Chris Lutz shared his insight into online merchants' requirement to pay income tax in additional states with Bloomberg Law as states consider how to implement some or all of a statement on Public Law 86-272, recently revised by the Multistate Tax Commission. Read the full article written by Michael J. Bologna and Tripp Baltz on Bloomberg Law News (subscription required) or download the article here.
Revenue officials in Colorado, Illinois, Oregon, and Utah are studying how to implement some or all of a statement on Public Law 86-272. Other states could take similar action, based on their previous adoptions of the commission’s principles through guidance and tax positions taken during audits. Online merchants face paying income taxes in dozens of additional states if revenue agencies adopt a new interpretation of a federal law that has protected out-of-state sellers for 60 years.
"Large businesses with physical presence and service affiliates in multiple states have likely been filing corporate returns in several states for many years, said Christopher Lutz, chair of state and local tax with the Chicago law firm HMB Legal Counsel.
Still, Lutz said e-commerce businesses — large and small — need to monitor the guidance and enforcement initiatives coming out of state revenue agencies to avoid potential penalties for failing to file income tax returns in a particular state.
'This is an interesting issue for us lawyers to talk about in the abstract,' he said. 'It will be much more
interesting when these cases eventually roll around.'"