Senate fights back on recent Supreme Court nexus issue

A bill has been introduced in the U.S. Senate that would require businesses to have a physical presence in a state in order to be subject to income and "other business activity taxes." This proposed legislation is offered in direct response to the recent U.S. Supreme Court refusal to consider two cases wherein states assessed income and franchise taxes on companies with no physical presence in the state.

The Supreme Court's inaction in the matters of Lanco, Inc. v. Director U.S. and FIA Card Services N.A. f/k/a MBNA America Bank, N.A. v. Commissioner, U.S. has raised the issue of whether a business activity constituting a "significant economic presence" in a state is sufficient grounds for assessing taxes on a company with no physical presence in the state.

The Senate bill, known as the Business Activity Tax Simplification Act of 2007 (BATSA) would solidify an earlier Supreme Court ruling (Quill v. North Dakota), a benchmark ruling that has been the cornerstone of nexus decisions for more than a decade, by requiring physical presence for the application of all business activity taxes.

BATSA has been introduced by Senators Mike Crapo (R-ID) and Charles E. Schumer (D-NY). "Businesses should not be punished with double taxation simply because their products reach beyond state borders," stated Schumer in a press release. "At a minimum, this is a huge administrative burden. In the worst case scenario, these differing state tax treatments will drive businesses to states with more favorable laws. Either way, the effect on commerce is debilitating."

Related story:

Supreme Court inaction could change nexus rules

You may like these other stories...

A new government report on Monday found that the IRS may not be completing the required research steps in collecting delinquent taxes before considering the cases “not collectible.”The Treasury Inspector General...
The school year is off and running—have your start-up clients launched as well? It may make a big difference in tax status. If your clients can get their businesses up-and-running before the end of the year, they may...
Ernst & Young fiscal-year revenue rises 6% to $27.4 billionMichael Rapoport of the Wall Street Journal reported late Thursday that Ernst & Young's (EY) global revenue was $27.4 billion in its latest fiscal year,...

Already a member? log in here.

Upcoming CPE Webinars

Sep 30This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.