Home > 106th Congressional Bills > H.R. 3221 (ih) To review, reform, and terminate unnecessary and inequitable Federal payments, benefits, services, and tax advantages. [Introduced in House] ...H.R. 3221 (ih) To review, reform, and terminate unnecessary and inequitable Federal payments, benefits, services, and tax advantages. [Introduced in House] ...
108th CONGRESS
1st Session
H. R. 3220
To regulate certain State taxation of interstate commerce, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 1, 2003
Mr. Goodlatte (for himself, Mr. Boucher, Mr. Boehner, Mr. Smith of
Texas, Mr. Chabot, Mr. Forbes, Ms. Pryce of Ohio, Mr. Ramstad, Mr.
Wilson of South Carolina, Mr. Tiberi, and Mr. Barrett 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.
Be it enacted by the Senate and House of Representatives 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 2003''.
SEC. 2. REMOVAL OF CERTAIN LIMITATIONS ON THE APPLICATION OF PUBLIC LAW
86-272.
(a) Solicitations With Respect to Sales of Other Than Tangible
Personal Property.--Section 101 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 authorizing studies by congressional
committees of matters pertaining thereto'', approved September 14, 1959
(15 U.S.C. 381 et seq.) is amended--
(1) in subsections (a) and (c), by striking ``of tangible
personal property''; and
(2) in subsection (d) by striking ``the sale of, tangible
personal property'' and inserting ``a sale,''.
(b) 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
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. Beginning with taxable periods beginning on or after
the first day of the first calendar year that begins after the date of
the enactment of the Business Activity Tax Simplification Act of 2003,
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 4 of the Business Activity Tax
Simplification Act of 2003. A State or subdivision may not assess or
collect any tax which by reason of this section the State or
subdivision may not impose.''.
(c) Effective Date of Subsection (a) Amendments.--The amendments
made by subsection (a) shall apply with respect to the imposition,
assessment, and collection of taxes for taxable periods beginning on or
after the first day of the first calendar year that begins after the
date of the enactment of the Business Activity Tax Simplification Act
of 2003.
SEC. 3. JURISDICTIONAL STANDARD FOR STATE AND LOCAL NET INCOME TAXES
AND OTHER BUSINESS ACTIVITY TAXES.
(a) In General.--Except as otherwise provided by this Act, 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 imposed.
(b) Requirements for Physical Presence.--Except as otherwise
provided by this Act, for the purposes of subsection (a), a person has
a physical presence in a State only if such person's business
activities within such State include any of the following during the
person's taxable year:
(1) Being an individual physically within the State, or
assigning one or more employees to be in such State, on more
than 21 days. However, the following shall be disregarded in
determining whether such 21-day limit has been exceeded:
(A) Activities in connection with a possible
purchase of goods or services for the business.
(B) Gathering news and covering events for print,
broadcast, or other distribution through the media.
(C) Meeting government officials for purposes other
than selling goods or services.
(D) Participation in educational or training
conferences, seminars or other similar functions.
(E) Participating in charitable activities.
(2) Using the services of another person, except an
employee, in such State, on more than 21 days to establish or
maintain the market in that State, unless that other person
performs similar functions on behalf of at least one additional
business entity during the taxable year.
(3) The leasing or owning of tangible personal property or
real property in such State on more than 21 days. However, the
following shall be disregarded in determining whether such 21-
day limit has been exceeded:
(A) Tangible property located in the State for
purposes of being assembled, manufactured, processed,
or tested by another person for the benefit of the
owner or lessee, or used to furnish a service to the
owner or lessee by another person.
(B) Marketing or promotional materials distributed
in a State using mail or a common carrier, or as
inserts in or components of publications.
(C) Any property to the extent used ancillary to an
activity excluded from the computation of the 21-day
period under paragraph (1) or (2).
(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) Exceptions.--
(1) Domestic business entities and individuals domiciled in
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
commercially domiciled in the State in which the tax is
imposed; or
(B) an individual who is domiciled in the State.
(2) Taxation of partners and similar persons.--If a taxing
authority is not prohibited by this section from taxing an
entity that is a partnership, a Subchapter S corporation, a
limited liability company, a trust, or an estate, or another
similar entity, that taxing authority is also not prohibited by
this section from taxing the owners or beneficiaries of the
entity, if State law imposes the tax not on the entity itself
but on the entity's owners or beneficiaries, whether or not
they are in the State, with respect to their ownership interest
in the entity.
(3) Certain activities.--With respect to the following,
subsection (b) shall be read by substituting ``one day'' for
``more than 21 days'':
(A) The sale within the State of tangible personal
property, where delivery of the property originates and
is completed within that State.
(B) The performance of services to real property
within the State.
(4) Exception relating to certain performances and sporting
events.--With respect to the taxation of one of the following,
subsection (b) shall be read by substituting ``one day'' for
``more than 21 days'':
(A) A live performance in the State, before a live
audience of more than 100 individuals.
(B) A live sporting event in the State before more
than 100 spectators present at the event.
SEC. 4. DEFINITIONS.
The following definitions apply in this Act:
(1) 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 commerce, and
authorizing 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) The term ``other business activity tax''
means--
(i) a tax imposed on or measured by gross
receipts, gross income, or gross profits;
(ii) a business licence tax;
(iii) a business and occupation tax;
(iv) a franchise tax;
(v) a single business tax or a capital
stock tax; or
(vi) any other tax imposed by a State on a
business for the right to do business in that
State or measured by the amount of, or economic
results of, business or related activity
conducted in that State.
(B) The term ``other business activity tax'' does
not include a transaction tax.
(3) State.--The term ``State'' means any of the several
States, the District of Columbia, or any territory or
possession of the United States, and any political subdivision
thereof.
SEC. 5. GENERAL MATTERS.
(a) Rule of Construction.--The limitation on the power of a State
imposed by section 3 does not affect any other limitation on that power
imposed by other law.
(b) Effective Date.--This Act applies with respect to taxable
periods beginning on and after the first day of the first year that
begins after the date of enactment of this Act.
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