Changes to ‘Business Activity’ on the Horizon?

Revisions Proposed by the Multistate Tax Commission

Corey Rosenthal, JD, and Arvinder Kaur, CPA, and Dilnora Isaeva, CPA

Although the Supreme Court's decision in South Dakota v. Wayfair [585 US _ (2018); 138 S. Ct. 2080 (2018)] significantly increased the state and local tax burden of many businesses, a proposal made by the Uniformity Committee of the Multistate Tax Commission (MTC) to define “business activity” for purposes of the protection offered by Public Law (PL) 86-272 will increase that burden even more. As PL 86-272 was adopted in 1959, it could not take into account the development of technology that would make it possible for any business to reach into homes using “online solicitations.” Therefore, the MTC determined that it was necessary to address online solicitation as it relates to PL 86-272. Accordingly, this article will concentrate on the proposals related to online solicitation. CPAs need to be aware of these proposed changes and their implications when assessing client nexus and filing issues.