Opposing Tax Bills Face Off in Congress
Following an April hearing in the House Judiciary Committee’s Courts, Commercial and Administrative Law subcommittee, on July 7th, legislation supported by MPA and the Business Activity Tax Nexus Coalition passed out of the full Judiciary Committee. H.R. 1439, the Business Activity Tax Simplification Act of 2011, would prohibit states from collecting income tax and other state-specific business activity taxes unless a business has a minimum in-state presence of 15 days per year. The bill would also expand the nexus definition for the “traveling” salespeople exemption to intangible goods - current law only exempts salespersons selling tangible personal products from income tax collection. Though Judiciary Committee passage is a good first step, nearly identical legislation has been introduced and passed out of committee in previous Congresses and been unable to proceed further.
Further clouding the legislative outlook is the recent reintroduction in the House and Senate of legislation that would codify an opposing position. The “Main Street Fairness Act” (S. 1452 / H.R. 2701) would allow states that have signed on to the Streamlined Sales and Use Tax Agreement, a comprehensive interstate system to streamline and harmonize sales tax rules and administrative requirements, clear authority to require online retailers to collect sales taxes owed, thereby treating “bricks and mortar” and online retailers equally. Given the conflicting views, and significant dollars at stake, it is unlikely that either piece of legislation will advance in this session of Congress.