Article VI 3 may apply.

(c)  Withdraw or limit the jurisdiction of anyState or local court or administrative officer or body with respect to anyperson, corporation or other entity or subject matter, except to the extentthat such jurisdiction is expressly conferred by or pursuant to this compactupon another agency or body.

(d)  Supersede or limit the jurisdiction of anycourt of the United States.

 

Article XII. Construction and Severability.

 

This Compact shall be liberally construed so asto effectuate the purposes thereof.  The provisions of this Compact shall beseverable and if any phrase, clause, sentence or provision of this Compact isdeclared to be contrary to the constitution of any State or of the UnitedStates or the applicability thereof to any government, agency, person orcircumstance is held invalid, the validity of the remainder of this Compact andthe applicability thereof to any government, agency, person or circumstanceshall not be affected thereby.  If this Compact shall be held contrary to theconstitution of any State participating therein, the Compact shall remain infull force and effect as to the remaining party States and in full force andeffect as to the State affected as to all severable matters. [L 1968, c 30, §2;am L 1989, c 19, §2]