,i  #aafth ,,congress  #ast ,session    
,h4 ,r4 #cjfc  ,,in ,,the ,,house ,,of  
,,representatives  ,june #c1 #bjai,mr4  
,chabot 7for himself and ,mr4 ,scott of 
,virginia7 introduced the following     
bill2 which was referred to the         
,committee on the ,judiciary  ,a ,,bill 
,to regulate certain ,state taxation of 
interstate commerce1 and for other      
purposes4  #a4 ,short title ,this ,act  
may be cited as the ,business ,activity 
,tax ,simplification ,act of #bjai4  #b4
 ,modernization of ,public ,law #hf-bgb 
7a7 ,solicitations ,with ,respect to    
,sales and ,transactions of ,other ,than
 ,tangible ,personal ,property ,section 
#aja of the ,act entitled ,an ,act      
relating to the power of the ,states to 
impose net income taxes on income       
derived from interstate commerce1 and   
authorizing studies by congressional    
committees of matters pertaining        
thereto1 approved ,september #ad1 #aiei 
7#ae ,u4,s4,c4 #cha et seq471 is        
amended--  7#a7 in subsection 7a71 by   

striking either1 or both1 and inserting 
any one or more2  7#b7 in subsection    
7a77#a71 by striking by such person and 
all that follows and inserting  7which  
are sent outside the ,state for approval
 or rejection7 or customers by such     
person1 or the representative of such   
person1 in such ,state for sales or     
transactions1 which are-- 7,a7 in the   
case of tangible personal property1     
filled by shipment or delivery from a   
point outside the ,state2 and  7,b7 in  
the case of all other forms of property1
 services1 and other transactions1      
fulfilled or distributed from a point   
outside the ,state2  2  7#c7 in         
subsection 7a77#b71 by striking the     
period at the end and inserting a       
semicolon2  7#d7 in subsection 7a71 by  
adding at the end the following3  7#c7  
the furnishing of information to        
customers or affiliates in such ,state1 
or the coverage of events or other      
gathering of information in such ,state 
by such person1 or his representative1  

which information is used or            
disseminated from a point outside the   
,state2  7#d7 those business activities 
directly related to such person's       
potential or actual purchase of goods or
 services within the ,state if the final
 decision to purchase is made outside   
the ,state2 and  7#e7 by reason of sales
 or transactions of a digital good or a 
digital service4  2  7#e7 by striking   
subsection 7c7 and inserting the        
following3  7c7 ,for purposes of        
subsection 7a71 a person shall not be   
considered to have engaged in business  
activities within a ,state during any   
taxable year merely--  7#a7 by reason of
 sales or transactions in such ,state1  
the solicitation of orders for sales or 
transactions in such ,state1 the        
furnishing of information to customers  
or affiliates in such ,state1 or the    
coverage of events or other gathering of
 information in such ,state1 on behalf  
of such person by one or more           
independent contractors2  7#b7 by reason

 of the maintenance of an office in such
 ,state by one or more independent      
contractors whose activities on behalf  
of such person in such ,state are       
limited to making sales or fulfilling   
transactions1 soliciting orders for     
sales or transactions1 the furnishing of
 information to customers or affiliates1
 or the coverage of events or other     
gathering of information2 or  7#c7 by   
reason of the furnishing of information 
to an independent contractor by such    
person ancillary to the solicitation of 
orders or transactions by the           
independent contractor on behalf of such
 person4  2 and  7#f7 in subsection     
7d77#a7--  7,a7 by inserting or         
fulfilling transactions after selling2  
and  7,b7 by striking the sale of1      
tangible personal property and inserting
 a sale or transaction1 furnishing      
information1 or covering events1 or     
otherwise gathering information4  7b7   
,application of ,prohibitions to ,other 
,business ,activity ,taxes ,title ,i of 

the ,act entitled ,an ,act relating to  
the power of the ,states to impose net  
income taxes on income derived from     
interstate commerce1 and authorizing    
studies by congressional committees of  
matters pertaining thereto1 approved    
,september #ad1 #aiei 7#ae ,u4,s4,c4    
#cha et seq471 is amended by adding at  
the end the following3  #aje4 ,for      
taxable periods beginning on or after   
,january #a1 #bjai1 the prohibitions of 
section #aja that apply with respect to 
net income taxes shall also apply with  
respect to each other business activity 
tax1 as defined in section #e7;a77#b7 of
 the ,business ,activity ,tax           
,simplification ,act of #bjai4 ,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 impose4   
#ajf4 ,for purposes of this title-- 7#a7
 the term digital good means any        
software or other good that is delivered
 or transferred electronically1         

including sounds1 images1 data1 facts1  
or combinations thereof1 maintained in  
digital format1 where such software or  
other good is the true object of the    
transaction1 rather than the activity or
 service performed to create such       
software or other good1 that results in 
the delivery to the customer of a       
complete copy of such software or other 
good1 with the right to use permanently 
or for a specified period1 and includes 
as an incidental component charges for  
the delivery or transfer of such        
software or other good2 and  7#b7 the   
term digital service means any service  
that is provided electronically1        
including but not limited to audio      
services1 data processing1 cloud        
computing1 the provision of remote      
access to or use of a digital good1 and 
includes as an incidental component     
charges for the electronic provision of 
the digital service to the customer4  4 
#c4 ,minimum jurisdictional standard for
 ,state and local net income taxes and  

