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MTC Draft Policy on P.L. 86-272: Marketplace Facilitator Concerns

Posted on Dec. 14, 2020

Rick Handel teaches at the University of South Carolina School of Law and the South Carolina Department of Revenue. He was previously in private practice and was general counsel for policy in the South Carolina DOR. Brittnee L. Pool is a third-year law student at the University of South Carolina School of Law. She is a research editor on the editorial board of the American Bar Association Real Property, Trust and Estate Law Journal.

This installment of Both Sides Now is the second of two articles on the MTC’s new draft statement concerning the ambiguities inherent in P.L. 86-272 and changes in technology and how business is done. In Part 1, Handel and Pool discussed issues the MTC does not consider and issues arising from electronic communications and the internet. In this part, they consider the MTC’s positions on marketplace facilitators and independent contractors.

Copyright 2020 Rick Handel and Brittnee L. Pool.
All rights reserved.

Public Law 86-272 in its essence prohibits any state from imposing a net income tax on the income derived from within its borders from interstate commerce if the company’s only business activity in the state is “the solicitation of orders [for sales of tangible personal property], which orders are sent outside the [taxing] State for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the state.”1

Although P.L. 86-272 is probably unconstitutional,2 the Multistate Tax Commission is working on drafting a new policy statement interpreting it.3 This statement will update the MTC’s statement dated July 27, 2001, in light of changes in technology, changes in how business is conducted, and case law reflecting those developments.

Part 1 discussed problems with the MTC not defining person or tangible personal property as used in P.L. 86-272, and how the law treats electronic communications and how business is conducted online. This part considers the MTC’s position on marketplace facilitators and independent contractors. It also makes some cursory comments about less controversial issues. Our comments and any answers we may suggest are arguable, but the issues we raise should be ones with which taxpayers, their representatives, states, and the courts wrestle.

It should be remembered that the MTC’s Statement of Information and the notices or revenue rulings states produce adopting parts or all of it are statements of opinion. They are not law or regulations unless a state formally adopts them. A court may or may not give these statements deference depending on whether it finds them persuasive or if the court believes the revenue department staff have some credibility as experts and the court, even with the taxpayer’s counsel’s assistance, sees no reason to disagree with them. Their most important use is to provide guidance to taxpayers, especially those who cannot afford tax disputes and litigation regarding the revenue department’s position — in other words, what the state is likely to challenge and what it won’t challenge.

Marketplace Facilitators, Sales by Consignment, And Independent Contractors

A section on marketplace facilitators is included in the MTC’s draft’s section on online activities. It states:

The marketplace facilitator maintains inventory, including some of the business’s products, at fulfillment centers in various states where the business’s customers are located. This maintenance of the business’s products defeats the business’s P.L. 86-272 immunity in those states where the fulfillment centers are located — see Art. V [Independent Contractors].4

The section on independent contractors is consistent. After listing the activities that an independent contractor can do without the business’s loss of immunity, it provides that the “maintenance of a stock of goods in the state by the independent contractor under consignment or any other type of arrangement with the business, except for purposes of display and solicitation, removes the protection.”5

However, the section on unprotected activities provides that the in-state activity of “consigning stock of goods or other tangible personal property to any person, including an independent contractor, for sale”6 is not protected by P.L. 86-272. This provision is consistent if it assumes that consigning goods requires them to be physically delivered and held in inventory by the independent contractor in the state where the independent contractor makes a sale. But it is not clear what it means. It should be clarified to be clearly consistent or eliminated, or all three statements should be changed to be clearly consistent with each other and perhaps with the arguments in the remainder of this section.

A marketplace facilitator may sell its own goods, the products of another entity that is part of its unitary business, the products of an affiliated company that is not part of its unitary business, or the products of an independent business. It may store and send the items it sells for itself and others from its own distribution centers or from those owned by other entities within its unitary business. For other independent companies, it may merely be an agent soliciting and processing orders and payments.

