Floor  Alert
National Conference of State Legislatures
Office of State-Federal Relations
July 24, 2006
Vote No on H.R. 1956 -Business Activity Tax Simplification Act
The National Conference of State Legislatures does not support the passage of H.R. 1956, the Business Activity Simplification Act. It is a proposed solution for a problem that this legislation will not fix. State legislators are concerned that our current tax systems have not kept pace with changes in the economy. Since 2000, we have been working with many taxpayers to remove the burden and costs of compliance to state tax regimes. We have made substantial progress in simplifying the administration and collection of sales and use taxes, addressing the need for reforming monopoly-era telecommunications tax systems and we are working on issues surrounding business activity taxes.
State legislators appreciate the concerns raised by taxpayers frustrated with complying to different state tax systems. We also acknowledge the need to review the actions of aggressive state tax departments in enforcing provisions of state business activity taxes. However, with that said, NCSL and state legislators believe it is the responsibility of the sovereign states to define and resolve these issues regarding such taxes in concert with the taxpayers. We believe our efforts to simplify sales tax collection and reform telecommunications taxation proves state legislators’ ability and resolve to address the concerns of business arising from the changing nature of the economy.
Even proponents of H.R. 1956 will acknowledge that most states limit business activity taxes to some kind of substantial presence in the state, and while the provisions of the legislation are aimed at most a handful of states that maybe overly aggressive in the pursuit of these taxes, the provisions of H.R. 1956 will financially impact the revenues of all states. The 21-day physical presence provision currently exceeds any state time limit requirement and this will result in revenue loss for all states as evidenced by the Congressional Budget Office Cost Estimate that H.R. 1956 is an unfunded mandate on the states.
Finally, the 21-day physical presence rule and the safe harbor carve outs will not provide relief for America’s small businesses. The provisions in H.R. 1956 are geared to the largest of banks and corporations, many who are not in need of any fiscal relief. If Congress is really concerned about our nation’s small businesses, Congress should consider and approve the Sales Tax Fairness and Simplification Act as sponsored by Senator Mike Enzi of Wyoming. This legislation would give states that comply with the Streamlined Sales and Use Tax Agreement, collection authority for transactions that occur through remote sellers and also would reduce and, eventually eliminate, the $6.8 billion a year that retailers spend to collect state and local sales taxes. This would be real tangible relief for main street businesses.
For more information contact: Neal Osten, 202-624-8660, neal.osten@ncsl.org / Garner Girthoffer, 202-624-7753, garner.girthoffer@ncsl.org
| 
