119-S-3027 Journalist Public Summary

Public Summary — S. 3027, Interstate Commerce Simplification Act of 2025

Headline Summary: A Senate bill would expand a federal rule that limits when states can tax out‑of‑state businesses, by clarifying that any activity helping to get orders counts as “solicitation,” even if it also serves some other business purpose. [1]Congress.gov — S.3027 — 119th Congress (2025–2026) | Congress.gov

What It Does: The bill amends Public Law 86‑272 to define “solicitation of orders” as any business activity that facilitates getting orders—even if that activity also has an independently valuable function. Today, P.L. 86‑272 generally protects out‑of‑state sellers of tangible goods from state income tax if their in‑state conduct is limited to soliciting orders, a standard courts have tied to activities that are strictly essential or entirely ancillary to asking for sales. [1]Congress.gov — S.3027 — 119th Congress (2025–2026) | Congress.gov[2]Congressional Research Service — CRS Insight: The Evolution of P.L. 86-272’s St…

Why It Matters: States have recently moved to treat many commonplace internet features (like live chat for post‑sale help, certain data‑gathering cookies, or online job applications) as in‑state business activity that defeats P.L. 86‑272 protection; New York adopted rules that a state court upheld (without retroactive effect), New Jersey formalized similar rules, while a California court invalidated its guidance on procedural grounds. The bill would push back by broadening the protected zone, likely reducing when states can tax remote sellers. [2]Congressional Research Service — CRS Insight: The Evolution of P.L. 86-272’s St…[3]Multistate Tax Commission — MTC Statement of Information Concerning Practices U…[4]Grant Thornton — New York court upholds internet-activities regulations interpr…[5]RSM US — New Jersey adopts revised MTC guidance on P.L. 86‑272 (effective June…[6]RSM US — California court strikes down Franchise Tax Board’s P.L. 86‑272 intern…

Who’s For It:

• Sponsor: Sen. Ron Johnson (R‑WI). [1]Congress.gov — S.3027 — 119th Congress (2025–2026) | Congress.gov
• Business groups that opposed states’ expanded interpretations of P.L. 86‑272—such as the American Catalog Mailers Association in its California lawsuit and the Council On State Taxation in broader advocacy—argue those state approaches erode federal protections and add compliance burdens; they are likely to favor clarifying federal protections. [7]Anchin — Taxpayers Prevail in Battle Against California (ACMA challenge to FTB…[8]Moffa, Sutton, & Donnini, P.A. — Multistate Nexus Issues with Far‑Reaching Impl…

Who’s Against It:

• State tax administrators and the Multistate Tax Commission (MTC), who have urged updating P.L. 86‑272 for the internet era, argue that broader federal immunity would undercut states’ ability to tax modern, interactive commerce and protect revenues. [3]Multistate Tax Commission — MTC Statement of Information Concerning Practices U…[9]Web search · turn 1 #4
• States that adopted or defended MTC‑style rules—such as New York—have argued those rules reasonably reflect real in‑state business activity online. [4]Grant Thornton — New York court upholds internet-activities regulations interpr…

What’s Next: As of October 24, 2025, the bill has been introduced, read twice, and referred to the Senate Finance Committee; no further action or cosponsors are listed yet. [1]Congress.gov — S.3027 — 119th Congress (2025–2026) | Congress.gov