For purposes of this discussion, assume that marketplace facilitators sell products of multiple companies that are not part of a unitary business with the marketplace facilitator. This assumption makes them an independent contractor under P.L. 86-272.7 When a marketplace facilitator sells its own goods, it is like any other seller — being a marketplace facilitator is irrelevant. If it is selling the goods of an affiliated company that is part of its unitary business, whether or not the state is a combined reporting state, then its treatment depends on the definition of person in P.L. 86-272.8 If the unitary business is a person, then selling property of an entity that is part of its unitary business is the same as it selling its own products. If a unitary business is not a person, and if the fulfillment center is owned by the marketplace facilitator, this example would be treated as a consignment sale in which the affiliated separate person consignor is selling the product through the consignee marketplace facilitator.9 If the marketplace facilitator is merely acting as an agent soliciting and processing orders and payments, it is acting like the independent contractors who solicited sales in Scripto.10

So, for purposes of P.L. 86-272, a marketplace facilitator is either the person selling its own goods or an independent contractor selling goods on consignment or otherwise working for the seller. Despite the MTC’s placement of the treatment of marketplace facilitators in the internet section of its statement, it should be noted that marketplace facilitators can also be auctioneers, companies that advertise products on television and take telephone orders, and even brick-and-mortar stores like jewelry stores that sell their own merchandise, items made by local craftsmen, and antique jewelry on consignment.

The most problematic issue here is the MTC’s treatment of independent contractors. P.L. 86-272 provides the following:

A person shall not be considered to have engaged in business activities within a State during any taxable year merely by reason of sales in such State, or the solicitation of orders for sales in such State, of tangible personal property on behalf of such person by one or more independent contractors, or by reason of the maintenance, of an office in such State by one or more independent contractors whose activities on behalf of such person in such State consist solely of making sales, or soliciting orders for sales, of tangible personal property.11

So, if a person hires an independent contractor, they do not lose the protection of P.L. 86-272 if, in addition to solicitation, the independent contractor has an office in the state and makes sales in the state.

The question whether a person who sells its products through an independent contractor loses its P.L. 86-272 protection in states where the independent contractor has the seller’s products is as difficult as, or perhaps more difficult than, determining whether a common carrier acts on behalf of the seller or buyer.12

Apparently the Wrigley13 Court thought that the activities that independent contractors could do, and that the seller of the goods couldn’t, were so significant that it used the fact that the law allowed an independent contractor to have an office to infer that the seller could not have an office in the state, even if that office was restricted to solicitation and activities totally ancillary to solicitation. That reasoning, plus the rule of statutory construction that legislatures do not add provisions for no reason, leads to the conclusion that independent contractors’ right to sell items, and not just solicit orders, must be meaningful.

The right to sell would have no meaning if independent contractors had to send orders to the seller out of state for acceptance or rejection and, if accepted, the products would have to be shipped or delivered from out of state. A sale is a contract — an offer and acceptance. So is it reasonable that a sale in the context of P.L. 86-272 means the independent contractor can accept the offer, but does it then have to transfer the offer and acceptance to the seller and the seller ship or deliver the product from out of state? It’s possible, but we don’t think so. At this point, the sale is not concluded. If the seller does not ship the item to the independent contractor or directly to the customer, all the customer has is the right to sue the independent contractor. The independent contractor may or may not have the right to sue the seller depending on their contract. And what if the item is unique and damages are not adequate to compensate the buyer? Suing for specific performance is only possible if the buyer is a third-party beneficiary of the contract between the seller and independent contractor.

To reasonably interpret the sale, it seems that the independent contractor would at least need the right to have the seller ship or deliver the item, and that right would need to be enforceable by specific performance because the independent contractor’s right to sell is not meaningful unless it can deliver. Otherwise, the buyer’s right is merely the right to order the product and get it if it is convenient, or to sue for damages, which are likely to comprise the purchase price, so there doesn’t appear to be any real right.

Therefore, we conclude that the seller is still protected by P.L. 86-272 if the independent contractor has the item it sells in its possession. The MTC’s draft does not contradict this conclusion; it merely states that the independent contractor’s inventory must be stored in a state different than the buyer’s state.14 The MTC draft is apparently stating that the independent contractor cannot have inventory for sale in the buyer’s state and must ship or deliver the product from out of state. It basically takes the position that the independent contractor provision should be strictly construed against the seller. Is this a correct interpretation of the law? Other than the issue of P.L. 86-272’s constitutionality, we think this is the issue most likely to get back to the Supreme Court. We believe that taxpayers should win this issue, but that conclusion, at least in some circumstances, is not clear enough to advise states that they should give up the issue rather than litigate it.

States would argue that an independent contractor’s additional rights under the statute should be strictly construed because they act as an exception to the general rule set forth in P.L. 86-272. They would also argue that because of our system of dual-sovereignty federalism and the necessity of state taxation, restrictions against states’ sovereign right to tax should be strictly construed against the restriction and lean in favor of the right of states to collect taxes on commerce within its borders.15

Taxpayers would argue that the MTC’s position violates due process, and that it is not a reasonable interpretation of the statute (especially considering Wrigley).

