Jun 08, 2015
From KPMG TaxWatch
On June 2, 2015, members of the House Judiciary Subcommittee on Regulatory Reform, Commercial, and Antitrust Law convened for an informational hearing to discuss three federal bills addressing state tax issues. The three bills discussed were H.R. 2315, “Mobile Workforce State Income Tax Simplification Act of 2015,” H.R. 1643, “Digital Goods and Services Tax Fairness Act of 2015,” and H.R. 2584, “Business Activity Tax Simplification Act of 2015.” If enacted, the Mobile Workforce bill would limit a state’s authority to tax (and the requirement for an employer to withhold) the income of nonresident employees present in a state for fewer than 30 days. The Digital Goods and Services bill, among other things, establishes a uniform sourcing rule for digital goods and services as a way of promoting “neutrality, simplicity, and fairness in the taxation of digital goods and digital services.” Finally, the Business Activity Tax Simplification Act, or “BATSA,” aims to restore physical presence as a prerequisite to a state imposing business activity taxes. Each of these bills has been introduced- some multiple times- in previous Congresses. Six witnesses testified before the Subcommittee, including Grover Norquist, President of Americans for Tax Reform, and Dan Crippen, Executive Director of the National Governors Association. Despite some opposition, the Members and witnesses largely appeared supportive of the Mobile Workforce bill. Similarly, the Digital Goods and Services Act generally appeared to have support from Subcommittee members. Of the three bills, BATSA received the most criticism from panelists and witnesses who cited concerns over state revenue loss and adverse effects on local businesses.
Proposed legislation surrounding remote sellers was also touched on throughout the hearing. The Marketplace Fairness Act of 2015, House Judiciary Chair Goodlatte’s origin-sourcing bill, and Congressman Chaffetz’s Remote Transaction Parity Act, which is not yet in bill form, are the three measures proposed this year that address e-commerce state tax issues. Another issue discussed and encouraged by House Judiciary Chair Goodlatte was the enactment of a Permanent Internet Tax Freedom Act. The current Act expires October 1, 2015. It remains to be seen if any of the three bills will advance. For more information on the bills discussed during the June 2 hearing or about legislation involving remote sellers, please contact Loren Chumley at (615) 248-5565 or Harley Duncan at (202) 533-3254.
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The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.