Supreme Court Weakens Shield for Taxpayers

In Uline, Inc. v. Commissioner (Minn., No. A23-1561, 2024), the court determined the market research activities by a Wisconsin company’s sales representatives in Minnesota went beyond mere “solicitation of orders” defined by federal law.

As states continue to scrutinize compliance with P.L. 86-272 during audits, it becomes increasingly important for companies to review their business practices and the activities of their employees. This ruling highlights the importance for businesses to carefully evaluate the extent of their sales and marketing activities.

When sales representatives undertake activities beyond simply soliciting orders, the safeguards provided by P.L. 86-272 may no longer be applicable, which could result in state tax liabilities. Evaluate your income tax nexus and filing obligations with Leyton SALT professionals who can help ensure compliance with state tax laws and mitigate the risk of unforeseen tax obligations.