Due process argument. Nexus will not generally be an issue in a P.L. 86-272 case, and for this discussion we assume that the seller’s contracts through the marketplace facilitator to its customers in the state give it nexus. But the due process reasoning in nexus and personal jurisdiction cases is relevant. These cases provide that a person will not be haled into court or taxed “solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated contacts,’ . . . or of the ‘unilateral activity of another party or a third person.’”16 “The relationship must arise out of contacts that the ‘defendant himself’ creates with the forum State.”17

If the seller ships goods to the marketplace facilitator, how does he know where the marketplace facilitator stores them and from where it ships them to customers? It is reasonable to conclude that, analogous to personal jurisdiction and nexus, a taxpayer’s liability in a state should not depend on the unilateral act of a third party. Does he receive due process if he is held liable for penalties that he did not have the right to know about until after they accrued — that is, when he finds out where his goods were stored as part of the audit process? It can be argued that the seller had the right to include a restriction of where the marketplace facilitator can store his goods in their contract, but given the size of some marketplace facilitators and the size of some sellers, as a practical matter, many sellers are not in a position to negotiate their contracts. However, even if they could, the negotiation, potential restrictions on the marketplace facilitator on the storage of goods, and the distance and time of shipping would make this interstate commerce less efficient and more expensive. This doesn’t make sense considering the purpose of the commerce clause and P.L. 86-272 is to prevent, not encourage, discrimination against interstate commerce.18 And if P.L. 86-272 requires the additional expense and increases discrimination against interstate commerce, it would be another argument that it is unconstitutional.19 It is a cardinal rule of statutory construction that, when possible, laws are not construed to be unconstitutional.

Wrigley holds that the term “solicitation” includes not merely the ultimate act of inviting an order but the entire process associated with the invitation is suggested by the fact that section 381 describes “the solicitation of orders” as a subcategory, not of in-state acts, but rather of in-state “business activities” — a term that more naturally connotes courses of conduct. See Webster’s Third New International Dictionary 22 (1981) (defining “activity” as “an occupation, pursuit, or recreation in which a person is active — often used in pl. <business activities>”). Moreover, limiting “solicitation of orders” to actual requests for purchases would reduce section 381(a)(1) to a nullity.20

The independent contractor section of P.L. 86-272 specifically permits the independent contractor to conduct the “business activities” of sales in the state without jeopardizing the seller’s P.L. 86-272 protection. The business activities of “solicitation” include “activities that are entirely ancillary to requests for purchases — those that serve no independent business function apart from their connection to the soliciting of orders.”21

Therefore, wouldn’t the business activities of sales include activities that are entirely ancillary to sales — those that serve no independent business function apart from their connection to sales? And isn’t having a product available entirely ancillary to selling it? What independent business function would it serve (other than perhaps another permissible activity, solicitation)? Tangible personal property in the state and under the independent contractor’s control could not be transferred to the seller’s direct customers in the state because that would directly violate P.L. 86-272’s restrictions. If they must order it from the seller, it is no more than the right to solicit orders.

If independent contractors can ship the property from their own inventory in another state that means they basically have the same rights as the seller under P.L. 86-272, no more, at least in any practical sense. It can be argued that they have the right to accept the order in the state before delivering or shipping the product from out of state, but they really don’t even have that in a practical sense. First of all, it isn’t any advantage to the independent contractor, the seller, or the buyer compared with a phone call, text, or email out of state to get an instantaneous approval; and second, they can’t accept the order in real terms immediately. It will take a call, text, email, or other communication to ensure the independent contractor still has the product and quantity available. So the MTC’s interpretation would essentially read the term “sale” out of P.L. 86-272; that is, it would reduce their ability to make sales in compliance with P.L. 86-272 “to a nullity.”

Extended Warranties

Paragraph IV.C.8 of the MTC’s draft provides that a business is not protected by P.L. 86-272 if it “offers and sells extended warrant[ies] via its website to in-state customers who purchase the business’s products.”22 They consider the sale of an extended warranty to be a sale of a service not entirely ancillary to the solicitation of orders for sales of tangible personal property.23 This conclusion appears to be correct, but its placement in the section on internet activities is hard to understand because it seems equally correct if extended warranties were offered for sale by door-to-door sales associates, offered through television ads with phone numbers to call, through direct telephone solicitation, or sold to retail stores for resale by manufacturers’ representatives.

