Checking Oneself Into a Box: State Tax Issues For Federal See-Through Entities ~ Part 2

States operate under two sets of constraints in imposing their taxes on multistate businesses and persons not present in their jurisdiction. The first set of constraints is federal. The United States Constitution, most significantly the Commerce Clause⁴⁵ and the Due Process Clause,⁴⁶ limits the reach of state taxing jurisdiction. For states to impose tax on someone or something there must be a Constitutionally adequate relationship between the state and the thing taxed. State's jurisdiction to tax may also be constrained by federal legislation. Congress has not intervened much in imposing limitations on state taxing jurisdiction, but there are some provisions of federal law, notably Public Law 86-272,⁴⁷ that may be important to particular taxpayers.