The Extent of the Problem

  • Eleven states claim they can impose a business activity tax on any company that merely lists itself in one of the local telephone books of a city located in that state, even if it has no presence in that state.
  • Sixteen states and the District of Colombia claim they can impose a business activity tax on any company that has a website located on a server in the state.
  • Three states and the District of Colombia say they can levy a business activity tax on a company if it maintains a bank account at a bank located in the state.
  • Thirty two states and the District of Colombia argue that they have sufficient grounds to tax the income of any company that, through a third party, provides warranty services on goods sold in the state, even if that company has no physical presence in the state.
  • Seven states say they can tax the income of any company that sends catalogs to residents of that state, even if the company has no physical presence in there.
  • Twenty five states claim that they can assess business activity taxes on a company that has no physical presence in the state but merely licenses software to consumers located in the state.
  • Thirty seven states and the District of Colombia argue that they can tax the income of any out-of-state company that contracts with an unrelated third party to repair or provide maintenance, six or fewer times in a year, for goods sold to consumers in that state
  • Twenty states and the District of Colombia states claim the right to tax the income of any company that delivers goods to a customer in the state (from a point outside the state) using its own (or leased) vehicles, even if that business is not located in the taxing state.
  • Eleven states would assess income taxes against any out-of-state company that merely uses its trucks to travel to or through the state six or fewer times in a year, even if it does not pick up or deliver goods in the taxing state
  • Twenty six states and the District of Colombia say they can tax the income of any bank that issues credit cards to residents of the state, even if the bank has no physical presence there.

2011 Survey of State Tax Departments (BNA 2011)
Has your business been a victim of unfair state taxation? If so, contact us.