enforcement action under such law or existing 
law against a person or entity, including related 
person or entity, that is engaged in an illegal 
activity, a sham transaction, or an actual abuse 
in its business activities in order to ensure a 
proper reflection of its tax liabilities; or 
(B) to supersede the authority of a State 
to require combined reporting. 
SEC. 4. GROUP RETURNS. 
If, in computing the net income tax or other business 
activity tax liability of a person for a taxable year, the 
net income or other economic results of affiliated persons 
is taken into account, the portion of such combined or con-
solidated net income or other economic results that may 
be subject to tax by the State shall be computed using 
the methodology that is generally applicable to businesses 
conducting similar business activities and, if that generally 
applicable methodology employs an apportionment for-
mula, the denominator or denominators of that formula 
shall include the aggregate factors of all persons whose 
net income or other economic results are included in such 
combined or consolidated net income or other economic re-
sults and the numerator or numerators shall include the 
factors attributable to the State of only those persons that 
are themselves subject to taxation by the State pursuant 
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to the provisions of this Act and subject to all other legal 
constraints on State taxation of interstate or foreign com-
merce. 
SEC. 5. DEFINITIONS AND EFFECTIVE DATE. 
(a) DEFINITIONS.—For purposes of this Act: 
(1) NET INCOME TAX.—The term ‘‘net income 
tax’’ has the meaning given that term for the pur-
poses of the Act entitled ‘‘An Act relating to the 
power of the States to impose net income taxes on 
income derived from interstate commerce, and au-
thorizing studies by congressional committees of 
matters pertaining thereto’’, approved September 
14, 1959 (15 U.S.C. 381 et seq.). 
(2) OTHER BUSINESS ACTIVITY TAX.— 
(A) IN GENERAL.—The term ‘‘other busi-
ness activity tax’’ means any tax in the nature 
of a net income tax or tax measured by the 
amount of, or economic results of, business or 
related activity conducted in the State. 
(B) EXCLUSION.—The term ‘‘other busi-
ness activity tax’’ does not include a sales tax, 
a use tax, or a similar transaction tax, imposed 
on the sale or acquisition of goods or services, 
whether or not denominated a tax imposed on 
the privilege of doing business. 
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(3) PERSON.—The term ‘‘person’’ has the 
meaning given such term by section 1 of title 1 of 
the United States Code. Each corporation that is a 
member of a group of affiliated corporations, wheth-
er unitary or not, is itself a separate ‘‘person’’. 
(4) STATE.—The term ‘‘State’’ means any of 
the several States, the District of Columbia, or any 
territory or possession of the United States, or any 
political subdivision of any of the foregoing. 
(5) TANGIBLE PERSONAL PROPERTY.—For pur-
poses of section 3(b)(1)(C), the leasing or owning of 
tangible personal property does not include the leas-
ing or licensing of computer software. 
(b) EFFECTIVE DATE.—This Act shall apply with re-
spect to taxable periods beginning on or after January 1, 
2020. 
Æ 
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