Congressman Jim Sensenbrenner (R-WI) introduced the Business Activity Tax Simplification Act (BATSA) today, which would limit state attempts to collect taxes from out-of-state businesses and codify the physical presence standard for state taxation of business activities.  

Congressman Sensenbrenner: “Per the Supreme Court, the Commerce Clause forbids states from levying taxes against individuals who lack a “substantial nexus” with the state. But the Court left many states unsure about what constitutes a “substantial nexus” and the extent of their ability to levy certain taxes on out-of-state businesses.

“This bipartisan bill aims to clear up what the Court left vague and ripe for misinterpretation. Some states have misconstrued their authority to levy business activity taxes, which has resulted in uncertainty for small businesses and state governments alike. BATSA resolves the existing ambiguity by establishing a clear and concise rule for when a sufficient connection exists to justify taxation.”