BATSA, the Amazon Tax, and the Physical Presence Rule

We’re getting a good amount of interest in the issues surrounding New York’s attempt to tax out-of-state sales and businesses with its “Amazon” tax, and impact that the Business Activity Tax Simplification Act (BATSA, H.R. 5267) would have on this and other state efforts. This morning’s New York Sun has a lengthy piece on some of the issues as they affect New York.

As a non-profit organization, the Tax Foundation takes no position on H.R. 5267. We believe that a sound tax system should tax like transactions alike while remaining simple, transparent, and stable. Limiting states to taxing only individuals within the state, and only businesses with property and employees within the state, protects interstate commerce from double taxation, preserves democratic accountability, and shields businesses from the burden of tracking 7,400+ sales tax bases and rates. “Economic nexus”—taxing Internet commerce based on where customers are located, but brick-and-mortar commerce based on where property and employees are—creates an uneven playing field and allows states to export their tax burdens to non-voting out-of-staters.

Here’s a collection of some of our work over the past year on these issues:

Articles:

• Testimony on H.R. 5267, the Business Activity Tax Simplification Act of 2008
• Don’t Assume the U.S. Supreme Court Accepts Economic Nexus
• Why the Quill Physical Presence Rule Shouldn’t Go the Way of Personal Jurisdiction
• Asking the U.S. Supreme Court to Settle Tax Nexus Issue—FIA Card Services, N.A., fka MBNA America Bank, N.A., v. Tax Commissioner of the State of West Virginia
• Arthur Rosen on the Commerce Clause, Nexus, and State Taxation of Business (podcast)

Blog Posts:

• Dubious BATSA Scoring from the NGA, by Josh Barro, June 25, 2008
• Thoughts on the BATSA Hearing, by Joseph Henchman, June 25, 2008
• Tax Foundation Testifies before Congress on Physical Presence for Business Taxation, by Joseph Henchman, June 24, 2008
• Amazon Files Suit Against New York Tax on Out-of-State Businesses, by Joseph Henchman, May 2, 2008
• New York “Amazon Tax” Presents Policy and Legal Problems, by Joseph Henchman, April 25, 2008
• More on States Exporting Tax Burden to Out-of-State Businesses, by Joseph Henchman, March 25, 2008
• Alleged Spitzer-Prostitute Liaison Raises Tax Questions, by Joseph Henchman, March 11, 2008
• BATSA Hearing: Shaken Down by New Jersey on the State Line, by Joseph Henchman, February 21, 2008
• Bill Introduced in Congress to Affirm Physical Presence Rule, by Joseph Henchman, February 8, 2008
• WSJ Discusses Virtues of Quill Physical Presence Rule, by Joseph Henchman, December 27, 2007
• State Nexus Debate Enters New Phase, by Chris Atkins, July 12, 2007