Franchise Association Asks Supreme Court to Protect Businesses from Unfair Taxation
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by Terry Hill
WASHINGTON , D.C. -- The nation's largest franchise association has called on the U.S. Supreme Court to overturn a state court decision that would unfairly expose businesses to state taxes.
In a friend-of-the-court brief filed recently, the International Franchise Association argued that the decision in the A&F Trademark, Inc. vs. North Carolina case "diminished to the vanishing point the limitations imposed by the Commerce Clause on the authority of states to impose income taxes on persons engaged in interstate commerce."
The ruling, if not overturned, would radically expand the reach of the states to tax income, including the right to tax out-of-state franchisors solely because their trademark, trade dress or other intellectual property is used by a franchisee in the state despite the fact that the company would not impose any costs on or derive any services from the state.
"Thousands of American small-business franchises face a devastating tax burden if this decision is not overturned," said IFA President Matthew Shay. "There are more than 760,000 franchised small businesses in the United States generating jobs for more than 18 million Americans. It's important that the Supreme Court realizes what is at stake here both constitutionally and economically, and acts quickly to correct this before these businesses are damaged."
Serving as "the Voice of Franchising" for more than four decades, IFA is the only association that represents franchisees, franchisors and suppliers. Its membership includes more than 1,000 company systems, 8,000 franchisees and 400 suppliers.
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