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Update to PL 86-272

by | Aug 14, 2020 | Multi-State, Multi-state Tax Issues, Sales & Use Tax Compliance |

Public Law 86-272 has long been an income tax protection for out-of-state sellers who enter into other states, including California, for purposes limited to the “mere solicitation of orders” of tangible personal property, when the orders are approved and filled outside of the state attempting to tax the business. In California, sellers protected by PL 86-272 do not have to pay franchise tax or corporate income tax, but the taxpayer is still required to file a tax return and pay taxes not measured by net income, unless certain exceptions apply. Recently, the Multistate Tax Commission (MTC) held a virtual public hearing regarding proposed revisions to determine whether PL 86-272 protects business activities unrelated to sales solicitations, conducted by the internet. Public Comments are due September 4, 2020.

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