There's a federal law from 1959 (Public Law 86-272) that protects businesses from state income taxes in states where their only activity is soliciting orders for goods. This bill would broaden that protection by expanding the definition of 'solicitation of orders' to include any business activity that helps facilitate sales — even if that activity also serves some other purpose. For businesses that sell across state lines, particularly online, this could limit states' ability to impose income taxes on them based on ancillary digital activities like website hosting or customer support.
Congressional Summary
Interstate Commerce Simplification Act of 2025This bill expands the definition of solicitation of orders to include business activities that serve an independently valuable business function apart from the solicitation of orders for purposes of the limitation on a state’s authority to impose a net income tax on an out-of-state seller.Under current law, a state is prohibited from imposing a net income tax on income derived from within the state from interstate commerce if the only business activity within the state is the solicitation of orders for the sale of tangible personal property, provided that the orders are approved (or rejected) and filled by shipment or delivery from outside of the state. Further, the Supreme Court has held that the term solicitation of orders includes (1) activities that are strictly essential to making requests for purchases, and (2) ancillary activities that serve no independent business function apart from their connection to requests for purchases.Under the bill, the definition of solicitation of orders is expanded to include business activities that facilitate the solicitation of orders even if such business activities serve an independently valuable business function apart from the solicitation.
Details
- Congress
- 119th
- Chamber
- Senate
- Status
- summarized
- Action
- Introduced in Senate
- Action Date
- 2025-10-22
- Date Added
- 2026-04-09