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TAX CLINIC

Unprotected and protected added to a customer’s shopping ■ Offering and selling extended
activities conducted via the cart during a web session, storing warranty plans through the business’s
internet personal information provided by the website to in-state customers who
New Art. IV, Section C, addresses customer, or reminding customers of purchase the business’s products
whether an out-of-state business that items they considered on prior visits (example 8);
uses the internet to conduct in-state to the website) (example 6); and ■ Contracting with a marketplace
business activities is engaged in pro- ■ Offering only tangible personal facilitator to facilitate the sale of the
tected activities under P.L. 86-272. Like property for sale on the business’s business’s products on the market-
other out-of-state businesses, internet website, with the website allowing place facilitator’s online marketplace,
sellers will fall within the protection of customers to search for items, read where the marketplace facilitator
P.L. 86-272 if their only business activity product descriptions, purchase items, maintains inventory, including that
within the state is soliciting orders for and select delivery options (assumes of the business, at fulfillment centers
sales of tangible personal property where that the business does not engage in a state in which the business’s
orders are approved at and fulfilled by in any of the unprotected activities customers are located (example 9);
shipment or delivery from a point out- described later, or any other in-state and
side the state. activities not described in the ■ Contracting with in-state customers
Regarding internet activities, the example) (example 11). to stream videos and music to elec-
Statement describes a general rule According to the Statement, unpro- tronic devices for a charge (example
that, “when a business interacts with a tected activities of a business include: 10).
customer via the business’s website or ■ Regularly providing post-sale
app, the business engages in a business assistance to in-state customers Other changes
activity within the customer’s state. through an electronic chat or email The MTC makes clear in the Statement
However, … when a business presents that customers initiate by clicking that “soliciting orders for sales” refers
static text or photos on its website, that on an icon on the business’s website specifically to sales of tangible personal
presentation does not in itself consti- (example 2); property and that any prior references
tute a business activity within those ■ Soliciting and receiving online to “company” have been changed to
states where the business’s customers applications for its branded credit “business.”
are located.” card through the business’s website Other changes in the newly revised
The Statement includes “examples of (example 3); Statement include the following:
activities conducted by a business that ■ Placing on the business’s website an ■ Amending Article I, “Nature of
operates a website offering for sale only invitation to viewers in the customer’s Property Being Sold,” to clarify that
items of tangible personal property.” For state to apply for nonsales positions P.L. 86-272 only protects solicita-
purposes of these examples, the busi- within the business (the example tions to sell tangible personal prop-
ness has no other connection with the states that the website enables view- erty (formerly “personal property”)
customer’s state, and orders are approved ers to fill out and submit an online and does not protect (1) transactions
(or rejected) and the property shipped application and submit a résumé and involving intangible property
from outside the customer’s state. cover letter) (example 4); (formerly “intangibles”); or (2) the
Under the Statement, it is the MTC’s ■ Placing on in-state customers’ sale or delivery, and solicitations for
view that protected activities of a busi- computers or other electronic devices the sale or delivery, of any type of
ness for purposes of P.L. 86-272 include: cookies that gather customer search service that is not “entirely ancillary”
■ Providing post-sale assistance to information for use in adjusting (formerly “ancillary”) to soliciting
in-state customers by posting a static production schedules and inventory orders for sales of tangible personal
list of frequently asked questions on amounts, developing new products, or property (formerly “ancillary to
the business’s website (example 1); identifying new items to offer for sale solicitation”);
■ Placing on in-state customers’ (example 5); ■ Amending Article II, “Solicitation
computers or other electronic ■ Remotely fixing or upgrading in-state of Orders and Activities Ancillary
devices “cookies” that gather cus- customers’ previously purchased to Solicitation,” to make clear
tomer information that is only used products by transmitting code or that P.L. 86-272 does not protect
for purposes entirely ancillary to other electronic instructions to activities that (1) go beyond soliciting
soliciting orders for tangible personal those products over the internet orders for sales of tangible personal
property (e.g., remembering items (example 7); property; (2) are entirely ancillary

16 January 2022 The Tax Adviser