Summary: ASAP Cruises, Inc. v. Wisconsin Department of Revenue raises an important question about whether P.L. 86-272 protects only sellers of tangible personal property or establishes a broader federal limit on when states may impose net income tax. This article explains the competing legal interpretations, why the case matters for multistate businesses, and how the outcome could affect state income tax treatment for service providers and businesses offering software and digital products.

A pending U.S. Supreme Court petition in ASAP Cruises, Inc. v. Wisconsin Department of Revenue raises an important question for multistate businesses: Does Public Law 86-272, 15 U.S.C. §§ 381-384 (P.L. 86-272) merely provide a narrow statutory safe harbor for sellers of tangible personal property, or does it establish a broader federal floor of in-state activity below which a state may not impose a net income tax?

What ASAP Cruises, Inc. Could Mean for P.L. 86-272 and Multistate Businesses

ASAP Cruises, Inc. involves a Florida-based travel business that worked with Wisconsin independent travel agents who, through ASAP Cruises, Inc.’s (ASAP) website, sold cruises, tours, vacation packages, hotels, air arrangements, among other related travel services or packages. Wisconsin assessed ASAP with Wisconsin corporate income and franchise tax, and ASAP argued its Wisconsin activities were protected by P.L. 86-272. The Wisconsin Court of Appeals rejected that argument, concluding ASAP sold travel services, not tangible personal property, and therefore was not protected from state net income tax by way of P.L. 86-272. ASAP appealed to the Supreme Court of Wisconsin, which denied review.

ASAP filed a petition for writ of certiorari with the U.S. Supreme Court on July 13, 2026, and the Wisconsin Department of Revenue filed its brief in opposition on Aug. 12, 2026. The case may or may not become the vehicle for Supreme Court review of P.L. 86-272’s modern scope, but it highlights a broader and increasingly important state tax issue: whether and how a federal statute enacted in 1959 for what was then a goods-driven economy should apply to today’s service-driven and digital economy.

What Is P.L. 86-272, and Why Is Its Scope Being Challenged?

P.L. 86-272 generally prohibits a state from imposing a net income tax where a taxpayer’s only in-state activities are the solicitation of orders for sales of tangible personal property, which orders are sent for approval or rejection outside the state, and, if approved, orders are filled by shipment or delivery from outside the state.

Wisconsin’s position follows the traditional reading of P.L. 86-272. Under that view, the statute is a narrow safe harbor limited to sellers of tangible personal property. Because ASAP sold travel services, not tangible personal property, Wisconsin argues that the statute does not apply. The Wisconsin Court of Appeals agreed, declining to extend P.L. 86-272 beyond its protection for the solicitation of sales of tangible personal property.

ASAP’s petition frames the issue more broadly. ASAP relies on U.S. Supreme Court decisions referencing P.L. 86-272 as establishing a “lower limit” or “minimum standard” for state income taxation, particularly in Heublein, Inc. v. South Carolina Tax Comm’n, 409 U.S. 275 (1972) and Wisconsin Dep’t of Revenue v.  William Wrigley, Jr., Co., 505 U.S. 214 (1992). Under ASAP’s interpretation, P.L. 86-272 should not be read solely as a safe harbor for sellers of tangible personal property. Instead, it should be understood as reflecting a federally protected minimum level of in-state activity below which a state may not impose a net income tax. Stated differently, ASAP asks whether P.L. 86-272 merely protects certain sellers of tangible personal property or whether it establishes a broader federal floor based on limited in-state activity.

Why ASAP Cruises Matters for Service, Software, and Digital Businesses

The distinction matters because the economy has changed significantly since P.L. 86-272 was enacted in 1959. The U.S. economy has shifted from one centered on tangible goods to one increasingly driven by services and intangible offerings, such as digital products, software, cloud-based platforms, and online marketplaces. For many modern multistate businesses, the traditional view of P.L. 86-272 as a narrow statutory safe harbor for sellers of tangible personal property provides no protection from state net income taxes, even when a service or digital business’s in-state activities are comparable to or less extensive than those of a protected seller of tangible personal property.

This disparate treatment creates tension across business types. A company selling tangible personal property may be protected from state net income tax under P.L. 86-272 if its in-state activities are limited to protected solicitation. By contrast, a company engaging in comparable or less extensive in-state solicitation activity for services, software as a service, or digital products may receive no protection solely because it sells something other than tangible personal property.

A broader reading of P.L. 86-272 could materially affect state income tax outcomes for multistate businesses generating revenue from services, software, digital products, or other intangible offerings.

Should the Courts or Congress Modernize P.L. 86-272?

The central issue is how P.L. 86-272 should be understood in the modern economy. The traditional interpretation treats the statute as a narrow safe harbor limited to sellers of tangible personal property. ASAP, by contrast, argues the statute creates a broader federal floor below which a state may not impose a net income tax, regardless of what the taxpayer sells.

Wisconsin, in its brief in opposition, acknowledges the U.S. economy may have shifted from one based primarily on the sale of tangible personal property to one based more heavily on services and intangibles, but argues any modern adaptation of P.L. 86-272 should be addressed by Congress, not the courts. Federal legislation has also been introduced that would modernize P.L. 86-272, including extending its protections to certain transactions involving digital goods and services.

That leaves an important question: Is now the time for the U.S. Supreme Court to weigh in on the scope of P.L. 86-272 in light of the modern economy, or is Congress better suited to address any expansion of the statute’s protections through legislation?

What Businesses Should Watch if the Supreme Court Takes the Case

It remains to be seen whether ASAP Cruises, Inc. will be the case in which the U.S. Supreme Court addresses the scope of P.L. 86-272 in today’s economy.

Regardless of the outcome, ASAP Cruises, Inc. is worth watching. The case highlights the growing tension between P.L. 86-272’s traditional interpretation and today’s service-driven and digital economy, including the disparate state income tax outcomes. Until Congress updates P.L. 86-272 or the U.S. Supreme Court addresses its scope, businesses engaged in interstate commerce will continue to face uncertainty.

For questions about P.L. 86-272 protection and its applicability in any particular state(s), contact your KSM advisor or complete the form below.