II
110th CONGRESS
2d Session
S. 3670
IN THE SENATE OF THE UNITED STATES
October 1 (legislative day, September 17), 2008
Mr. Bunning introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation
A BILL
To regulate certain State and local taxation of electronic commerce, and for other purposes.
Minimum jurisdictional standard for State and local taxes on electronic commerce
In General
No taxing authority of a State shall have power to require the collection and remittance of a State tax by any person resulting from the electronic commerce of such person unless such person has a physical presence in the State during the taxable period with respect to which the tax is imposed.
Requirements for Physical Presence
In general
For purposes of subsection (a), a person has a physical presence in a State only if such person’s electronic commerce in the State includes any of the following during such person’s taxable year:
Being an individual physically in the State, or assigning one or more employees to be in the State.
Using the services of an agent (excluding an employee) to establish or maintain the electronic commerce in the State, if such agent does not perform the same services in the State for any other person during such taxable year.
The leasing or owning of tangible personal property or of real property in the State.
De minimis physical presence
For purposes of this section, the term physical presence shall not include—
entering into an agreement to share revenue generated by an electronic commerce presence owned or maintained by a person who is physically present in a State;
presence in a State for less than 15 days in a taxable year (or a greater number of days if provided by State law); and
presence in a State to conduct limited or transient business activity.
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.
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 allowing persons to conduct greater activities without the imposition of tax jurisdiction.
Exceptions
Domestic business entities and individuals domiciled in, or residents of, the state
Subsection (a) shall not apply with respect to—
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
an individual who is domiciled in, or a resident of, the State in which the tax is imposed.
Preservation of authority
This section shall not be construed to modify, affect, or supersede the authority of a State to bring an enforcement action against a person or entity that may be engaged in an illegal activity, a sham transaction, or any perceived or actual abuse in its electronic commerce if such enforcement action does not modify, affect, or supersede the operation of any provision of this section or of any other Federal law.
Rule of Construction
This section shall not be construed to modify,
affect, or supersede the operation of 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.).
Definitions, etc
For purposes of this section:
Electronic commerce
The term electronic commerce has the meaning given that term in section 1105(3) of the Internet Tax Freedom Act (47 U.S.C. 151 note).
Person
The term person has the meaning given such term by section 1 of title 1 of the United States Code.
State
The term State means any of the several States, the District of Columbia, or any territory or possession of the United States, or any political subdivision of any of the foregoing.
Tangible personal property
For purposes of subsection (b)(1)(C), the leasing or owning of tangible personal property does not include the leasing or licensing of computer software.
Effective date
This section shall apply with respect to taxable periods beginning on or after January 1, 2009.