Public Law 86-272

Definition

A federal law that limits a state's ability to impose net income tax on an out-of-state business whose only in-state activity is the solicitation of orders for tangible personal property that are approved and fulfilled from outside the state. It provides a protective safe harbor for businesses with minimal in-state sales activity, shielding them from state income tax obligations. The law does not apply to sales tax or transactions involving services or intangible property.