P.L. 86-272 protections six years after Wrigley.

• Author: Griffen, Richard H.
• Position: Interstate Income Act

Controversy over activities protected as solicitation under the Interstate Income Law (P..L. 86-272) are as old as the law itself. Nearly 33 years after Congress passed this law, the Supreme Court, in Wisconsin v. William Wrigley, Jr., Co., 505 US 214 (1992), provided the first significant insight into how the Court interpreted the protections afforded by P.L. 86-272. Six years later, little has changed as to the clarity of its limitations on solicitation. In recent years, controversy about the limitations that may be placed on the fulfillment method of orders has been added to the question.

In 1992, the Court dealt with the protections of P.L. 86-272 in Wrigley, for the first 6me providing significant insight as to its protections. The Court determined that, in the context of this law, solicitation referred to "business activities" rather than to an act. Justice Scalia revisited the background of case law preceding the passage of P.L. 86-272, noting the solicitation activities in Brown-Forman, 101 So.2d 70 (1958), and International Shoe, 107 So.2d 640 (1958), that were protected, looking to the intent of Congress in its passage. In rejecting the narrow interpretation of solicitation proposed by Wisconsin, he stated:

It seems to us evident that "solicitation of orders" embraces request-related activity that is not even, strictly speaking, essential, or else it would not cover salesmen's driving on the State's roads, spending the night in the State's hotels, or displaying within the State samples of their product. We hardly think the statute had in mind only day-trips into the taxing jurisdiction by empty-handed drummers on foot .... And finally, this extremely narrow interpretation of "solicitation" would cause [sections] 381 to leave virtually unchanged the law that existed before its enactment. Both Brown-Forman (where the salesman assisted wholesalers in obtaining suitable displays for whiskey at retail stores) and International Shoe (where hotel rooms were used to display shoes) would be decided as they were before, upholding the taxation.

The Court also rejected a broad standard proposed by the taxpayer in Wrigley and the Wisconsin Supreme Court's standard considering industry practices as one of the components evaluated. Instead, the Court adopted a standard accepting as protected activities those functions that serve no business function other than order solicitation and not those activities the business would have good reason to...