Colorado's proposed Nexus regulation.

• Author: Stevens, Cathleen
• Position: Corporate income tax on out-of-state corporations

October 6, 2009

On October 6, 2009, Tax Executives Institute filed the following comments with the Colorado Department of Revenue relating to a proposed regulation that would impose the State's corporate income tax on out-of-state corporations with no physical presence in Colorado. TEI's comments, which took the form of a letter from TEI President Neil D. Traubenberg, were prepared under the aegis of its State and Local Tax Committee, whose chair is Cathleen Stevens of Brunswick Corporation. Contributing substantially to the development of TEI's comments was Linda Dickens of Texas Instruments, Inc., who serves as a Vice Chair of the committee. Daniel B. De Jong, TEI Tax Counsel, serves as legal staff liaison to the committee.

On behalf of Tax Executives Institute, I am pleased to submit the following comments on the Department of Revenue's ("Department") Proposed Regulation 39-22-301.1 defining when a corporation is doing business in Colorado for purposes of imposing the State's corporate income tax ("Proposed Regulation"). TEI supports the Department's goal of crafting "a regulation that addresses in a comprehensive fashion what activities of a corporation will create nexus in Colorado." We regret, however, that if the Proposed Regulation is not revised to require some physical presence in the State, it will violate controlling Commerce Clause jurisprudence and subject both taxpayers and the State to months, and even years, of uncertainty and expense.

Background

Tax Executives Institute was founded in 1944 to serve the professional needs of business tax professionals. Today, the organization has 54 chapters in North America, Europe, and Asia, including one in Colorado. Our 7,000 members represent 3,200 of the largest companies in the world, many of which are either resident or do business in Colorado. As the preeminent association of business tax professionals worldwide, TEI has a significant interest in promoting sound tax policy, encouraging the uniform and equitable enforcement of the tax laws, and reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. The Institute is committed to maintaining a system that works--one that builds upon the principle of voluntary compliance and is consistent with sound tax policy. We, along with federal, state, and local governments, have the most at stake in crafting a tax system that is administrable and efficient.

Description of the Proposed...