IFA Asks Speaker Boehner to Address Business Activity Tax Challenges to Spur Job Creation & Reduce Federal Budget Deficits

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FOR IMMEDIATE RELEASE


Contact:

Alisa Harrison, 202-628-8000

Matthew Haller, 202-662-0770

aharrison@franchise.org

mhaller@franchise.org

@franchising411


IFA ASKS SPEAKER BOEHNER TO ADDRESS BUSINESS ACTIVITY TAX CHALLENEGES TO SPUR JOB CREATION & REDUCE FEDERAL BUDGET DEFICITS


WASHINGTON, FEB. 29, 2012 – The International Franchise Association today joined a coalition of 154 companies and business groups calling on Congress to pass the Business Activity Tax Simplification Act (BATSA), bipartisan legislation to put an end to unfair, confusing and costly state corporate income taxation and resolve challenges facing many franchise businesses who operate across state lines.


“BATSA is a rarity in today’s political environment. Not only does it enjoy bipartisan support, but its passage would also spur job creation by small businesses and reduce the federal deficit,” said IFA Senior Vice President of Government Relations & Public Policy Judith Thorman. “We urge Speaker Boehner and members of Congress to pass this critically-important legislation as soon as possible this year.”


Under BATSA, a version of which has been introduced in every Congress since 2002, a state would only be able to impose income-based taxes on companies that have a physical presence in the taxing state. The bill would prohibit states from taxing the income of companies, such as franchisors, that merely have franchisees in the state and are already paying separate taxes in the states where they have a physical presence. BATSA would NOT affect sales taxes.


Congressmen Bob Goodlatte (R-VA) and Robert Scott (D-VA) introduced the most recent version of the bill in April 2011. Addressing the House Subcommittee on Courts, Commercial and Administrative Law during a hearing to BATSA last year, IFA member Corey Schroeder, vice president and CFO of Outdoor Living Brands, Inc, spoke of the difficulty his company faces navigating the unpredictable nature of state tax nexus decisions across multiple jurisdictions, and the impact those decisions have on the nearly 825,000 franchise small businesses that collectively account for nearly 18 million jobs in the United States.


“Franchising is a unique method of doing business. This legislation will ensure that state tax officials can no longer impose tax liability on businesses that have no physical presence in their state,” said Schroeder. “Passage of BATSA would greatly reduce the financial and administrative burden associated with tax compliance for my business.”


According to the letter delivered to House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.), “enactment of BATSA would lead to greater investment in U.S. business growth and jobs by clarifying the standards for the imposition of business activity taxes by states and localities on multistate businesses and by resolving widespread uncertainty caused by inconsistent and ambiguous state interpretations of the constitutional standard for state taxation of interstate commerce. If the bill were to become law, businesses would not be avoiding taxes. They would simply be paying taxes in the proper jurisdictions. The longstanding rule governing state taxation provides that state and local governments may impose taxes on an out-of-state company only if that company has a physical presence in the taxing state. More recently, some states and localities have attempted to circumvent that rule by trying to impose business activity taxes on businesses that merely have customers in their jurisdictions. Such an aggressive “economic nexus” approach violates the Constitution’s Commerce Clause, has a chilling effect on the national economy and produces unfair compliance burdens for businesses, large and small, that operate in interstate commerce. Even worse, the burdens associated with overreaching state taxation threaten U.S. job creation.”


To view a copy of the letter, click here.


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About the International Franchise Association

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

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