And what does “extended” mean? It appears to at least imply that manufacturers’ warranties included with the product do not destroy P.L. 86-272 protection. Does this mean the warranty in the box is entirely ancillary to solicitation? It does not seem to be. It is certainly in accordance with an arguably important company policy, so it is hard to see it as de minimis. Is the MTC grafting the sales tax concept of “true object” onto P.L. 86-272? If it did that, it should probably view an extended manufacturer’s warranty as also protected if it’s sold at the same time as the product. Can a company sell three products — Gizmo 1 for $100, Gizmo 2 for $115, and Gizmo 3 for $130 — with the only differences among the products being the packaging and that Gizmo 1 comes with a one-year manufacturer’s warranty, 2 comes with a two-year warranty, and 3 comes with a three-year warranty? It is hard to believe that a court would not allow the warranty in the box and that it wouldn’t agree with the MTC on the extended warranty. But if this is true, would the court merely be interpreting Congress’s intent in enacting P.L. 86-272 (like Wrigley appears to have interpreted it for telephone communications) in a way to prevent the law from being meaningless when it was enacted?24 If this is correct, it supports the conclusion in Part 1 that not all non-solicitation internet chats violate the conditions of P.L. 86-272.25

Other Provisions in the MTC’s Draft Statement on P.L. 86-272

Part IV.A and Part IV.B of MTC’s draft statement list unprotected and protected activities respectively. Neither has been modified substantially from MTC’s 2001 statement.26 The MTC’s Part VI (conflict of laws) and Part VII, (miscellaneous practices) contain more significant changes, but are unlikely to generate the conflict that the section on internet activities does.27 So we will only comment on them selectively — not so much because they are a correct or incorrect application of P.L. 86-272, but because they contain ambiguities that should be minimized. That said, minimizing these ambiguities should not prevent the issuance of new guidance that is overdue and should be an immense help to businesses, especially smaller businesses with no desire or ability to engage in tax disputes.

Unprotected and protected activities in Part IV.A and B. The changes of MTC’s draft of unprotected and protected activities not related to the internet should not, for the most part, be controversial. Although some of the listed activities have been clarified and one unprotected activity has been added, they should not, for the most part, be controversial.

It is unlikely that there will be a challenge to the activities in Part IV.B that the MTC’s draft says are protected.28 However, it should be noted that passing orders, inquiries, and complaints to the home office and coordinating shipment and delivery support the position that, contrary to the draft, interactive websites that provide information are also protected.29

The unprotected activities described in Part IV.A deserve a few comments. Paragraph 20 was added to this draft and provides that employees who telecommute from within the state and perform activities beyond the solicitation of orders for the sale of tangible personal property cause the business to lose the protection of P.L. 86-272.30 This shouldn’t be controversial, except it will not be immediately meaningful in the states that have temporarily provided that telecommuting employees will not affect P.L. 86-272 protection, at least for a period of time related to the COVID-19 pandemic.

Paragraph 7 provides that “investigating, handling, or otherwise assisting in resolving customer complaints” destroys the protection of P.L. 86-272, except that sales personnel can “mediat[e] direct customer complaints when the sole purpose . . . is to ingratiate the sales personnel with the customer.”31 That is never going to be the “sole purpose”; the most important purpose will likely be to make sales, because sales personnel often receive commissions. Maybe “sole purpose” means “a purpose” or “a significant purpose.” Or perhaps it is analogous to the interpretation of necessary in IRC section 162 (allowing the deductibility of “ordinary and necessary [business] expenses”) to mean “appropriate and helpful.”32

Consistent with the MTC’s 2001 statement, paragraph 14 provides that if the seller “maintains a sample or display room in excess of 2 weeks (14 days) at any one location within the state,” the seller loses P.L. 86-272 protection.33 This is a helpful guideline for businesses because it tells them that they can maintain a sample or display room for two weeks before the state will consider it a forbidden office or store. It may not have been intended to, but it also implies a seller can continually maintain a sample or display room if it moves it to a different location every two weeks.34 If the seller maintains a sample room in a hotel room for three weeks does the seller really lose its protection? Not necessarily. Most states that adopt the MTC’s draft, or a variation of it, are likely to do so in a revenue ruling or some other public pronouncement of its position, and therefore it is only the DOR’s opinion. Whether three weeks is too long will be the subject of negotiations, and if necessary, ultimately up to a court.

