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TAX MATTERS

released, a significant portion of electronic chat or email involves ac- their nonfiling positions, particularly
taxpayers can expect to be affected by tions that typically were, and continue in California and New York, while
online sales to California- and New to be, handled via telephone. Differ- monitoring additional states that
York–based customers. ences between performing this service may enact similar language to the
Potential for challenges — via the internet versus telephone may Statement of Information, perhaps
treating internet sales as pres- need to be established. retroactively. Businesses whose facts
ence: The Statement of Information’s Furthermore, P.L. 86-272 does and circumstances create material
equating of internet sales to physical not define “tangible personal proper- risk under the new guidance should
presence without clarifying its basis ty.” While most states do not define consider requesting a private letter
for doing so could encourage tax- tangible personal property in detail ruling with the state and/or applying
payer challenges, particularly where as part of their income tax statutes, for a voluntary disclosure agreement
facts and circumstances deviate they often do so for purposes of sales on a no-name basis to obtain further
from the examples in the Statement tax. As these definitions evolve and clarity before filing.
of Information. more digital products are considered
Potential for challenges — ex- tangible personal property, certain — Hal W. Brown, CPA, is a state and local
amples language: Further judicial or states could have differing treatment tax senior manager in Chicago, and Sara
legislative clarification may be needed of a business’s activities regarding Arvold, CPA, is a state and local tax part-
regarding the specifics of the examples P.L. 86-272 protection. ner in Minneapolis, both with Crowe LLP.
in the Statement of Information. For What businesses should do
instance, Example 2’s provision con- now: In the meantime, businesses To comment on this column, contact Paul
cerning active post-sale assistance via with online sales should reevaluate Bonner, the JofA’s tax editor. ■

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34 | Journal of Accountancy October 2022