I 

111TH CONGRESS 

1ST SESSION H. R. 1083 

To regulate certain State taxation of interstate commerce, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2009 

Mr. BOUCHER (for himself, Mr. GOODLATTE, Mr. DAVIS of Alabama, Mrs. 

BACHMANN, Ms. HERSETH SANDLIN, Mr. JONES, Mr. SCOTT of Virginia, 

Mr. JORDAN of Ohio, Mr. WEINER, Mr. PENCE, and Mr. WILSON of 

South Carolina) introduced the following bill; which was referred to the 

Committee on the Judiciary 

A BILL 

To regulate certain State taxation of interstate commerce, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Business Activity Tax 

5 Simplification Act of 2009’’. 

6 SEC. 2. MODERNIZATION OF PUBLIC LAW 86–272. 

7 (a) SOLICITATIONS WITH RESPECT TO SALES AND

8 TRANSACTIONS OF OTHER THAN TANGIBLE PERSONAL

9 PROPERTY.—Section 101 of the Act entitled ‘‘An Act reVerDate Nov 24 2008 19:14 Feb 14, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1083.IH H1083

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1 lating to the power of the States to impose net income 

2 taxes on income derived from interstate commerce, and 

3 authorizing studies by congressional committees of mat4 ters pertaining thereto’’, approved September 14, 1959 

5 (15 U.S.C. 381 et seq.), is amended— 

6 (1) in section (a), by striking ‘‘either, or both,’’ 

7 and inserting ‘‘any one or more’’; 

8 (2) in subsection (a)(1), by striking ‘‘by such 

9 person’’ and all that follows and inserting ‘‘(which 

10 are sent outside the State for approval or rejection) 

11 or customers by such person, or his representative, 

12 in such State for sales or transactions, which are— 

13 ‘‘(A) in the case of tangible personal prop14 erty, filled by shipment or delivery from a point 

15 outside the State; and 

16 ‘‘(B) in the case of all other forms of prop17 erty, services, and other transactions, fulfilled 

18 or distributed from a point outside the State;’’; 

19 (3) in subsection (a)(2), by striking the period 

20 at the end and inserting a semicolon; 

21 (4) in subsection (a), by adding at the end the 

22 following new paragraphs: 

23 ‘‘(3) the furnishing of information to customers 

24 or affiliates in such State, or the coverage of events 

25 or other gathering of information in such State by 


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1 such person, or his representative, which information 

2 is used or disseminated from a point outside the 

3 State; and 

4 ‘‘(4) those business activities directly related to 

5 such person’s potential or actual purchase of goods 

6 or services within the State if the final decision to 

7 purchase is made outside the State.’’; 

8 (5) by striking subsection (c) and inserting the 

9 following new subsection: 

10 ‘‘(c) For purposes of subsection (a) of this section, 

11 a person shall not be considered to have engaged in busi12 ness activities within a State during any taxable year 

13 merely— 

14 ‘‘(1) by reason of sales or transactions in such 

15 State, the solicitation of orders for sales or trans16 actions in such State, the furnishing of information 

17 to customers or affiliates in such State, or the cov18 erage of events or other gathering of information in 

19 such State, on behalf of such person by one or more 

20 independent contractors; 

21 ‘‘(2) by reason of the maintenance of an office 

22 in such State by one or more independent contrac23 tors whose activities on behalf of such person in 

24 such State consist solely of making sales or fulfilling 

25 transactions, soliciting order for sales or transVerDate Nov 24 2008 19:14 Feb 14, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1083.IH H1083

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1 actions, the furnishing of information to customers 

2 or affiliates, or the coverage of events or other gath3 ering of information; or 

4 ‘‘(3) by reason of the furnishing of information 

5 to an independent contractor by such person ancil6 lary to the solicitation of orders or transactions by 

7 the independent contractor on behalf of such per8 son.’’; and 

9 (6) in subsection (d)(1)— 

10 (A) by inserting ‘‘or fulfilling trans11 actions,’’ after ‘‘selling’’; and 

12 (B) by striking ‘‘the sale of, tangible per13 sonal property’’ and inserting ‘‘a sale or trans14 action, furnishing information, or covering 

15 events, or otherwise gathering information’’. 

16 (b) APPLICATION OF PROHIBITIONS TO OTHER BUSI17 NESS ACTIVITY TAXES.—Title I of the Act entitled ‘‘An 

18 Act relating to the power of the States to impose net in19 come taxes on income derived from interstate commerce, 

20 and authorizing studies by congressional committees of 

21 matters pertaining thereto’’, approved September 14, 

22 1959 (15 U.S.C. 381 et seq.), is amended by adding at 

23 the end the following: 

24 ‘‘SEC. 105. For taxable periods beginning on or after 

25 January 1, 2010, the prohibitions of section 101 that 


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1 apply with respect to net income taxes shall also apply 

2 with respect to each other business activity tax, as defined 

3 in section 3(g) of the Business Activity Tax Simplification 

4 Act of 2009. A State or political subdivision thereof may 

5 not assess or collect any tax which by reason of this sec6 tion the State or political subdivision may not impose.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply with respect to the imposition, as9 sessment, and collection of taxes for taxable periods begin10 ning on or after January 1, 2010. 

11 SEC. 3. MINIMUM JURISDICTIONAL STANDARD FOR STATE 

12 AND LOCAL NET INCOME TAXES AND OTHER 

13 BUSINESS ACTIVITY TAXES. 

14 (a) IN GENERAL.—No taxing authority of a State 

15 shall have power to impose, assess, or collect a net income 

16 tax or other business activity tax on any person relating 

17 to such person’s activities in interstate commerce unless 

18 such person has a physical presence in the State during 

19 the taxable period with respect to which the tax is im20 posed. 