Paragraph 18 provides that a telephone listing or business literature with an address in the state of an employee or representative in that capacity destroys the protection of P.L. 86-272, but the “normal distribution and use of business cards and stationary with the employee’s or representative’s name, street address, email address, telephone and fax numbers and affiliation with the business” does not.35 This inconsistency is difficult or impossible to justify.36

Part VI — Conflict of laws provision. Assuming this statement is not enacted as law in a state, this part appears to be the most presumptuous provision in the draft. And, although it is not likely to be challenged, it appears to go too far. If the statement is a ruling, most of it is the revenue department informing taxpayers of its opinion of what is taxable and what is not. Courts may or may not give the department’s opinion deference, but if the taxpayer decides to litigate, a court will decide this issue. This provision reads more like the department telling the courts what their choice of law decision must be. It isn’t like a choice of law provision in a contract in which the parties tell the court what law they agree should apply; it is one party telling the court that it is “required” to adopt that party’s opinion.37

The statement provides that a “State will apply the destination state’s definition of ‘tangible personal property’ to determine the application of P.L. 86-272 as it relates to the origin state’s throwback rule, if any.”38 As previously discussed,39 the definition of tangible personal property is a federal issue. Does this mean that the state must adopt the destination state’s definition even if the U.S. Supreme Court has, in the intervening years, defined tangible personal property for the purpose of P.L. 86-272? Further, this limited choice of law provision, only required for one issue, is designed to control the tax outcome — not unreasonably from the perspective of a state with a throwback rule and often from the perspective of the taxpayer. This provision can prevent both states from taxing the sale while increasing the chance of having the sale thrown back to the originating state.

Part VII — Miscellaneous practices. These provisions concern foreign commerce, application to corporations incorporated in the state or to a person resident or domiciled in the state, registration or qualification to do business in the state, and loss of protection for conducting unprotected activity during part of the tax year.40

Foreign commerce. The provision on foreign commerce shouldn’t be controversial because it provides that states can individually decide whether to apply the principles of P.L. 86-272 to foreign commerce.41 On a positive note, it does provide that if a state applies P.L. 86-272 to foreign commerce, it will do so consistently.

Of course, states have the authority to exempt businesses from tax that it would be constitutional and legal for them to tax. On the other hand, if the tax is constitutional and legal, it is not clear that departments of revenue have the power to exempt businesses from tax if state law doesn’t do so.

Less positive is that the benefits of uniformity are lost on this issue, and the statement does not discuss if the state may be required to apply P.L. 86-272 to foreign commerce by the anti-discriminatory provisions of our international trade treaties like the General Agreement on Tariffs and Trade and the General Agreement on Trade in Services.

Application to corporations incorporated in the state or to a person resident or domiciled in the state. The statement provides that P.L. 86-272 does not protect “a corporation incorporated under the laws of the taxing state or to a person who is a resident of or domiciled in the taxing state.”42 The corporate part of this provision is basically a quote from the statute, but the second part is more difficult to understand. The statute says that P.L. 86-272 does not protect an individual who is a resident of or domiciled in the taxing state. As previously discussed, “person” is a broad term that includes partnerships, associations, societies, and maybe unitary businesses.43 Individual is generally defined as a human being. The MTC seems to have, perhaps purposely, not attempted to define when an individual may be a resident, but not domiciled, in a state. More troublesome is where are societies, unitary businesses, etc. resident — where any member is a resident or domiciled? And where is a person that is not an individual domiciled? Where its principal place of business is located? Where its articles of organization are filed? Where it or any of its members would be subject to general jurisdiction for due process purposes?

Registration or qualification to do business in the state. The statement provides that “merely registering or qualifying to do business within a state, without more, will not forfeit the protection that may otherwise apply under P.L. 86-272.”44 This provision is ambiguous. We think it means that merely registering or qualifying to do business in a state, in addition to conducting protected activities, does not forfeit the protection. If a company merely registered or qualified to do business and conducted no other activities, we do not think P.L. 86-272 is a concern. We do not think the company has nexus. It goes on to say that protecting a trade secret or corporate name will forfeit the protection.45 This provision is more problematic. Does it mean that a business that does no business in the state cannot sue another business in that state for improperly using its trade secrets? And what about the states where registering or qualifying to do business in a state automatically protects the business’s name?

Loss of protection for conducting unprotected activity during part of tax year. This provision provides that P.L. 86-272’s protection “is determined on a tax year by tax year basis.”46 It goes on to say that if protection is lost at any time during a tax year, it is lost for the entire tax year.47 That position is reasonable. It would be impractical to try to determine how to partition the tax year if the rule were otherwise. Note that it refers to a “tax year”; tax years are sometimes less than 12 months, and there may be some taxes based on net income with a tax period of less than a year. Does it really mean the period over which the tax is determined? It does not say, but there is a strong implication that an activity that loses the protection will not destroy the protection beyond the tax year in which it occurs. It should provide clear guidance to taxpayers by saying so.

