Multistate: MTC Approves Revised Statement on Public Law 86-272

Listen to a brief overview of state tax developments this week, including this Multistate update, or read the full Multistate development below.

Detailed Multistate Development

On August 4, 2021, the Multistate Tax Commission (MTC) approved its revised “Model Statement of Information Concerning Practices of Multistate Commission and Supporting States Under Public Law 86-272,” which addresses the application of Public Law 86-272 to business activity conducted by an Internet seller. This statement was last updated in 2001.  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. In contrast, simply presenting static text or photos on a website or app does not in itself constitute a business activity in the state. If the activity conducted through the website or app is not limited to solicitation of sales of tangible personal property or ancillary activities, then per the revised statement, the business is not eligible for Public Law 86-272 protection. The statement includes examples of protected and unprotected Internet-related activities.    Unprotected activities that will defeat an entity’s Public Law 86-272 immunity include, but are not limited to, providing post-sale assistance to in-state customers via an app or website, leaving cookies on a customer’s device to gather information on shopping trends or to track inventory, soliciting applications for branded credit cards on the business’s website, inviting customers to apply for non-sales positions, and remotely fixing or upgrading products via the Internet.  In contrast, protected activities include posting static FAQs that may be used to provide post-sale assistance or placing cookies onto the computers or devices of in-state customers to gather information that is used only for soliciting sales of tangible personal property, such as to remind customers of items that were placed in shopping carts, or to store personal information the customer has provided in the course of making a purchase.

Although the revised model statement has been approved by the MTC, it has yet to be officially adopted by any state. However, many states indicated during the MTC’s Bylaw 7 survey that they would consider adoption. The complete revised statement can be accessed here. Please contact Shirley Sicilian with questions.


This Week's Developments

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Featured Speaker

Sarah McGahan

Sarah McGahan

Managing Director, State & Local Tax, KPMG US