IWLA urges tax clarification for warehouses in California
The International Warehouse Logistics Association (IWLA), a trade organization for third-party logistics providers in North America, said it supports a proposed simplification of California’s business activity tax law that would make public warehouses more competitive with those in other states.
IWLA members control more than 20 million square feet of storage space in California.
That state’s proposed Business Activity Tax Simplification Act (AB 2061) includes an amendment saying the storage of a product in a public or third-party warehouse does not, by itself, establish physical presence for the purpose of imposing taxes on a warehouse customer.
“This will remove the financial penalty 3PL customers currently pay for temporarily storing goods in California warehouses,” said Jere Van Puffelen, president of PRISM Team Services. an IWLA member based in Danville, Calif.
In a public warehouse — as opposed to a private warehouse — the owner of the facility contracts with a customer to provide care, custody and control of the customer’s merchandise. “The nature of the bailment relationship between the public warehouse and its customer negates a claimed entitlement on the part of the state to impose taxes against the owner of the goods,” said Joel Hoiland, president and chief executive officer of the IWLA.
“As a result, storage of the product in a public warehouse does not create a ‘presence’ of the bailor — the warehouse customer,” Hoiland explained.
“Inventory maintained in a public warehouse remains in interstate commerce. This has been supported by prior court decisions,” he added.
The new law would not affect the tax liability of a public warehouse, which would continue to pay business activity taxes.