The International Warehouse Logistics Association (IWLA) continued to urge shippers and third-party logistics companies to contact members of Congress to support amending the language of H.R. 1956, the Business Activity Tax Simplification Act, to exclude goods stored while in interstate commerce from the 21-day limit that would establish a business presence in a state. Under the current bill, goods stored at a third party warehouse in a state where a company has no other business presence could establish a presence for state tax purposes. An on-line poll of logisticstoday.com readers indicated 73% of respondents have third-party logistics (3PL) relationships in states where they have no other business presence.
The IWLA further clarified its position in asking for an amendment to the bill to exempt goods that move into a state, are stored in a public warehouse or other contracted facility, and then delivered to a consignee outside the state. IWLA has asked Congressional leaders to exempt specifically, goods “warehoused in accordance with UCC Article 7 for distribution in interstate commerce” from the 21-day test. As reported earlier (Shippers Could Bear New Tax Burden), “H.R. 1956 says that a physical presence is established by leasing or owning tangible personal property in the state for more than 21 days.” Without the exemption sought by IWLA, companies that have no other presence in a state could be subject to a state’s business activity taxes. Some states have already acted to provide such an exemption in order to attract businesses to establish their distribution operations in their state vs. a neighboring state which has not provided such an exemption.
The IWLA’s legal counsel is continuing its efforts with members and their customers to alert House Judiciary Committee members of the issue and to urge amending the current bill to provide the appropriate exemption.
Additional information is available through the IWLA at www.iwla.com.