Letter: Sales Tax May Bring Foreign Franchise Tax

Share this content:
Yes, Fred Hahn indeed has missed something that DMers are going to hear a lot about once they agree to pay sales tax: foreign franchise tax (Letters, March 3).

Foreign franchise tax is the tax that out-of-state firms pay for the privilege of doing business outside their home state. The Commonwealth of Pennsylvania, for example, requires that every firm "doing business" in Pennsylvania pay an annual tax based on a formula derived from the percentage of a firm's Pennsylvania sales versus national sales.

What is taxed? Not sales, not income and not Pennsylvania assets (DMers presumably would have none). Pennsylvania taxes the firm's capital assets, wherever located. Pennsylvania includes solicitation of orders by mail and purchasing from vendors located in the state among its definitions of "doing business."

Sound incredible? It's not. The Direct Marketing Association is aware of the problem but has taken the approach that the sales tax issue should be addressed first. However, unless sales taxes and foreign franchise taxes are negotiated by the industry with the states as one package, once DMers register to pay sales tax, they will receive not only sales tax forms, but also corporate excise tax forms.

Richard C. Dabrowski, President, Shaker Workshops, Ashburnham, MA



Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above