Tax Beat - Interstate Tax Rule’s Protections Are a Must for Small Businesses
Public Law 86-272 (PL 86-272) offers limited protection to out-of-state companies that solely solicit sales for tangible personal property within a state. Small and medium-sized businesses in the manufacturing, distribution and retail sectors have heavily relied upon this state protection since it was enacted in 1959 to decrease overall tax liability.
In 2021, the Multistate Tax Commission (MTC) released a controversial reinterpretation of what activities may be considered more than mere sales solicitation. The MTC guidance suggests that some internet-based activities such as post purchase chats, online tutorials and cookies used for data mining may cause a business to no longer qualify for the protection of PL 86-272.
In this episode, Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, are joined by Louis Cole, Partner and State & Local Tax Services Leader, and Cathie Shaw, National Tax Partner. Together they discuss the current challenges surrounding PL 86-272 and the increasing pressure stemming from the evolution of modern-day business practices.
Listen to learn more about:
00:00 - Start
04:07 - PL 86-272 background
05:25 - MTC authority
06:45 - Businesses that have adopted MTC interpretations
10:07 - MTC impact on small businesses
12:45 - Determining nexus without the sale of tangible goods
14:59 - Relevance of nexus studies
16:59 - Record keeping and internet activity analyses
19:43 - Mitigating compliance burden
Related Guidance
The Income Tax Nexus Battle and Federal Public Law 86-272 - www.cbh.com/guide/articles/ec...
Learn More About Cherry Bekaert's State and Local Tax Services:
www.cbh.com/services/tax/stat...
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