Coalition to Protect Interstate Commerce
Praises Improvements to Business Activity Tax Simplification Legislation
(Washington, DC)—Today the Coalition to Protect Interstate Commerce (CPIC) praised the original cosponsors of H.R. 5267, the “Business Activity Tax Simplification Act of 2008,” which has been updated and improved from previous versions of the legislation. The revised bill, which mirrors S. 1726, introduced in the Senate by Sens. Charles Schumer (D-NY) and Mike Crapo (R-ID), includes several significant changes from similar bills introduced in prior Congress to ensure that states and businesses more clearly understand the operating rules for the imposition of taxes on businesses that operate across state borders.
“The cosponsors of the House and Senate bills, and we hope eventually a majority of members of Congress, understand that Congress has a duty to step in when some states impede the free flow of interstate commerce,” said CPIC Spokeswoman Tara Bradshaw. “The entrepreneurial spirit upon which this great country was founded and which allows large and small businesses alike to be the engine of growth for our economy, is being jeopardized as an increasing number of states clearly overreach in their efforts to collect state business activity taxes,” she added.
“The Business Activity Tax Simplification Act of 2008 would create bright line tests to ensure that states continue to have the ability to tax businesses that operate within their borders, employ people and have property within their boundaries, and utilize the services those states and municipalities provide. However, the legislation also clarifies that ‘doing business in a state’ does not mean simply having customers in the state,” Bradshaw stated.
Improvements made to the Business Activity Tax Simplification Act of 2008 include:
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Reduction to a 15-day de minimis physical presence threshold
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Elimination of a carve-out that would have allowed a person to own or lease tangible property in a state for assembling, manufacturing, processing or testing by another person for the benefit of the owner
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Elimination of targeted carve-outs that would have allowed a person to have a physical presence in a state for certain activities without creating nexus
“These improvements go a long way to addressing specific critiques of prior versions of the legislation and, thus, further the goal of clarifying what is now an unsustainable multitude of competing state statutes and practices,” she continued. “It is critically important that Congress step in and take immediate action on this legislation to clear up our current system.”