The inconsistency of state laws regarding tax nexus puts marine companies “at a distinct disadvantage, not only with domestic manufacturers, but foreign manufactures as well,” according to Mark Ducharme, chief financial officer and vice president of Monterey Boats.
Ducharme testified Tuesday at a hearing of the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law. The hearing focused on H.R. 5267, the Business Activity Tax Simplification Act of 2008.
Testifying on behalf of the recreational boating industry, Ducharme spoke about how his company has been hurt by the tax in Michigan and New Jersey. His company is based in Florida, and does not have an established "bricks and mortar" presence in either Michigan or New Jersey.
“Our experience with the state of New Jersey is nothing short of extortion,” Ducharme told the subcommittee.
An agent with the New Jersey Division of Taxation impounded a Monterey truck that was delivering boats, and demanded the company pay $27,500. The company refused to remit funds and, through an attorney, negotiated the release of the truck.
However, the next day Monterey received a Warrant of Execution Jeopardy Assessment demanding payment of $176,000, which the company says was based on “some unexplainable field formula.” Also, the company had to pay $52,000 in income tax and $5,200 for the cost of collection.
That was nearly four years ago. Ducharme testified that Monterey has been trying ever since to resolve the issue with the state of New Jersey, but to no avail.
The National Marine Manufacturers Association has been lobbying the House Judiciary Committee about what it says are the increasingly negative impacts associated with the patchwork of ever-changing state standards on small businesses across the U.S.
The NMMA says BATSA would ensure a level and fair playing field, allowing small businesses to plan for a standard taxing certainty and pay business activity taxes to states that provide them with direct benefits and protections.
— Melanie Winters