KPMG article: Analysis of New York State trial court decision on out-of-state online retailers
Court failed to adequately consider the legislative intent of P.L. 86-272.
In American Catalog Mailers Association v. Department of Taxation and Finance, the Albany County Supreme Court (a state trial court) upheld the Internet Activities Rule under the New York State’s corporate tax reform regulation. Subject to appeal, the court held that the regulation was a valid interpretation of P.L. 86-272, allowing states to determine which non-solicitation internet activities exceed mere solicitation and thus establish state income tax jurisdiction—despite being conducted remotely online. However, the court found that the regulation could not be retroactively applied to tax periods before its publication date in December 2023, citing due process concerns given the nearly nine-year retroactive period.
Read a KPMG article* prepared by KPMG LLP tax professionals that analyzes the decision and suggests that the court failed to adequately consider the legislative intent of P.L. 86-272.
*This article originally appeared as a Bloomberg Tax Insight and is provided with permission. Published June 3, 2025. Copyright 2025 Bloomberg Industry Group 800-372-1033. For further use please visit https://www.bloombergindustry.com/copyright-and-usage-guidelines-copyright/