The recent United States Budget Reconciliation bill included language that modifies the provisions of P.L. 86-272, the 1959 federal statute that prohibits states from imposing income taxes on out-of-state business if their only activity in a state is soliciting the sale of tangible personal property. The proposed new definition of “solicitation of orders” reads: “any business activity that facilitates the solicitation of orders even if that activity may also serve some independently valuable business function apart from solicitation.” In this article, MTC Nexus Director Richard Cram discusses similar language introduced last term. He says the legislation (H.R. 8021) would dramatically expand P.L. 86-272’s preemption of state taxing authority by broadening the range of protected activities that out-of-state sellers could engage in.
To read the H.R. 8021: More Preemption of State Taxing Authority (PDF) article, originally published in the November 6, 2024 edition of the Tax Notes State.