other business activity taxes  7a7 ,in  
,general ,no taxing authority of a      
,state shall have power to impose1      
assess1 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        
imposed4  7b7 ,requirements for         
,physical ,presence  7#a7 ,in general   
,for purposes of subsection 7a71 a      
person has a physical presence in a     
,state only if such person's business   
activities in the ,state include any of 
the following during such person's      
taxable year3 7,a7 ,being an individual 
physically in the ,state1 or assigning  
one or more employees to be in the      
,state4  7,b7 ,using the services of an 
agent 7excluding an employee7 to        
establish or maintain the market in the 
,state if such agent does not perform   
business services in the ,state for any 

other person during such taxable year4  
7,c7 ,the leasing or owning of tangible 
personal property or of real property in
 the ,state4  7#b7 ,de minimis physical 
presence ,for purposes of this section1 
the term physical presence shall not    
include-- 7,a7 presence in a ,state for 
less than #ae days in a taxable year 7or
 a greater number of days if provided by
 ,state law72 or  7,b7 presence in a    
,state to conduct limited or transient  
business activity4  7c7 ,taxable        
,periods ,not ,consisting of a ,year ,if
 the taxable period for which the tax is
 imposed is not a year1 then any        
requirements expressed in days for      
establishing physical presence under    
this ,act shall be adjusted pro rata    
accordingly4  7d7 ,minimum              
,jurisdictional ,standard ,this section 
provides for minimum jurisdictional     
standards and shall not be construed to 
modify1 affect1 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           
jurisdiction4  7e7 ,exceptions  7#a7    
,domestic business entities and         
individuals domiciled in1 or residents  
of1 the ,state ,subsection 7a7 does not 
apply with respect to--  7,a7 a person  
7other than an individual7 that is      
incorporated or formed under the laws of
 the ,state 7or domiciled in the ,state7
 in which the tax is imposed2 or  7,b7  
an individual who is domiciled in1 or a 
resident of1 the ,state in which the tax
 is imposed4  7#b7 ,taxation of partners
 and similar persons ,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 partnership1 an ,s  
corporation 7as defined in section #acfa
 of the ,internal ,revenue ,code of     
#aihf71 a limited liability company     
7classified as a partnership for        
,federal income tax purposes71 a trust1 
an estate1 or any other similar entity  

if the entity has a physical presence in
 the ,state in which the tax is imposed4
  7#c7 ,preservation of authority ,this 
section shall not be construed--  7,a7  
to modify1 affect1 or supersede the     
authority of a ,state to enact a law and
 bring an enforcement action under such 
law or existing law against a person or 
entity1 including related person or     
entity1 that is engaged in an illegal   
activity1 a sham transaction1 or an     
actual abuse in its business activities 
in order to ensure a proper reflection  
of its tax liabilities2 or  7,b7 to     
supersede the authority of a ,state to  
require combined reporting4  #d4 ,group 
returns ,if1 in computing the net income
 tax or other business activity tax     
liability of a person for a taxable     
year1 the net income or other economic  
results of affiliated persons is taken  
into account1 the portion of such       
combined or consolidated 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  
and1 if that generally applicable       
methodology employs an apportionment    
formula1 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 results 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 to the  
provisions of this ,act and subject to  
all other legal constraints on ,state   
taxation of interstate or foreign       
commerce4  #e4 ,definitions and         
effective date  7a7 ,definitions ,for   
purposes of this ,act3  7#a7 ,net income
 tax ,the term net income tax has the   
meaning given that term for the purposes
 of the ,act entitled ,an ,act relating 

to the power of the ,states to impose   
net income taxes on income derived from 
interstate commerce1 and authorizing    
studies by congressional committees of  
matters pertaining thereto1 approved    
,september #ad1 #aiei 7#ae ,u4,s4,c4    
#cha et seq474  7#b7 ,other business    
activity tax  7,a7 ,in general ,the term
 other business activity tax means any  
tax in the nature of a net income tax or
 tax measured by the amount of1 or      
economic results of1 business or related
 activity conducted in the ,state4  7,b7
 ,exclusion ,the term other business    
activity tax does not include a sales   
tax1 a use tax1 or a similar transaction
 tax1 imposed on the sale or acquisition
 of goods or services1 whether or not   
denominated a tax imposed on the        
privilege of doing business4  7#c7      
,person ,the term person has the meaning
 given such term by section #a of title 
#a of the ,united ,states ,code4 ,each  
corporation that is a member of a group 
of affiliated corporations1 whether     

unitary or not1 is itself a separate    
person4  7#d7 ,state ,the term ,state   
means any of the several ,states1 the   
,district of ,columbia1 or any territory
 or possession of the ,united ,states1  
or any political subdivision of any of  
the foregoing4  7#e7 ,tangible personal 
property ,for purposes of section       
#c7;b77#a77;,c71 the leasing or owning  
of tangible personal property does not  
include the leasing or licensing of     
computer software4  7b7 ,effective ,date
 ,this ,act shall apply with respect to 
taxable periods beginning on or after   
,january #a1 #bjbj4