More About the Commerce Clause

BY LYN F. RICHARDS

Thank you for publishing the summary of the Alabama franchise tax decision (“For Whom the South Central Bell Tolls,” JofA , Jan.00, page 73). I would like to draw more attention to the burden that states place on individuals who perform services in multiple states.

In more than 20 states and various localities, there is currently no de minimis for exempting wages from withholding when services are performed. I have clients with $25,000 in wages who have withholding in 24 different states and 4 localities. The rule is that personal services are subject to withholding in the location where the services are performed. The unemployment wage base is replicated in each state, and compliance is a nightmare.

Since the cost of filing outweighs the benefit of a refund, most states collect more than the legal amount due. Surely this is what the Commerce Clause was intended to discourage.

Lyn F. Richards, CPA
Columbia, South Carolina

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