21 (b) REQUIREMENTS FOR PHYSICAL PRESENCE.— 

22 (1) IN GENERAL.—For purposes of subsection 

23 (a), a person has a physical presence in a State only 

24 if such person’s business activities in the State inVerDate Nov 24 2008 19:14 Feb 14, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1083.IH H1083

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1 clude any of the following during such person’s tax2 able year: 

3 (A) Being an individual physically in the 

4 State, or assigning one or more employees to be 

5 in the State. 

6 (B) Using the services of an agent (exclud7 ing an employee) to establish or maintain the 

8 market in the State, if such agent does not per9 form business services in the State for any 

10 other person during such taxable year. 

11 (C) The leasing or owning of tangible per12 sonal property or of real property in the State. 

13 (2) DE MINIMIS PHYSICAL PRESENCE.—For 

14 purposes of this section, the term ‘‘physical pres15 ence’’ shall not include— 

16 (A) presence in a State for less than 15 

17 days in a taxable year (or a greater number of 

18 days if provided by State law); or 

19 (B) presence in a State to conduct limited 

20 or transient business activity. 

21 (c) TAXABLE PERIODS NOT CONSISTING OF A

22 YEAR.—If the taxable period for which the tax is imposed 

23 is not a year, then any requirements expressed in days 

24 for establishing physical presence under this Act shall be 

25 adjusted pro rata accordingly. 


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1 (d) MINIMUM JURISDICTIONAL STANDARD.—This 

2 section provides for minimum jurisdictional standards and 

3 shall not be construed to modify, affect, or supersede the 

4 authority of a State or any other provision of Federal law 

5 allowing persons to conduct greater activities without the 

6 imposition of tax jurisdiction. 

7 (e) EXCEPTIONS.— 

8 (1) DOMESTIC BUSINESS ENTITIES AND INDI9 VIDUALS DOMICILED IN, OR RESIDENTS OF, THE

10 STATE.—Subsection (a) does not apply with respect 

11 to— 

12 (A) a person (other than an individual) 

13 that is incorporated or formed under the laws 

14 of the State (or domiciled in the State) in which 

15 the tax is imposed; or 

16 (B) an individual who is domiciled in, or a 

17 resident of, the State in which the tax is im18 posed. 

19 (2) TAXATION OF PARTNERS AND SIMILAR PER20 SONS.—This section shall not be construed to modify 

21 or affect any State business activity tax liability of 

22 an owner or beneficiary of an entity that is a part23 nership, an S corporation (as defined in section 

24 1361 of the Internal Revenue Code of 1986), a lim25 ited liability company (classified as a partnership for 


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1 Federal income tax purposes), a trust, an estate, or 

2 any other similar entity, if the entity has a physical 

3 presence in the State in which the tax is imposed. 

4 (3) PRESERVATION OF AUTHORITY.—This sec5 tion shall not be construed to modify, affect, or su6 persede the authority of a State to bring an enforce7 ment action against a person or entity that may be 

8 engaged in an illegal activity, a sham transaction, or 

9 any perceived or actual abuse in its business activi10 ties if such enforcement action does not modify, af11 fect, or supersede the operation of any provision of 

12 this section or of any other Federal law. 

13 (f) RULE OF CONSTRUCTION.—This section shall not 

14 be construed to modify, affect, or supersede the operation 

15 of title I of the Act entitled ‘‘An Act relating to the power 

16 of the States to impose net income taxes on income derived 

17 from interstate commerce, and authorizing studies by con18 gressional committees of matters pertaining thereto’’, ap19 proved September 14, 1959 (15 U.S.C. 381 et seq.). 

20 (g) DEFINITIONS, ETC.—For purposes of this section: 

21 (1) NET INCOME TAX.—The term ‘‘net income 

22 tax’’ has the meaning given that term for the pur23 poses of the Act entitled ‘‘An Act relating to the 

24 power of the States to impose net income taxes on 

25 income derived from interstate commerce, and auVerDate Nov 24 2008 19:14 Feb 14, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1083.IH H1083

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1 thorizing studies by congressional committees of 

2 matters pertaining thereto’’, approved September 

3 14, 1959 (15 U.S.C. 381 et seq.). 

4 (2) OTHER BUSINESS ACTIVITY TAX.— 

5 (A) IN GENERAL.—The term ‘‘other busi6 ness activity tax’’ means any tax in the nature 

7 of a net income tax or tax measured by the 

8 amount of, or economic results of, business or 

9 related activity conducted in the State. 

10 (B) EXCLUSION.—The term ‘‘other busi11 ness activity tax’’ does not include a sales tax, 

12 a use tax, or a similar transaction tax, imposed 

13 on the sale or acquisition of goods or services, 

14 whether or not denominated a tax imposed on 

15 the privilege of doing business. 

16 (3) PERSON.—The term ‘‘person’’ has the 

17 meaning given such term by section 1 of title 1 of 

18 the United States Code. 

19 (4) STATE.—The term ‘‘State’’ means any of 

20 the several States, the District of Columbia, or any 

21 territory or possession of the United States, or any 

22 political subdivision of any of the foregoing. 

23 (5) TANGIBLE PERSONAL PROPERTY.—For pur24 poses of subsection (b)(1)(C), the leasing or owning 


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1 of tangible personal property does not include the 

2 leasing or licensing of computer software. 

3 (h) EFFECTIVE DATE.—This section shall apply with 

4 respect to taxable periods beginning on or after January 

5 1, 2009. 

Æ 


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