WASHINGTON, DC — Today, the ACMA (American Catalog Mailers Association), the largest trade association representing the direct marketing/e-commerce/catalog industry, filed a complaint in the Superior Court in San Francisco that a recently-issued California Franchise Tax Board memorandum wrongly and substantially expanded the reach of income taxes on out-of-state merchants with no physical presence in the Golden State.

“The California Franchise Tax Board is contradicting a long-established law by requiring companies to pay income taxes without any representation or involvement in the state, which is contrary to federal law,” said ACMA CEO Hamilton Davison. “The California Board’s Technical Advice Memorandum has effectively negated a well-established and longstanding federal statute, Public Law 86-272."

This would require ACMA members not located in California and other similar direct/e-com/catalog companies to pay substantially more than 100% of their current state income taxes to their home states on the same income, increasing their costs dramatically. "It would occur even though they do not receive the kind of benefits they receive from their home states nor are they represented," he said. "New York has indicated its intent to follow this lead."

The California memo (comprising TAM 2022-01 and FTB Publication 1050) would effectively remove the federal law’s long-time protection from liability for the California income tax for many ACMA members. “In essence,” Davison said, “our members will be victims of a ‘double-dip’ on their required income taxes, plus all the costs and risks of filing in multiple states. This looming six-figure cost and the untold liabilities is simply untenable.”

Acting as chief advocate for its members when their businesses are threatened, as they have been by the recent actions of the California Franchise Tax Board, the ACMA is being represented by attorneys George Isaacson, Martin Eisenstein and Nathaniel Bessey of the Lewiston, ME-based firm of Brann & Isaacson, which has represented the ACMA and the direct/e-com/catalog industry for years.

For more information, please visit www.catalogmailers.org.