Businesses Urge Consideration of Measure To Create Bright-Line State Nexus Standard

Daily Tax Report
May 13, 2008

More than 100 businesses have urged the House Judiciary Committee to consider legislation (H.R. 5267) to establish standards outlining when states can levy business activity taxes on out-of-state businesses.

The May 2 letter to Committee Chairman John Conyers (D-Mich.), Commercial and Administrative Law Subcommittee Chairwoman Linda Sanchez (D-Calif.), and the rest of the committee was sent by the Coalition to Protect Interstate Commerce, an umbrella group made up of business and trade organizations.

Reps. Rick Boucher (D-Va.) and Bob Goodlatte (R-Va.) introduced the Business Activity Tax Simplification Act of 2008. The measure was referred to the Judiciary Committee, which has not acted or held a hearing on the topic. The House Small Business Committee held a hearing Feb. 14, where witnesses said without the legislation small business growth would be inhibited by oft-changing taxes levied at each state's will (31 DTR G-3, 2/15/08).

Nineteen lawmakers signed on to the bipartisan bill. Of the 21 total members supporting the bill, 15 serve on the 40-member House Judiciary Committee.

The legislation would "clarify the constitutional requirement for a physical presence nexus standard governing state assessment of corporate income taxes and comparable taxes on a business," the businesses wrote. "Specifically, the bill would articulate a bright-line physical presence nexus standard that includes owning or leasing any real or tangible property, or assigning one or more employees to perform certain activities in the state for more than fifteen days in a taxable year."

Text of the Coalition to Protect Interstate Commerce letter is in TaxCore.