State Business Licenses

From time to time, a state or locality will demand that motor carriers that only do interstate business within its borders obtain a business license or, in the case of a state, register as an out-of-state business with the secretary of state or some other state office.   The license requirement is usually tied to an annual report and the payment of a fee.  However, the U.S. Supreme Court has made in very clear that the Commerce Clause of the U.S. Constitution prevents state or local governments from imposing any such requirements.  In recent years, ATA has challenged business license demands made by New Jersey and the District of Columbia (click here and here to see ATA’s letters), and was successful in both instances when these jurisdictions backed off.  Unfortunately, even though a state may not require a purely interstate carrier to get a license to do business, it may under some circumstances require a motor carrier to pay business taxes.  See the entry on this page under State Income Tax Nexus & BATSA.