Business Activity Taxes
Write Your Legislator NOW About Business Activity Taxes!
Business Activity Tax Simplification Act of 2011 (BATSA)
Issue Summary:
States have been seeking to tax out-of-state corporations by establishing an economic nexus standard for such taxation rather than through establishing such corporations’ physical presence in the state. The Business Activity Tax Simplification Act of 2011 (BATSA), H.R. 1439, introduced by Congressman Goodlatte, establishes a bright-line rule that all states would follow by codifying the traditional physical presence nexus governing state imposition of corporate income taxes and comparable business activity taxes.
Background:
The Supreme Court, in Quill Corp. v. North Dakota (1992), justified the prohibition of states forcing out-of-state corporations to collect certain taxes unless it established a physical presence in the taxing state. States, however, have continued to seek revenue from out-of-state corporations despite the lack of such appropriate physical nexus, by relying on an economic nexus standard for taxation. There has been an effort for several Congresses to establish a bright-line test which protects out-of-state businesses from overreaching states seeking to tax them.
IFA Concern:
Franchisors with no real physical presence in a state can be subjected to such state’s efforts to impose business taxes on them due to the presence of their franchisees in the state.
IFA Action:
IFA has supported H.R. 1439 and its predecessor legislation in previous Congresses through lobbying Members, letters of support to the Hill, and testimony before Congress. Corey Schroeder, Vice President and CFO of Outdoor Living Brands, Inc. of Richmond, Virginia, testified in support of H.R. 1439 before the House Judiciary Subcommittee on Courts, Commercial and Administrative Law on April 13, 2011. IFA has also worked in conjunction with the large number of other businesses and trade associations supporting the legislation.
Status:
The House Judiciary Committee approved H.R. 1439 by voice vote on July 7, 2011. It was placed on the House calendar on October 21, 2011. The Committee Report is H.Rept. 112-25.
RESOURCES
Coalition for Interstate Tax Fairness & Job Growth - Letter to Speaker Boehner and Leader Pelosi (IFA co-signed) - February 28, 2012
Industry Coalition Urges Congress to Pass BATSA (IFA co-signed letter July 2011) - July 7, 2011
IFA Testimony to House Judiciary Committee on State Taxation Hearing - February 4, 2010
Industry Coalition Urges Congress to Pass BATSA (IFA co-signed letter) - June 22, 2009
IFA Testimony to House Judiciary Committee, Subcommittee on Commercial and Administrative Law - June 24, 2008