Multistate: MTC Executive Committee advances revisions to statement governing P.L. 86-272

Listen to a brief overview of state tax developments this week, including a Multistate update.

Detailed Multistate Development

Recently, the Multistate Tax Commission’s Executive Committee voted unanimously to advance revisions to the Commission’s “Model Statement of Information Concerning Practices of Multistate Commission and Supporting States Under Public Law 86-272” to the next stage of approval.   Since 2018, a Commission Work Group has been examining the application of P.L. 86-272 to business activity conducted by an Internet seller. Under the revised statement, if a business interacts with a customer via the business’s website or app, the business is generally considered to be engaged in a business activity within the customer’s state. If the activity performed through the website or app is not limited to solicitation of sales of tangible personal property or ancillary activities, then the business is not eligible for P.L. 86-272 protection.   The revised statement provides eleven examples of certain Internet-related activities that are considered protected and unprotected. Unprotected activities include, but are not limited to, providing post-sale customer assistance via an app or website and leaving cookies on a customer’s device to gather information on shopping trends or to track inventory.  Prior to the Executive Committee vote, a public hearing was held on the revisions and comments were submitted. Certain commentators challenged the Work Group’s determination that an interactive Internet activity constitutes business activity in the customer’s state. However, the Hearing Officer who provided recommendations to the Executive Committee in advance of the vote, disagreed and concluded that the states had the “sovereign authority to interpret ‘business activity’ for purposes of P.L. 86-272.”

The next stage of the process is a “bylaw 7 survey” of MTC Compact and Sovereignty states.  The survey asks if the state would consider adopting the proposal.  If a majority of states answer “yes,” the proposal moves to the final stage, which is a vote of the Compact and Sovereignty states.  Please reach out to Shirley Sicilian at 202-533-3466 with questions. 

This Week's Developments

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Featured Speaker

Sarah McGahan

Sarah McGahan

Managing Director, State & Local Tax, KPMG US