House Judiciary Committee Approves Business Activity Tax Simplification Act of 2015

Washington, D.C.—The House Judiciary Committee approved H.R. 2584, the Business Activity Tax Simplification Act of 2015 (BATSA), by a vote of 18-7. BATSA codifies physical presence, defined as presence for more than 14 days, as a prerequisite to a state imposing business activity taxes on out-of-state companies. It does so by expanding and modernizing existing law (P.L. 86-272), which prohibits states and localities from imposing income taxes on a business whose activities in the state are limited. Without BATSA, states will continue to aggressively impose burdensome tax requirements on out-of-state businesses that only have individual contact with the taxing state. Similar forms of BATSA have been introduced in every Congressional term since the 108th Congress in 2003. The House Judiciary Committee conducted hearings on the legislative proposals during each prior Congress, and previous versions of the bill have been reported out of the Judiciary Committee twice—in 2006 and 2011—but the bill has not yet received a vote in the full House. House Judiciary Committee Chairman Goodlatte (R-Va.) and the bill’s chief sponsor, Rep. Steve Chabot (R-Ohio), applauded the Committee’s passage of the legislation. Chairman Goodlatte: “The Business Activity Tax Simplification Act will provide fairness, minimize litigation, and create the kind of legal certainty and stable business climate that frees up funds for businesses of all sizes to make investments, expand interstate commerce, grow the economy and create new jobs. “At the same time, this legislation will protect the ability of states to ensure that they are fairly compensated when they provide services to businesses that do have physical presence in the state. In addition, the legislation expressly protects the ability of states to use all tools at their disposal to aggressively combat illegal activities, sham transactions, or any other abuses.” Congressman Chabot: “Businesses that operate in multiple states face a complex process when determining if they owe taxes for business activity in a given state.  This complexity increases business costs and can make it more difficult to expand operations and add jobs, creating a drag on the economy.  The Business Activity Tax Simplification Act will help simplify the process and provide businesses with a degree of certainty by establishing clear business activity tax standards nationwide.  I appreciate the support of my colleagues on the Judiciary Committee, and I applaud Chairman Goodlatte for leadership on this issue.”