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unprotected activities under its interpre-
tation of the federal statute. Thereafter,
the MTC revised the Statement in 1993,
1994, and 2001.
In 2018 the Supreme Court held
in South Dakota v. Wayfair, Inc., 138
S. Ct. 2080 (2018), that a physical
presence was not required under the
dormant Commerce Clause in order
for a state to impose a sales tax collec-
tion requirement on an out-of-state
seller. Following this ruling, the MTC’s
Uniformity Committee formed a work
group at the request of some of its
members to update the Statement “to
address changes that have occurred dur-
ing the past two decades in the economy
and the way that business is conducted”
According to the MTC, the political subdivisions, from imposing a (see MTC, “P.L. 86-272 Statement of
Statement (available at tinyurl.com/ net income tax on an out-of-state seller Information Project,” available at tinyurl.
hm5xenh6) is “intended to serve as gen- if the seller’s “only business activities” com/3z8dsuz7). Although the Way-
eral guidance to taxpayers and to provide within the state consist of “the solicita- fair Court was not interpreting P.L.
notice as to how Supporting States will tion of orders by such person, or his 86-272, “the Supporting States consider
apply the statute.” Although the revised representative … for sales of tangible the Court’s analysis as to virtual contacts
Statement has been approved by the personal property … which … are sent to be relevant to the question of whether
MTC, it is not automatically adopted outside the State for approval or rejec- a seller is engaged in business activities
by states. Rather, the Statement pro- tion and, if approved, are filled by ship- in states where its customers are located
vides that Supporting States will need ment or delivery from a point outside for purposes of the statute,” according to
to expressly indicate support through the State.” Thus, even if constitutional the Statement.
statutory, regulatory, or administrative nexus exists that would allow taxing an After numerous meetings, drafts,
action for the Statement to be effective out-of-state business, P.L. 86-272 ef- and public hearings, the MTC adopted
in that state. fectively preempts state income taxation the fourth revision to the Statement
on an out-of-state business whose activi- on Aug. 4, 2021. While many sections
Background ties in the state are limited to soliciting of the Statement were modified, the
In February 1959, the U.S. Supreme sales of tangible personal property as most significant change is new Sec-
Court held in Northwestern States described in the federal law. tion C, “Activities Conducted via the
Portland Cement Co. v. Minnesota, 358 In 1986, the MTC adopted the Internet,” which was added to Article
U.S. 450 (1959), that Minnesota could “Statement of Information Concerning IV, “Specific Listing of Unprotected
impose its corporate income tax on an Practices of Multistate Tax Commission and Protected Activities” (hereafter,
Iowa corporation that leased a sales of- and Signatory States Under Public Law Art. IV, Section C). Other notable
fice in Minnesota and had employees in 86-272,” which sets forth the MTC changes to the Statement include the
Minnesota whose activities were limited signatory states’ interpretation of those addition of teleworking under the list
to soliciting orders that were accepted in-state activities that are conducted of unprotected activities, the revisions
at, and filled from, the home office in by or on behalf of a corporation and to the application of the Statement to
Iowa. In order to legislatively overturn
IMAGE BY BLACKRED/ISTOCK of the business community, Congress Court addressed the scope of the activi- Appeal of Joyce, Inc., 66-SBE-070 (Cal.
foreign commerce, and eliminating the
fall within or outside the protection of
application of the Joyce rule (named for
this holding and with the active support
P.L. 86-272. In 1992, the U.S. Supreme
enacted P.L. 86-272 later that year in
State Bd. of Equalization 11/23/66)) in
ties protected under P.L. 86-272 in Wis-
consin Department of Revenue v. William
determining whether the activities of a
September 1959.
Wrigley, Jr., Co., 505 U.S. 214 (1992)
P.L. 86-272 (codified at 15 U.S.C.
company conducted in the state exceed
the protections of P.L. 86-272.
§381) prohibits a state, and any of its
(Wrigley), and listed protected and
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