I 
116TH CONGRESS 
1ST SESSION H. R. 3063 
To regulate certain State taxation of interstate commerce, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 3, 2019 
Mr. CHABOT (for himself and Mr. SCOTT of Virginia) 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Business Activity Tax 
Simplification Act of 2019’’. 
SEC. 2. MODERNIZATION OF PUBLIC LAW 86–272. 
(a) SOLICITATIONS WITH RESPECT TO SALES AND 
TRANSACTIONS OF OTHER THAN TANGIBLE PERSONAL 
PROPERTY.—Section 101 of the Act entitled ‘‘An Act re-
lating to the power of the States to impose net income 
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transactions, soliciting orders for sales or trans-
actions, the furnishing of information to customers 
or affiliates, or the coverage of events or other gath-
ering of information; or 
‘‘(3) by reason of the furnishing of information 
to an independent contractor by such person ancil-
lary to the solicitation of orders or transactions by 
the independent contractor on behalf of such per-
son.’’; and 
(6) in subsection (d)(1)— 
(A) by inserting ‘‘or fulfilling transactions’’ 
after ‘‘selling’’; and 
(B) by striking ‘‘the sale of, tangible per-
sonal property’’ and inserting ‘‘a sale or trans-
action, furnishing information, or covering 
events, or otherwise gathering information’’. 
(b) APPLICATION OF PROHIBITIONS TO OTHER BUSI-
NESS ACTIVITY TAXES.—Title I of the Act entitled ‘‘An 
Act relating to the power of the States to impose net in-
come taxes on income derived from interstate commerce, 
and authorizing studies by congressional committees of 
matters pertaining thereto’’, approved September 14, 
1959 (15 U.S.C. 381 et seq.), is amended by adding at 
the end the following: 
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‘‘SEC. 105. For taxable periods beginning on or after 
January 1, 2019, the prohibitions of section 101 that 
apply with respect to net income taxes shall also apply 
with respect to each other business activity tax, as defined 
in section 5(a)(2) of the Business Activity Tax Simplifica-
tion Act of 2019. A State or political subdivision thereof 
may not assess or collect any tax which by reason of this 
section the State or political subdivision may not impose. 
‘‘SEC. 106. For purposes of this title— 
‘‘(1) the term ‘digital good’ means any software 
or other good that is delivered or transferred elec-
tronically, including sounds, images, data, facts, or 
combinations thereof, maintained in digital format, 
where such software or other good is the true object 
of the transaction, rather than the activity or service 
performed to create such software or other good, 
that results in the delivery to the customer of a com-
plete copy of such software or other good, with the 
right to use permanently or for a specified period, 
and includes as an incidental component charges for 
the delivery or transfer of such software or other 
good; and 
‘‘(2) the term ‘digital service’ means any service 
that is provided electronically, including but not lim-
ited to audio services, data processing, cloud com-
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puting, the provision of remote access to or use of 
a digital good, and includes as an incidental compo-
nent charges for the electronic provision of the dig-
ital service to the customer.’’. 
SEC. 3. MINIMUM JURISDICTIONAL STANDARD FOR STATE 
AND LOCAL NET INCOME TAXES AND OTHER 
BUSINESS ACTIVITY TAXES. 
(a) IN GENERAL.—No taxing authority of a State 
shall have power to impose, assess, or collect a net income 
tax or other business activity tax on any person relating 
to such person’s activities in interstate commerce unless 
such person has a physical presence in the State during 
the taxable period with respect to which the tax is im-
posed. 
(b) REQUIREMENTS FOR PHYSICAL PRESENCE.— 
(1) IN GENERAL.—For purposes of subsection 
(a), a person has a physical presence in a State only 
if such person’s business activities in the State in-
clude any of the following during such person’s tax-
able year: 
(A) Being an individual physically in the 
State, or assigning one or more employees to be 
in the State. 
(B) Using the services of an agent (exclud-
ing an employee) to establish or maintain the 
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market in the State if such agent does not per-
form business services in the State for any 
other person during such taxable year. 
(C) The leasing or owning of tangible per-
sonal property or of real property in the State. 
(2) DE
MINIMIS
PHYSICAL
PRESENCE.—For 
purposes of this section, the term ‘‘physical pres-
ence’’ shall not include— 
(A) presence in a State for less than 15 
days in a taxable year (or a greater number of 
days if provided by State law); or 
(B) presence in a State to conduct limited 
or transient business activity. 
(c) TAXABLE PERIODS NOT CONSISTING
OF
A 
YEAR.—If the taxable period for which the tax is imposed 
is not a year, then any requirements expressed in days 
for establishing physical presence under this Act shall be 
adjusted pro rata accordingly. 
(d) MINIMUM JURISDICTIONAL STANDARD.—This 
section provides for minimum jurisdictional standards and 
shall not be construed to modify, affect, or supersede the 
authority of a State or any other provision of Federal law 
allowing persons to conduct greater activities without the 
imposition of tax jurisdiction. 
(e) EXCEPTIONS.— 
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(1) DOMESTIC BUSINESS ENTITIES AND INDI-
VIDUALS
DOMICILED
IN, OR
RESIDENTS
OF, THE 
STATE.—Subsection (a) does not apply with respect 
to— 
(A) a person (other than an individual) 
that is incorporated or formed under the laws 
of the State (or domiciled in the State) in which 
the tax is imposed; or 
(B) an individual who is domiciled in, or a 
resident of, the State in which the tax is im-
posed. 
(2) TAXATION OF PARTNERS AND SIMILAR PER-
SONS.—This section shall not be construed to modify 
or affect any State business activity tax liability of 
an owner or beneficiary of an entity that is a part-
nership, an S corporation (as defined in section 
1361 of the Internal Revenue Code of 1986), a lim-
ited liability company (classified as a partnership for 
Federal income tax purposes), a trust, an estate, or 
any other similar entity if the entity has a physical 
presence in the State in which the tax is imposed. 
(3) PRESERVATION OF AUTHORITY.—This sec-
tion shall not be construed— 
(A) to modify, affect, or supersede the au-
thority of a State to enact a law and bring an 
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