Many Manufacturers right now face a very confusing landscape when it comes to state taxes. An increasing number of states tax businesses that have “substantial nexus” to the state, but there is no uniform definition of what that means. Setting aside the administrative nightmare of complying with 50 different standards, Manufacturers are also facing a situation where states are expanding that definition of nexus, taxing businesses that have no employers, plant, or physical presence in the state. This can present serious problems for manufacturers who may not realize that they are subject to a state’s tax and may face costly penalties down the road.
NAM is pleased to see that Congress is taking a close look at this growing problem. Late last month House Judiciary‘s Regulatory Reform, Commercial and Antitrust Law Subcommittee held a hearing on H.R. 2992, the “Business Activity Tax Simplification Act of 2013,” and featured testimony from two manufacturers, Sage V Foods and McIlhenny Company. The witnesses spoke about the growing problem of unfair taxation of interstate commerce by many states and their individual run-ins with state tax agencies.
In order to address this problem, Rep. Jim Sensenbrenner (R-WI) introduced H.R. 2992, the “Business Activity Tax Simplification Act of 2013.” This bipartisan legislation would establish a bright-line rule that all states would follow when determining if a company is subject to a state’s tax. The NAM submitted comments to the House Judiciary Committee for the hearing record in support of this measure and manufacturers urge Congress to pass this much-needed, pro-growth legislation.