In short
Public Law 86-272 bars a state from imposing a net income tax on an out-of-state business whose only activity in the state is soliciting orders for tangible personal property that are approved and shipped from outside the state.
Key takeaways
- It doesn't protect sales of services or intangibles, or activities beyond solicitation, such as installation or repairs.
- It doesn't apply to sales taxes or gross receipts taxes.
- Multistate Tax Commission guidance treats some online activities, such as post-sale chat support, as going beyond solicitation.
Where it's tested
TCP: Multi-Jurisdictional & International Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company's only activity in a state is sending sales representatives to solicit orders for tangible goods, which are approved and shipped from outside the state. What protection does Public Law 86-272 provide?