More businesses are competing across state lines in the bank and credit card industry, but that creates a problem for collecting taxes. Jason Dilges is the commissioner of South Dakota's Bureau of Finance and Management. He explains the issue to the Joint Appropriations Committee.
“You may apply for a credit card at your home in Sioux Falls, that will go to a repository or will be farmed out to a place that examines that in Nevada. Ultimate approval may occur in Connecticut, you may send your payment to Delaware, customer service may be in Texas or even India. Where the home is for that income is really the question,” Dilges says.
Dilges says all of those factors make it difficult to determine which state should get what percentage of the income. He says banks have tactics to claim they have no tax liability in South Dakota, which means they don't pay the state. South Dakota's bank franchise tax was last updated in 1977.
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