The Interstate Income Act of 1959, also known as Public Law 86-272,[1] is a United States statute that allows a business to go, or send representatives, into a state to solicit orders for goods without being subject to a net income tax.
Public Law 86-272 was enacted in response to outcries from business over the decision held in Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450 (1959).
[3] In Northwestern States, the Supreme Court upheld the imposition of a Minnesota tax on an Iowa corporation that solicited orders and maintained a leased office in Minnesota.
Public Law 86-272 addressed that circumstance by acting as a 'stopgap'[5] by restricting a state from collecting income tax on solicited sales within its borders, as long as the orders are filled or shipped outside of the state.
[2] Public Law 86-272 protects only solicitation of orders for tangible personal property.