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Monday, September 14, 2009

50th Anniversary of PL 86-272 - Temporary Legislation!

Today - September 14, 2009, marks the 50th anniversary of Public Law 86-272 which many of its drafters viewed as a temporary law. PL 86-272 provides guidance to businesses as to when they have income tax obligations in a state. Basically, if the only thing a business does is to take orders in the state that are approved and filled from outside of the state and the business has no property in the state, the business is not subject to income tax in that state.

PL 86-272 also called for a congressional committee to study various state income tax issues as relevant to multistate businesses. Results of that study were to enable Congress to improve or broaden PL 86-272.

Despite a 1,200+ page report released in 1964 and 1965, no changes were made to PL 86-272. That's a long time to have a temporary provision. A key lesson learned is that a termination date should have been specified in the law to make it a higher priority to get the law into a final and lasting form. One of the key defects of PL 86-272 is that it only provides guidance to multistate businesses that sell tangible personal property.

I've written on this before, asking the question over 1 year ago whether PL 86-272 would get modernized prior to its 50th anniversary. Legislative proposals to do so, remain in limbo - as they have for the past few sessions of Congress.

For more information, see a website on this topic -

What do you think?

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