Thursday, July 12, 2007

Senate to USSC: Act or We Will on Physical Nexus for State Taxes

  • Senate Fights Back on Nexus--Accounting Web

  • Senators Mike Crapo (R-ID) and Charles Schumer (D-NY) have authored legislation which would clarify state taxation where a business has no physical presence. The U.S. Supreme Court recently refused to address two cases: Lanco, Inc. and FIA Card Services where states assessed taxes with no physical presence--claiming that the companies had "significant economic presence." Crapo and Schumer want to return to Quill vs. North Dakota, a case decided a decade ago which required physical presence for states to qualify to apply business taxes. Schumer referred to the present state as an administrative burden with the potential to be debilitating to commerce.

    It is a little hard to understand the Supreme Court's refusal to act unless they are considering a change in present law. Businesses selling on the Internet, perhaps even those in foreign countries, should take note--some states are more than eager to apply sales taxes to Internet sales.


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