Tax Type
Corporation Income Tax
Description
Federal limitation on taxation of interstate commerce; Catalog sales
Topic
Constitutional Provisions
Date Issued
05-08-1995
May 8, 1995
Re: Request for Ruling: Corporate Income Taxes
Dear*****************
This will reply to your letter of June 15, 1994, in which you have requested a ruling with respect to corporate income tax nexus for*********** (the "Taxpayer"). I apologize for the delay in responding.
FACTS
The Taxpayer is a seller of tangible personal property. The sales are accomplished by furnishing catalogs to potential customers who order via mail, fax, or telephone. The orders are processed outside of Virginia and filled from inventory located outside of Virginia. Shipments into Virginia are made via common carrier. The Taxpayer has no office, place of business, or inventory in Virginia. The Taxpayer has one employee in Virginia whose activities are limited to the solicitation of sales.
RULING
Public Law (P.L.) 86-272, codified at 15 U.S.C.A. §§381-384, prohibits a state from imposing a net income tax where the only contacts with a state are a narrowly defined set of activities constituting solicitation of orders for sales of tangible personal property.
Based on the facts presented by the Taxpayer, the Taxpayer does not have sufficient nexus for the Commonwealth to impose its corporate income tax. The mere presence of a salesman in Virginia is not a sufficient basis to establish nexus where no other activities are present.
If you have any questions regarding this ruling, please call****************.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/8155P
Rulings of the Tax Commissioner