Income/Franchise:
Minnesota: State High Court Affirms Out-of-State Company’s In-State Activities Exceed P.L. 86-272 Protections
Case No. A23-1561, Minn. (8/7/24). Affirming the Minnesota Tax Court’s 2023 decision [see Case No. 9435-R, Minn. Tax Ct. (6/23/23) and State Tax Matters, Issue 2023-26, for more details on this earlier ruling], the Minnesota Supreme Court (Court) held that the in-state activities of an out-of-state company operating as a “business-to-business catalog” and web-based distributor of industrial and packaging products went beyond solicitation of sales under P.L. 86-272, were not de minimis, and thus not immune from Minnesota corporate income or franchise taxation. The Court explained that, under the facts, “the mandatory practice of what amounts to market research performed by the out-of-state company’s sales team in Minnesota” is not considered “solicitation of orders” under P.L. 86-272 and therefore is not protected from Minnesota income or franchise taxation. Under the facts, the company’s in-state sales representatives regularly and systematically collected and reported market data, including data concerning competitors. Please contact us with any questions.
30 Rockefeller Plaza New York, NY 10112-0015 United States
About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.
Deloitte provides industry-leading audit and assurance, tax and legal, consulting, financial advisory, and risk advisory services to nearly 90% of the Fortune Global 500® and thousands of private companies. Our professionals deliver measurable and lasting results that help reinforce public trust in capital markets, enable clients to transform and thrive, and lead the way toward a stronger economy, a more equitable society and a sustainable world. Building on its 175-plus year history, Deloitte spans more than 150 countries and territories. Learn how Deloitte’s approximately 415,000 peopleworldwide make an impact that matters at www.deloitte.com.
