I 
112TH CONGRESS 
1ST SESSION H. R. 1439 
To regulate certain State taxation of interstate commerce, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 8, 2011 
Mr. GOODLATTE (for himself, Mr. SCOTT of Virginia, Mr. DUNCAN of South 
Carolina, and Ms. JACKSON LEE of Texas) 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 2011’’. 
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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taxes on income derived from interstate commerce, and 
authorizing studies by congressional committees of mat-
ters pertaining thereto’’, approved September 14, 1959 
(15 U.S.C. 381 et seq.), is amended— 
(1) in section (a), by striking ‘‘either, or both,’’ 
and inserting ‘‘any one or more’’; 
(2) in subsection (a)(1), by striking ‘‘by such 
person’’ and all that follows and inserting ‘‘(which 
are sent outside the State for approval or rejection) 
or customers by such person, or his representative, 
in such State for sales or transactions, which are— 
‘‘(A) in the case of tangible personal prop-
erty, filled by shipment or delivery from a point 
outside the State; and 
‘‘(B) in the case of all other forms of prop-
erty, services, and other transactions, fulfilled 
or distributed from a point outside the State;’’; 
(3) in subsection (a)(2), by striking the period 
at the end and inserting a semicolon; 
(4) in subsection (a), by adding at the end the 
following new paragraphs: 
‘‘(3) the furnishing of information to customers 
or affiliates in such State, or the coverage of events 
or other gathering of information in such State by 
such person, or his representative, which information 
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or affiliates, and/or the coverage of events or other 
gathering 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: 
‘‘SEC. 105. For taxable periods beginning on or after 
January 1, 2012, the prohibitions of section 101 that 
apply with respect to net income taxes shall also apply 
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with respect to each other business activity tax, as defined 
in section 5(a)(2) of the Business Activity Tax Simplifica-
tion Act of 2011. 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. 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. 
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(B) Using the services of an agent (exclud-
ing an employee) to establish or maintain the 
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 
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allowing persons to conduct greater activities without the 
imposition of tax jurisdiction. 
(e) EXCEPTIONS.— 
(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. 
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(3) PRESERVATION OF AUTHORITY.—This sec-
tion shall not be construed to modify, affect, or su-
persede the authority of a State to enact a law and 
bring an enforcement action under such law or exist-
ing law against a person or persons or an entity or 
entities, including but not limited to related persons 
or entities, that is or are engaged in an illegal activ-
ity, a sham transaction, or an actual abuse in its or 
their business activities in order to ensure a proper 
reflection of its or their tax liabilities, nor shall it 
supersede the authority of a State to require com-
bined 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 
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