Tax Type
Corporation Income Tax
Description
Foreign corporation
Topic
Computation of Income
Date Issued
03-07-1988
March 7, 1988
Re: Request for Ruling; Corporation Income Tax
Dear***************
This is in response to your letter of January 4, 1988, requesting a ruling as to whether your client is subject to Virginia income tax based on its activities through December 31, 1987.
Facts
Your client manufactures single-use disposable products outside of Virginia. The only activities performed in Virginia are the solicitation of sales by sales representatives. Orders are accepted at the company's headquarters and filled from stocks of goods located outside Virginia. The nature of the company's product is such that no installation, servicing or repair is required. The bulk of the minimum quantity of the company's product makes it impractical for sales representatives to make on-the-spot sales or to pick up returned goods.
Sales representatives do not accept orders, do not store inventory or samples in Virginia, do not perform credit or collection services in Virginia, and do not process complaints or make warranty adjustments because all of these actions are performed exclusively by employees at the headquarters.
Conclusion
Based on the facts presented it appears that the company has income from Virginia sources because significant quantities of tangible personal property are sold and delivered into Virginia on a regular and continuing basis. However, it also appears that Virginia is prohibited from imposing an income tax on the company because its activity in Virginia does not exceed the minimum activity required by federal law P.L. 86-272, codified at 15 U.S.C.A. §381-384.
Under Virginia regulation VR 630-3-441 (copy enclosed), a corporation is required to file a Virginia income tax return if it is incorporated under Virginia law or has registered with the State Corporation Commission for the privilege of doing business in Virginia. If either of these conditions is met then an annual Virginia corporation income tax return, Form 500, must be filed even though no tax is due because of the federal limitation on taxation.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner