July 21, 2006

United States House of Representatives
Washington, DC 20515

Re: Business Activity Tax Simplification Act (H.R. 1956)

Dear Representative:

America’s Community Bankers respectfully requests that you support H.R. 1956, the Business Activity Tax Simplification Act (“BATSA”), when it is brought up for a vote in the House the week of July 24th.

BATSA would provide a consistent, national jurisdictional standard for the imposition of state and local business activity taxes on interstate commerce. This legislation addresses the need to clarify and modernize the nexus rules that govern the states’ ability to impose business activity taxes on companies that do not have a physical presence in the taxing jurisdiction.

BATSA would resolve the issue of unlawful state assessment of business activity taxes by prohibiting states from imposing a business activity tax on any entity that does not have a physical presence in the taxing jurisdiction. Specifically, the bill would clarify that physical presence is the constitutional standard for imposition of business activity taxes and establish a bright-line physical presence standard. Businesses would continue to pay business activity taxes in those jurisdictions where they receive direct benefits. Importantly, the bill would merely clarify the states’ existing authority to tax interstate commerce, not impose any new restrictions on the states’ taxing power.

Enactment of the bill would ensure fairness, minimize litigation, promote a level playing field for taxpayers by providing a bright-line standard governing taxation and foster the kind of legally certain and stable business climate that encourages business investment, expands interstate commerce, creates new jobs and leads to a healthy economy.

Thank you for considering our request. Please contact me, if you have any questions about the legislation.

Sincerely

Robert R. Davis
Executive Vice President and
Managing Director, Government Relations