WASHINGTON - The National Marine Manufacturers Association has joined with a group of trade associations, businesses and interest groups to push for the passage of the Business Activity Tax Simplification Act in the 109th Congress, NMMA said in a statement yesterday.
The BATSA bill would codify which business activities produce a sufficient “presence” in a state for that state to levy taxes on out-of-state businesses. This presence, which is termed “nexus” in tax law, is defined differently by many states, leaving businesses unsure when they have conducted activities that fall within a particular state's definition of “business activity” in that state, NMMA said.
In some cases, for example, states have claimed that reimbursing marine dealers for warranty repairs opens a manufacturer to taxes on this service. Other states pursue a tax claim on net profits made on the sale of a boat if the transfer of ownership to a dealer occurs within that state's borders.
“In the last two years, some state tax enforcement agencies have demanded that boat manufacturers pay millions of dollars in back-taxes, interest, and fines in states where they had unknowingly established nexus,” said Thom Dammrich, NMMA president. “BATSA would clarify which business actions provide nexus for states to tax out-of-state businesses - reducing administrative overhead, minimizing litigation, increasing economic growth and creating new jobs in the recreational boating industry.”
NMMA Vice President of Government Relations Monita Fontaine believes the legislation is critical to the boating industry.
“The complexity and cost of understanding and complying with these inconsistent and vague “nexus” rules is detrimental to interstate commerce and hurts marine manufacturers doing business across state lines,” Fontaine said. “Congress needs to act now to protect our businesses and promote a healthy business economy.”
The purpose of BATSA is to clarify “presence” so businesses will know which activities trigger nexus in a state. The legislation would significantly reduce room for interpretation of “presence,” hopefully to the point that a “bricks and mortar” facility would be required in a state before a company would be required to pay state income, franchise or sales taxes.
NMMA's coalition partners include, among others, the American Bankers Association, American Electronics Association, Chevron Texaco, Citigroup, Microsoft, Sony, and the U.S. Chamber of Commerce.
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