[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3670 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3670

 To regulate certain State and local taxation of electronic commerce, 
                        and for other purposes.


_______________________________________________________________________


                   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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. MINIMUM JURISDICTIONAL STANDARD FOR STATE AND LOCAL TAXES ON 
              ELECTRONIC COMMERCE.

    (a) 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.
    (b) Requirements for Physical Presence.--
            (1) 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:
                    (A) Being an individual physically in the State, or 
                assigning one or more employees to be in the State.
                    (B) 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.
                    (C) The leasing or owning of tangible personal 
                property or of real property in the State.
            (2) De minimis physical presence.--For purposes of this 
        section, the term ``physical presence'' shall not include--
                    (A) 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;
                    (B) 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
                    (C) presence in a State to conduct limited or 
                transient business activity.
    (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) 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.
    (e) Exceptions.--
            (1) Domestic business entities and individuals domiciled 
        in, or residents of, the state.--Subsection (a) shall not apply 
        with respect to--
                    (A) 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
                    (B) an individual who is domiciled in, or a 
                resident of, the State in which the tax is imposed.
            (2) 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.
    (f) 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.).
    (g) Definitions, etc.--For purposes of this section:
            (1) 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).
            (2) Person.--The term ``person'' has the meaning given such 
        term by section 1 of title 1 of the United States Code.
            (3) 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.
            (4) 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.
    (h) Effective Date.--This section shall apply with respect to 
taxable periods beginning on or after January 1, 2009.
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