A refrigerator truck heading down the New Jersey Turnpike was stopped by a collection agent with the New Jersey Department of Taxation who demanded that the owner of the truck’s cargo — Virginia-based Smithfield Foods — immediately cough up $150,000 because it had failed properly to file New Jersey tax returns.

Smithfield refused, arguing that it had no physical presence in the state and therefore no liability for income tax, but did agree to pay $8,000 to get the truck back on the road. The firm then appealed to the New Jersey State tax commissioner and won a refund and an apology — but not before spending considerable time and money to rectify the situation.

Congressman Rick Boucher (D-Va.) told the story last week as he introduced the Business Activity Tax Simplification Act of 2009, which he claims “will bring certainty to today’s increasingly chaotic tax environment for businesses by clarifying that the states cannot attempt to tax the income of a company that has no physical presence within the taxing state’s borders.” In short, Boucher and the bill’s co-sponsor, Bob Goodlatte (R-Va.), want to cut through the complexities and confusions around nexus (i.e., the minimum amount of activity a business must conduct in a particular state to become subject to taxation there).

Here’s the twist, though: The Smithfield Foods incident dates back to 2002. Indeed, Boucher and Goodlatte’s bill is just the latest in a series of similar bills they’ve been proposing for the past five years, none of which have gone anywhere.

Now, the hoariness of the Smithfield case doesn’t make it irrelevant, and any corporate tax pro could surely come up with a dozen similar stories of nexus headaches. But it does suggest that Boucher and Goodlatte at this point are just going through the motions.

That’s unfortunate, because their call for a bright-line nexus standard based on physical presence within the taxing state’s borders makes all kinds of sense. The bill proposes that a business must use employees or services in a state for more than 15 days in a calendar year before it’s liable to pay business activity taxes to that jurisdiction. (Business activity taxes are generally thought of as corporate income taxes, but they also include a grab-bag of other state and local taxes such as franchise and value added taxes.) As Goodlatte remarks in this release: “Just because a website can be accessed by consumers in a certain state doesn’t mean that state should be allowed to collect taxes from the website owner.”

This is just common sense. But whether the 111th Congress will be more open to nexus reform that its predecessor remains to be seen. ###