House Resolution 164 PAG LIN 1 1 HOUSE RESOLUTION NO. 1 2 BY J. K. VAN FOSSEN 1 3 A Resolution requesting the United States Congress to 1 4 expand the physical presence standard for the 1 5 imposition of state and local business activity 1 6 taxes. 1 7 WHEREAS, the United States Supreme Court, in Quill 1 8 Corp. v. North Dakota, 504 U. S. 298 (1992), held that 1 9 remote sellers lacking a physical presence may not be 1 10 required to act as tax collection agents of the state; 1 11 and 1 12 WHEREAS, direct state and local taxes on 1 13 businesses, also known as "business activity taxes", 1 14 such as income, franchise, net worth, business 1 15 license, business and occupation, single business, 1 16 capital stock, and like taxes, impose an even greater 1 17 burden on businesses engaged in interstate commerce 1 18 than an obligation to collect a tax from consumers; 1 19 and 1 20 WHEREAS, the physical presence standard promotes 1 21 fairness by ensuring that businesses that receive 1 22 benefits and protections provided by state and local 1 23 governments pay their fair share for these services; 1 24 and 1 25 WHEREAS, the ability of state and local 1 26 jurisdictions to tax out=of=state businesses should be 1 27 limited to those situations in which the business has 1 28 employees or property in the taxing jurisdiction and 1 29 accordingly receives meaningful governmental benefits 1 30 or protections from the jurisdiction; and 2 1 WHEREAS, the physical presence standard results in 2 2 the proper attribution of business profits to taxing 2 3 jurisdictions where a business is located and thus 2 4 does not result in tax avoidance; and 2 5 WHEREAS, a business activity tax filing requirement 2 6 based on a standard other than physical presence 2 7 results in increased filing requirements and thus 2 8 increased compliance costs; and 2 9 WHEREAS, businesses currently rely on a physical 2 10 presence standard for complying with state and local 2 11 business activity tax obligations, and this standard 2 12 is applied currently by most state courts; and 2 13 WHEREAS, any congressional authorization for states 2 14 to impose a sales and use tax collection obligation 2 15 would further put businesses at risk of the unfair 2 16 application of business activity taxes by 2 17 jurisdictions in which the businesses lack a physical 2 18 presence; and 2 19 WHEREAS, the imposition of a standard other than 2 20 physical presence for business activity taxes would 2 21 expose United States companies lacking a physical 2 22 presence overseas to similarly expansive and unfair 2 23 taxation by foreign countries and their provinces; and 2 24 WHEREAS, businesses operating in interstate 2 25 commerce should not be compelled to pay taxes in state 2 26 and local jurisdictions solely as a result of the 2 27 business having customers located in the taxing 2 28 jurisdiction; and 2 29 WHEREAS, the United States economy has become more 2 30 global since Congress first enacted Pub. L. No. 86=272 3 1 and has shifted toward the provision of more 3 2 interstate services and intangibles, and providers of 3 3 services and intangibles are competitively 3 4 disadvantaged relative to businesses that only sell 3 5 tangible personal property; and 3 6 WHEREAS, the enactment of new business activity 3 7 taxes other than income taxes threatens to circumvent 3 8 the intent of Congress in enacting Pub. L. No. 86=272; 3 9 NOW THEREFORE, 3 10 BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES, 3 11 That the State of Iowa urges Congress to enact 3 12 legislation recognizing a physical presence standard 3 13 for the imposition of state and local business 3 14 activity taxes, defining de minimis standards for 3 15 measuring physical presence and setting reasonable 3 16 limits on the attribution of nexus, and updating Pub. 3 17 L. No. 86=272 to extend the current protections 3 18 available for the solicitation for sales of goods to 3 19 the solicitation for sales of services and intangibles 3 20 and to apply these protections to all business 3 21 activity taxes; and 3 22 BE IT FURTHER RESOLVED, That the State of Iowa 3 23 recognizes that any congressional approval of "sales 3 24 tax streamlining" without the simultaneous enactment 3 25 of these business activity tax measures would have a 3 26 harmful effect on American businesses and the economy; 3 27 and 3 28 BE IT FURTHER RESOLVED, That the Chief Clerk of the 3 29 House of Representatives shall forward a copy of this 3 30 Resolution to the Congress of the United States. 4 1 LSB 7081HH 80 4 2 mg/cf/24