21 Pages Posted: 28 Jul 2010
Date Written: July 27, 2010
When a state asserts substantive jurisdiction over the subject matter of a tax, the state generally should also have enforcement jurisdiction over a person who can remit the tax. In the American subnational system, transaction costs, tax assignments, and legal barriers are the major causes of misalignment between substantive and enforcement jurisdiction. Strategies for achieving greater jurisdictional alignment include (1) reducing administrative and compliance cost through reform vehicles such as the Streamlined Sales Tax, (2) adopting simplified compliance regimes for foreign taxpayers, (3) repealing the physical-presence test and P.L. 86-272, and (4) “reverse engineering” substantive jurisdiction rules in recognition of existing limits on enforcement capabilities.
Keywords: state and local taxation, nexus, jurisdiction
JEL Classification: H71, H77
Suggested Citation: Suggested Citation
Swain, John A., Misalignment of Substantive and Enforcement Tax Jurisdiction in a Mobile Economy: Causes and Strategies for Realignment (July 27, 2010). National Tax Journal, Forthcoming ; Arizona Legal Studies Discussion Paper No. 10-23. Available at SSRN: https://ssrn.com/abstract=1649541