The Multistate Tax Commission’s (MTC) Financial Institutions Working Group held its monthly meeting on April 23, 2013 to discuss a proposed apportionment formula for financial institutions.

By way of background, since 2007 the Working Group has examined whether the MTC’s special financial apportionment regulations, which were adopted in 1994 and applied by many states, are in need of revision. In recent months, the Working Group, which consists of representatives from states and industry, has been examining whether to include loans in the property factor and the best method to source them. Under the existing MTC rules, loans are sourced for property factor purposes based on where the preponderance of the substantive contacts relating to a loan has occurred. This process considers five factors: solicitation, investigation, negotiation, approval and administration of the loan (the aptly named SINAA test).