Cohen Chairs Hearing on State Taxation and Apportionment Standards

WASHINGTON, D.C. – Congressman Steve Cohen (D-TN-9), Chairman of the House Judiciary Subcommittee on Commercial and Administrative Law (CAL), today held a hearing on state taxation and the role Congress plays in developing tax apportionment standards for businesses.

“Taxing interstate commerce is a complicated issue that can hopefully be simplified for taxpayers,” said Congressman Cohen. “Today’s panel provided the subcommittee with valuable testimony that will go a long way toward helping Congress analyze and improve the tax structure.”

The hearing – State Taxation: The Role of Congress in Developing Apportionment Standards – provided Congressman Cohen and other members of the CAL Subcommittee with critical information as it reviews the intricacies of the division of tax bases for multistate enterprises and how the methods impact interstate commerce and state taxation.

The CAL subcommittee held a hearing in February concerning nexus, or when a state may constitutionally tax an individual or business. Once a state establishes nexus over the income, property or activity of the taxpayer, the taxpayer is liable to pay the tax.

Currently, states attribute the amount of property, income and receipts for tax purposes based on different methods. Some contend that these methods burden interstate commerce. Although no legislative proposals have been introduced, Congress is reviewing whether the current methods burden interstate commerce.

The CAL panel took testimony from Professor John Swain, University of Arizona College of Law; Daniel De Jong, Tax Counsel for Tax Executives Institute; and Jim Eads, Executive Director of the Federation of Tax Administration.