Interstate Commerce Simplification Act of 2025

This bill, formally titled the "Interstate Commerce Simplification Act of 2025," amends the Interstate Income Act of 1959 (Public Law 86-272) to broaden protections for out-of-state businesses against state taxation. Currently, PL 86-272 prohibits states from taxing a business’s net income if its only activity in the state is soliciting orders for tangible goods—like sales calls or catalogs—provided orders are sent outside the state for approval. The bill expands the definition of "solicitation of orders" to include *any activity that facilitates order solicitation*, even if that activity (such as maintaining digital sales platforms, customer service portals, or product databases) also serves other business purposes. This change targets modern e-commerce practices where states have increasingly argued that digital support functions exceed traditional "solicitation" and thus justify taxation. The goal is to reduce compliance burdens for remote sellers and prevent states from imposing income or franchise taxes on businesses with minimal physical presence. The amendment addresses a growing legal gray area where states tax out-of-state companies for activities integral to online sales (e.g., cloud-based order tracking or localized marketing tools), despite PL 86-272’s original intent to shield purely interstate commerce. If enacted, it would clarify that such digitally enabled sales support remains protected, potentially shielding thousands of small and medium-sized businesses from multi-state tax liabilities. However, it does *not* affect sales tax collection rules (governed by the 2018 *Wayfair* decision) or protect businesses with physical operations like warehouses or offices in a state.