TaxFoundation.org State Taxes Blog Donate
In three hours, I’ll be testifying to the U.S. House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Administrative Law. The subject of the hearing is the Business Activity Tax Simplification Act (BATSA) of 2013, H.R. 2992, co-sponsored by Rep. Bob Goodlatte (R-VA) and Rep. Bobby Scott (D-VA).
What is BATSA? BATSA re-affirms the physical presence rule – the rule that states can impose corporate income taxes and other business activity taxes only on companies that have phyiscal presence in a state.
States are unfortunately becoming more aggressive about reaching beyond their borders to impose taxes on out-of-state companies with neither property nor employees in the state. Not only do these parochial actions harm the national economy, they’re bad tax policy because they violate the benefit principle that people should pay taxes where they receive benefits from government services.
You’ll hear more on my testimony later. But I wanted to share the story of a fellow witness at today’s hearing, Pete Vegas. We’ve tried to get the word out about Pete’s story since he first reached out to us in 2011. Pete runs a food manufacturing company, with facilities in California, Arkansas, and Texas, and they sell their products all over the country. While in Washington State on a personal trip, he stopped by an existing customer to say hi and introduce himself.
Later, revenue officials learned that Pete’s trucks were going into the state, so they sent what they call a nexus questionnaire (what I would call a fishing expedition) to Pete’s company, asking “How many times per year” did he visit Washington? Pete answered “once.” Big mistake. Washington then sent Pete an invoice for seven years of back taxes of their gross reciepts tax, the Business & Occupation Tax, plus interest and penalties — $180,000 in total.
Pete’s a fighter and he appealed and ultimately won. (Hear his story in your own words here.) But for every Pete Vegas who fights overly aggressive state tax actions, lots of businesses get trampled. Today, I’ll be explaining the physical presence rule and why it’s important, and why it’s constitutional and appropriate for Congress to set rules on the limits of state authority to tax multistate companies that have all their property and employees in other states. Stay tuned.
Vice President, Legal & State Projects
The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.
This message was sent to Parrottcpa@gmail.com from:
Tax Foundation | 529 14th Street, N.W., Suite 420 | Washington, DC 20045
Manage Your Subscription | Forward This Message
- Passed all 7 sections! Yay! fb.me/RoP9pb9L 1 year ago
- Updating all the QuickBooks Certifications: QuickBooks Desktop and QuickBooks Online Certified ProAdvisor. Now... fb.me/21StqOkaK 1 year ago
- Today is the last day of 2015 - a good day to take inventory of the products you sale that you still have on... fb.me/4AJ2tUXNg 1 year ago
- Year end and gearing up for tax season fun has commenced! fb.me/1ZURzjdLf 1 year ago
- Nita Strauss -Alice ift.tt/1NxlvQ2 1 year ago
- 2012 Tax DeadlineApril 15th, 2013Your 2012 Tax Return is due.
- August 2015
- May 2015
- December 2014
- September 2014
- August 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- April 2012
- January 2012
- October 2011