H.R. 1439, the Business Activity Tax Simplification Act of 2011 (“BATSA”) BATSA was introduced by Representatives Bob Goodlatte (R-VA) and Bobby Scott (D-VA).  The bill has strong bipartisan support among members of the Judiciary Committee.  BATSA would establish a bright-line rule that all states would follow by codifying the traditional physical presence nexus standard governing state imposition of corporate income taxes and comparable business activity taxes.  The bill also would modernize Public Law 86-272, creating consistent standards for solicitation activities across lines of industry.  This means that a state or locality would continue to be permitted to impose a business activity tax on a business that is physically present in its jurisdiction (e.g., having employees, an office or real property there) for more than fourteen days in a taxable year.  A business that has no real presence, de minimis or transient presence, or one that engages in mere solicitation or certain other activities in a state, would not be subject to taxation by the state in which such limited activities take place but in the state where it is physically present and has substantial activities. BATSA also makes clear that such uniform, simplified tax jurisdiction standards would determine whether every corporation is subject to taxation, regardless of whether it is a member of an affiliated or combined group.  Thus, it prevents extraterritorial taxation of the economic activity of a corporation merely because of its ownership affiliation. BATSA establishes minimum tax jurisdictional standards to reduce the burden on interstate commerce caused by the present hodge-podge of rules and regulations among the several taxing jurisdictions that create administrative nightmares for small and large multistate businesses in the United States and are difficult for state and local governments to administer.  The bill would ensure fairness, minimize costly litigation for both state governments and taxpayers and create legal certainty and a stable business environment that encourages companies to make investments in the United States, expand interstate commerce and create new jobs.  At the same time, the bill would ensure that businesses continue to pay business activity taxes to support state governments in providing public infrastructure, schools, educational institutions, a trained workforce and other benefits and protections.  Finally, BATSA would end the disconnect between the international tax system’s permanent establishment rule and the current efforts of aggressive states to expand their tax jurisdiction, thereby eliminating concerns being raised by some of our country’s treaty partners. Action Request On behalf of employers and the employees who travel for business, ask your Member of Congress to support this important legislation. To join BIFMA's Taxation Interest Group for updates on this issue, email bmiller@bifma.org. This page updated 2011-04-16