A decade ago, fed-up lawmakers in Montana decided it was time to try to fix what had turned into a broken taxation system.

For years, corporations were—and still are—shifting profits to offshore tax havens, starving Montana and other states of millions in revenues. So the Big Sky state introduced a simple fix: make corporations report profits going to known tax havens and then tax a share of it, relying on the same formula the state uses to calculate how to tax businesses with operations throughout the nation. In 2010, alone, Montana’s solution to the problem raked in $7.2 million in cash.

Last summer, Oregon became the only other state to join it, but there are others who stand to gain millions through making similar changes, according to a new report. Some 21 other states already require corporations report profits generated in and out of the state, according to the report produced by the U.S. Public Interest Research Group, a pro-consumer group countering big banks, insurers, manufacturers and other special interests. If those states had been taxing profits diverted to offshore havens in 2012, they could have generated another billion dollars in revenue, the group estimates.

“With Congress often gridlocked, states should take action to reduce the impact of offshore tax havens on state budgets,” the report’s authors argue.

Estimates of the federal impact vary, but a report last year from the nonpartisan Congressional Research Service cited a range of $10 billion to $90 billion in lost revenues annually. Yet, despite broad support for taxing corporate overseas profits and high-profile stories on the practice, the federal government has yet to do much about the problem. Enter the states.

There are three simple steps for states to reclaim revenue lost to tax havens, US PIRG argues. (Note, technically they list four, but one is just addition.)

  1. Identify known tax havens. As it stands, many states only require businesses to report profits up to the “water’s edge”—or within the United States. To fix that, states would first need to identify known tax havens. Fortunately, several groups including the National Bureau of Economic Research and Internal Revenue Service already do this. States could easily rely on these lists.
  2. Make businesses report income of subsidiaries in those havens. The federal government already requires this, so it wouldn’t be much of a stretch for states to add this mandate, US PIRG argues in the report.
  3. Pick a formula to calculate how much of that income should be taxed. States don’t want to tax national corporations 50 times on all income, so they’ve devised formulas to calculate what share of a multi-state business’s income can fairly be taxed. These same formulas could be used to calculate the same for foreign income.

Oregon became the second state to address the “water’s edge” problem in July and its legislative analysts predict $18 million in extra revenues this year alone. Another 21 states already require reporting of income from foreign subsidiaries, according to the report: