California Addresses P.L. 86-272 Protection for Company Vehicle Deliveries

California issued a technical advice memorandum that addresses Public Law 86-272 income tax protection for the delivery of goods by company owned vehicles.

What Is Public Law 86-272?

Under Public Law 86-272 (P.L. 86-272), California cannot tax income from interstate commerce if:

– the only business activities in the state are the solicitation of orders for the sale of goods; and

– the orders are sent outside the state for approval and filled by shipment or delivery from outside the state.

Does P.L. 86-272 Protect Company Vehicle Deliveries?

California concluded that P.L. 86-272 protects the delivery of goods by company owned vehicles. But, it does not protect any activity that goes beyond the scope of delivery, like backhauling.

Technical Advice Memorandum 2018-03, California Franchise Tax Board, December 4, 2018, ¶406-876

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