Louisiana House Bill HCR162

Louisiana 2011 Regular Session

• Introduced: 6/8/11
• Engrossed: 6/9/11
• Report Pass: 6/21/11
• Passed: 6/23/11

Caption

Urges and requests the Arkansas Dept. of Finance and Administration to revise its current criteria for determining the existence of a nexus requiring out-of-state businesses to pay Arkansas income tax

Impact

The implications of HCR162 are significant as it seeks to alter the criteria used by the ADFA to define nexus for tax purposes. The resolution highlights cases where Louisiana institutions were being taxed in Arkansas for activities that did not involve a physical presence or business transactions within the state. The proposed change aims to protect out-of-state businesses from what is perceived as unfair taxation, thereby promoting better interstate commerce relations and potentially benefitting the financial institutions involved.

Summary

House Concurrent Resolution 162 (HCR162) urges the Arkansas Department of Finance and Administration (ADFA) to revise its criteria for determining tax nexus. The bill specifically addresses situations where out-of-state businesses hold mortgages or security interests on property within Arkansas. The intent behind this resolution is to clarify that having such financial interests should not automatically establish a nexus that subjects these businesses to Arkansas income tax. This is particularly pertinent for Louisiana financial institutions that have faced dual taxation despite lacking a physical business presence in Arkansas.

Sentiment

The overall sentiment surrounding HCR162 appears to be supportive, primarily from the Louisiana perspective, as it addresses concerns of duplicative taxation. The resolution has garnered consensus among legislators, as evidenced by the unanimous vote in favor, indicating a bipartisan acknowledgment of the need to reform nexus standards. This sentiment reflects a broader concern about tax fairness and the economic burdens imposed on businesses without a substantial connection to the taxing state.

Contention

While HCR162 received broad support, potential points of contention may arise concerning the implications of redefining nexus standards. Some may argue that altering tax criteria could lead to gaps in state revenue or embolden other out-of-state businesses to exploit the revised definitions. Furthermore, the resolution signals an ongoing debate between states about the extent of tax jurisdiction and the rights of businesses operating across state lines.