The Interstate Commerce Simplification Act of 2025 amends existing law to broaden the definition of "solicitation of orders" to include activities that support order solicitation, regardless of additional business value. This clarification aims to simplify interstate commerce regulations.
Scott Fitzgerald
Representative
WI-5
The Interstate Commerce Simplification Act of 2025 amends existing federal law to broaden the definition of "solicitation of orders" to include activities that support order solicitation, regardless of other business purposes. This change may subject businesses to income tax in states where they have previously been protected from taxation under federal law.
Interstate Commerce Law Tweaked: 'Helps Solicit' Now Enough for States to Tax Businesses
The "Interstate Commerce Simplification Act of 2025" might sound harmless, but it's actually a significant change to how businesses are taxed across state lines. The core of the bill amends Section 101(d) of Public Law 86-272, expanding what counts as "solicitation of orders." This seemingly small tweak could have big implications for how much tax your business owes, and to which states.
Redefining "Solicitation"
The main change is the addition of a new clause stating that "solicitation of orders" now includes any business activity that "helps solicit orders," even if that activity has other business value. Previously, states had clearer limits on taxing out-of-state businesses. Now, if a company does anything that even indirectly assists in getting orders within a state, that state might be able to tax them. This is a pretty broad definition, and that's where the trouble starts.
Real-World Rollout
Imagine a small online retailer based in Nevada that sells handcrafted goods nationwide. They use a marketing consultant in California who helps them refine their online ads, targeting customers in various states. Under this new law, even if the consultant's work also improves the retailer's overall brand image (other business value), the fact that they help solicit orders in California could be enough to trigger tax obligations there. Or consider a tech company with remote customer support staff across multiple states. If a support rep in Texas helps a customer troubleshoot a problem, and that customer later places a new order, that interaction could be considered 'helping solicit orders' and expose the company to Texas taxes.
The Bigger Picture: Challenges and Concerns
This law could create a real headache for businesses, especially smaller ones and those operating primarily online. It blurs the lines of what constitutes a taxable presence in a state. The ambiguity of "helps solicit orders" is a major concern. What counts as "help"? Could attending an online industry conference be seen as helping solicit orders? This vagueness could lead to lots of disputes and even lawsuits as states try to figure out who they can tax, and businesses try to figure out where they owe.
The practical challenge is compliance. Businesses might need to track every activity that could remotely be linked to sales in every state. This means more paperwork, more accounting complexity, and potentially higher tax bills. It also raises the risk of double taxation, where a business ends up paying taxes on the same income to multiple states. While the bill's stated goal might be simplification, the actual result could be anything but.