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Multistate Tax Commission Votes to Adopt a New Revision to Public Law

On August 4, 2021, the Multistate Tax Commission (“MTC”) adopted revisions to its “Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States Under Public Law 86-272 (“P.L. 86-272 Statement”) which provides guidance on how the MTC and adopting states interpret and apply P.L. 86-272 with respect to internet activities.

The amendments provide a framework in determining whether P.L. 86-272 protects non-solicited business activities performed over the internet. For example, the use of “static text or photos” on a seller’s website or “cookies” placed on customer’s computers or electronic devices that are “only used for purposes entirely ancillary to the solicitation of orders for tangible personal property” such as remembering items in a user’s shopping cart or storing personal information are still considered protected activities under the new guidance.

However, the use of these “cookies” to adjust production schedules and inventory, develop new products, or identify new items to offer for sale are not considered ancillary to solicitation and are not protected under P.L. 86-272. The adoption of the proposed revised statement could result in significant income tax liabilities for many remote businesses, as many of these businesses use a website or phone application to interact with their customers.

Contact a member of our State and Local Tax Service Team to help address your further questions.

State and Local Tax Services

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