The Coalition for Interstate Tax Fairness & Job Growth is an alliance of businesses – large and small, including virtually all types of businesses – fighting for fair, uniform state corporate income taxation laws. The Coalition, formed in 2007, believes that a state should not be able to impose income taxes or similar taxes on businesses that do not have a meaningful physical presence in that state. The Business Activity Tax Simplification Act (BATSA) would clarify that standard, and reiterate what is already current law.
Some states have gone to extreme lengths to collect revenue from businesses by imposing corporate income and similar taxes on them even when they are not located in the taxing jurisdiction. New Jersey has tried to collect taxes from out-of-state companies whose delivery trucks simply passed through on an interstate highway. Other states have tried to collect income taxes from out-of-state companies that merely license software to a single customer within their borders. These practices are not only unfair and confusing but also violate the U.S. Constitution: nearly 20 years ago the Supreme Court ruled that states can only impose taxes on companies when those companies have a substantial connection to the state, but the Court has declined to decide any cases in this area since then.
New Jersey, Louisiana, South Carolina and others have levied taxes on companies that don’t have a physical presence there. As a result, businesses have had to pay up or, if they can afford it, engage in costly litigation rather than using their capital to create jobs, expand operations and grow payrolls. The BATSA legislation, now pending in Congress, would finally end this outrage.