Final answer:
For PL 86-272 to apply, it is not required that the taxpayer's commercial domicile be in another state. PL 86-272 provides protections against state income taxes for businesses with limited activities in the state, focused on whether in-state employees are involved in sales activities. Therefore correct option is C
Step-by-step explanation:
Understanding PL 86-272
Public Law 86-272, commonly known as PL 86-272, is a provision that offers protections for businesses against states taxing their income if they limit their business activities within the state. Under PL 86-272, businesses are shielded from state income taxes if their only business activity in the state is the solicitation of orders for sales of tangible personal property, which are sent outside the state for approval and fulfillment. This federal statute is significant because it sets limitations on the states' power to tax out-of-state entities.
To address the question, for PL 86-272 to apply, it is NOT required:
c. The taxpayer's commercial domicile is in another state.
This choice is not a requirement for PL 86-272 because the law focuses on in-state activities rather than the location of the taxpayer's commercial domicile. Choices a and b deal directly with restrictions placed upon in-state activities of company employees that would relate to PL 86-272's applicability.
Additional Considerations
While PL 86-272 provides protections, companies must still navigate other state tax considerations, such as sales taxes or franchise taxes. States may also charge higher rates for out-of-state businesses in some regards, such as tuition or public service fees. It is essential for companies to employ strategies, possibly involving technology, to manage their state tax liabilities effectively within the bounds of the law.