Conclusion

This article and its predecessor have raised several issues, most of which are not as important as providing taxpayers guidance on what the states will and will not challenge. We would like to see changes made to the provisions about communicating through software or the internet and changes made about independent contractors’ power to make sales considered, and then we would like to see the statement adopted as soon as possible. Other issues can wait and be considered later. And we reiterate our hope that when states litigate these issues, they argue in the alternative that P.L. 86-272 is unconstitutional.48

FOOTNOTES

1 Interstate Income Tax Act of 1959, P.L. 86-272, 73 Stat. 555, section 381(a) (1959) (codified at 15 U.S.C. section 381 (2012)).

2 See Rick Handel, “Reflections on the Constitutionality of P.L. 86-272,” Tax Notes State, Aug. 17, 2020, p. 695.

3 A public hearing on the MTC’s Uniformity Committee draft was held August 5, 2020.

4 MTC, “Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States Under Public Law 86-272,” Section IV.C at 9-10 (2020).

5 Id. at Article V, at 10.

6 Id. at Para. IV.A.17, at 6.

7 “‘Independent contractor’ means a commission agent, broker, or other independent contractor who is engaged in selling, or soliciting orders for the sale of, tangible personal property for more than one principal and who holds himself out as such in the regular course of his business activities.” Interstate Income Tax Act of 1959, P.L. 86-272, section 381(d)(1).

8 See Handel and Brittnee L. Pool, “MTC Draft Policy on P.L. 86-272: Electronic Communications Concerns,” Tax Notes State, Oct. 19, 2020, p. 217, at 221.

9 Even though the marketplace facilitator may be treated as the seller for sales tax purposes.

10 Scripto Inc. v. Carson, 362 U.S. 207, at 209-10 (1960).

11 P.L. 86-272, section 381(c).

12 See Handel and Pool, supra note 8, at 227.

13 Wisconsin Department of Revenue v. Wrigley, 505 U.S. 214, at 230 (1992).

14 See MTC, supra note 4, at 10.

15 See Handel, supra note 2 (arguing that P.L. 86-272 is unconstitutional).

16 Burger King Corp. v. Rudzewicz, 471 U.S. 462, at 475 (1985).

17 Walden v. Fiore, 134 S.Ct. 1115, at 1122 (2014) (emphasis added).

18 See Handel, supra note 2, at 695; and P.L. 86-272, at 3-5 (to accompany S. 2524).

19 See Handel, supra note 2, at 695.

20 Wrigley, 505 U.S. at 225-26.

21 Wrigley, 505 U.S. at 228-29.

22 MTC, supra note 4, at 9.

23 Id.

24 See Handel and Pool, supra note 8, at 224-25.

25 See id.

26 MTC, supra note 4, at 4-10.

27 Id. at 11-12.

28 Id. at 7-8.

29 See Handel and Pool, supra note 8.

30 See MTC, supra note 4, at 7.

31 Id. at 5 (emphasis added).

32 Welch v. Helvering, 290 U.S. 111, at 113 (1933).

33 MTC, supra note 4, at 5.

34 Maybe businesses will get some inspiration from Frank Loesser lyrics in Guys and Dolls that gave tribute “to the oldest established, permanent, floating crap game in New York.”

35 MTC, supra note 4, at 6.

36 We assume the reason for the business card exception is that Wrigley’s sales personnel in Wisconsin used business cards, and that wasn’t a problem, but the telephone numbers on them were answered in a different state. See Wrigley, 505 U.S. at 234-35. So the MTC’s position is a little less restrictive.

37 One sentence says that a “State is not required by this Statement to follow any other state’s (including the destination state’s) law.” In another sentence it says that a “State will apply the destination state’s definition of ‘tangible personal property’ to determine the application of P.L. 86-272 as it relates to the origin state’s throwback rule, if any.” In litigation, the court is arguably the “State.” MTC, supra note 4, at 11.

38 Id.

39 See Handel and Pool, supra note 8, at 220-221.

40 See MTC, supra note 4, at 11-12.

41 See id. at 11.

42 Id. at 12.

43 See Handel and Pool, supra note 8, at 221.

44 MTC, supra note 4, at 12.

45 See id.

46 Id.

47 See id.

48 See Handel, supra note 2, at 695.

END FOOTNOTES

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