Last Wednesday, the House Judiciary Committee advanced a version of the federal reconciliation bill that would arguably enact the most significant Congressional limit on states’ interstate taxing power since 1959. The proposal would expand the protections afforded to businesses by a longstanding federal law (P.L. 86-272) that prohibits states from imposing a net income tax on a business whose activities in the state are limited to soliciting orders for sales of tangible personal property.
In its current form, P.L. 86-272 does not define protected “solicitation of orders.” The measure approved by the Committee incorporates proposed H.R. 427 (the Interstate Commerce Simplification Act of 2025), and would specify that protected solicitation includes “any business activity that facilitates the solicitation of orders even if that activity may also serve some independently valuable business function apart from solicitation.”
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