[Congressional Record Volume 154, Number 159 (Wednesday, October 1, 2008)]
[Senate]
[Page S10335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BUNNING:
  S. 3670. A bill to regulate certain State and local taxation of 
electronic commerce, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.
  Mr. BUNNING. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3670

       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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