global Tax Selling Across State Lines? Here’s how Public Law 86-272 will Impact You May 28, 2026 Does your business sell products online across state lines? Public Law 86-272 might help shield you from state income taxes, but only in certain situations. Here’s what you should know. Quick Takeaways Public Law 86-272 can protect you from state income tax, but only in very limited situations The protections afforded by Public Law 86-272 apply only to sales of tangible goods, not services or digital products Your activity in a state must be limited to soliciting orders, nothing more Many common website features and e-commerce tools are considered outside of Public Law 76-272 protection; meaning states are using them to create nexus and tax obligations. States are increasingly eroding Public Law 86-272 projections through narrowly defining ‘solicitation’ to allow for more activities to create nexus with a state. Businesses, are you up to speed on Public Law 86-272 and its impact on your physical and digital transactions? If your business is selling across state lines, especially online, this rule should be on your radar. What is Rule 86-272?Public Law 86-272 is a federal statute which limits when a state can tax an out-of-state business. Essentially, a state cannot impose income tax on your business if your only activity within the state is soliciting orders for tangible goods (like physical products) and those orders are approved and shipped from outside the state. What are the limitations?You lose the protection under Public Law 86-272 if you do more than basic solicitation activity, such as:Providing services or support beyond the sale (ex. via chat or email)Storing inventory in the state (including through third parties)Having administrative employees, contractors or operations in a stateHaving potential customers using your website or application which requires the customer to accept ‘cookies’ to use the website or appCommon website features like collecting customer data for analytics or offering interactive support can push you past mere solicitation.Why this mattersPublic Law 86-272 was drafted long before e-commerce. Now, with websites, apps, and data tracking, many common online activities can go beyond “solicitation’ which means more businesses are losing this protection without realizing it.States (and the Multistate Tax Commission) are taking a closer look at how online activity fits into these rules, and many are leaning toward a broader interpretation of what creates tax exposure.If your website or digital tools do more than simply take orders, there’s a good chance you’ve moved beyond the protection of Public Law 86-272. Tips for businessesReview your website functionality: Look beyond sales; features like chat support, data collection, or account tools could create exposure.Map your activities by state: Understand where you may be doing more than just soliciting orders. Nexus includes both where you make sales and where you’re engaging in business activity. Even limited interactions with customers can impact your state tax position.Evaluate third-party relationships: Inventory storage, fulfillment, or marketplace facilitators can create nexus too.Don’t assume you’re protected: Just because you sell products doesn’t automatically qualify you for Public Law 86-272 protections.Monitor evolving guidance: States are increasingly aligning with broader interpretations of Public Law 86-272 in a digital context, and positions can shift. What worked a few years ago may not hold up today.Work with a tax advisor: The rules are nuanced, and small changes in your operations can have big tax implications.
