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Catalog Sellers Challenge California’s Income Tax Regulations

Aug. 24, 2022, 8:02 PM

Catalog sellers fired a legal challenge at California’s effort to scoop thousands of out-of-state retailers onto its tax rolls, calling it a “radical new interpretation” of a federal law that generally shields businesses with no physical presence in a state from corporate income taxes.

The American Catalog Mailers Association filed a complaint Wednesday seeking to void a California Franchise Tax Board memorandum and a related guidance statement that adopts a new interpretation of Public Law 86-272.

That 1959 law prohibits states from imposing income taxes on out-of-state businesses if their only activity in the state is soliciting ...