This week, CompTIA will urge the prompt enactment of H.R. 2992, “the Business Activity Tax Simplification Act of 2013,” legislation that modifies the way states can collect taxes from out-of-state businesses. CompTIA submitted its testimony for the hearing by the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
Also known as BATSA, the legislation sets up a “physical presence nexus standard” for businesses: In order for a state to tax business activity, that business must have a tangible connection to the state, such as an office or a sales force. Without this legislation — and as states seek additional revenue streams — businesses face increasing tax compliance costs.
This type of legislation has languished over the past few years, though the House Judiciary reacted favorably to similar legislation – “the Business Activity Tax Simplification Act of 2011” – in October 2011.
CompTIA has long supported this type of legislation. We believe it is principally unfair for a state to attempt to tax a transaction on a business that has no physical presence in the taxing state. The bottom line: Without this legislation, state tax controversies and resulting compliance costs will continue to rise.
Small businesses are already saturated with tax compliance burdens. Requiring a business to submit to the taxing requirements of multiple states — especially when that business has no presence in the state — would make it economically impossible for a small business to grow and prosper in our online world.
As CompTIA continues to encourage leadership to take up this legislation for passage by the full House, you can read its testimony here.
