Interstate Commerce Simplification Act of 2025
Interstate Commerce Simplification Act of 2025
Plain Language Summary
# Interstate Commerce Simplification Act of 2025 - Summary **What the bill would do:** This bill would change federal tax rules about when states can tax out-of-state businesses. Currently, states cannot tax the net income of companies that only solicit orders within the state (like taking customer orders) if those orders are fulfilled from outside the state. This bill would expand what counts as "solicitation" to include business activities that serve purposes beyond just taking orders—essentially giving states more authority to tax out-of-state sellers who do more than just take orders in their state. **Who it affects:** Out-of-state companies that do business in multiple states would be most affected, particularly e-commerce businesses, mail-order companies, and other interstate retailers.
The bill could result in these businesses owing state income taxes in states where they currently don't. Consumers might potentially see indirect effects depending on how businesses respond to new tax obligations. **Current status:** The bill was introduced by Rep. Scott Fitzgerald (R-Wisconsin) in the 119th Congress and is currently in committee, meaning it has not yet been debated or voted on by the full House of Representatives.
CRS Official 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.
Latest Action
Referred to the House Committee on the Judiciary.