Online Business Activity? New York State Is Preparing to Lose Protection on PL 86-272
Jeanna Schenk, CPA | May 10, 2022
New York Adopts Multistate Tax Commission (MTC) Internet Activities Guidance
In light of the Multistate Tax Commission’s guidance in August 2021 suggesting how states should tax internet sales, New York has issued a draft rule that undoes certain income tax protections previously allowed for out-of-state retailers. With the new rule, New York would become the second state to conform to the MTC guidance. California released a technical memorandum also revising how internet activities are taxed back in February 2022.
Article Continues Below
- California PTE Tax: California SB 113 Eliminates Suspensions on NOL Deductions
- Washington Heavy Equipment Rental Tax: Navigating Washington State’s New Heavy Equipment Rental Tax
- Florida Sales Tax Holidays & Exemptions: Florida Budget Includes Multiple Sales Tax Impacts
Subscribe to our quarterly State and Local Tax Digest
MTC’s New Guidance & PL 86-272
As a reminder on the MTC guidance, it addressed the taxability of companies making internet sales into a state and whether those actions create nexus and extend beyond the protections of PL 86-272. The guidance gives examples of the types of online business activities that would defeat PL 86-272 immunity such as providing post-sale assistance via email or chat, soliciting and receiving applications for credit cards, inviting job applications for non-sales position, placing internet cookies onto the computers of in-state customers, and remote repairs and upgrades.
When MTC released the guidance back in August 2021, many critics argued that the update essentially wipes out PL 86-272 and the decision should not lie with the MTC, but rather with Congress. However, with New York and California starting to adopt this new guidance, and surely more states to come, taxpayers need to make sure they understand their internet activities and potential additional filing requirements.
Make Sure You Understand Your Business’s Online Activity
Please contact REDW State and Local Tax Manager Jeanna Schenk or Principal George Rendziperis. We would be happy to discuss your unique tax situation and answer any questions you may have for your online business activity.