Uniformity Proposal for a Factor Presence Nexus Standard for Apportioned Income and Franchise Taxes: August 23, 2002.

On August 23, 2002, Tax Executives Institute submitted the following comments to the Multistate Tax Commission regarding their proposal for an uniform nexus standard for income taxes using apportionment-factors. TEI's comments were prepared under the aegis of TEI's State and Local Tax Committee, whose chair is Barbara Barton of Electronic Data Systems Corporation.

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On behalf of Tax Executives Institute, I am pleased to submit the following comments on the Multistate Tax Commission's Uniformity Proposal for a Factor Presence Nexus Standard for Apportioned Income and Franchise Taxes. As the preeminent association of business tax professionals, TEI has a significant interest in promoting sound tax policy, as well as the fair and efficient administration of the tax laws, at all levels of government.

TEI applauds the Commission's goal of crafting a "simple and certain standard for income and franchise tax nexus." We urge the Commission, however, to abandon the proposal outright or to revise it substantially to require some physical presence within a state in order to harmonize the proposal with modern Commerce Clause jurisprudence.

Background

Tax Executives Institute was established in 1944 to serve the professional needs of business tax professionals. Today, the Institute has 53 chapters in the United States, Canada, and Europe. Our more than 5,300 members are accountants, attorneys, and other business professionals who work for 2,800 of the leading companies in North America and Europe. As a professional organization, the Institute is firmly dedicated to developing and implementing sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to 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, one that taxpayers can comply with, and one in which the state taxing authorities can effectively administer the tax laws without unduly burdening taxpayers.

These goals can only be achieved through the members' adherence to the highest standards of professional competence and integrity. To ensure compliance with the law, TEI's Standards of Conduct exhort the members to "present the facts required in tax returns and all the facts pertinent to the resolution of questions at issue with...