Tax Type
Corporation Income Tax
Description
Corporations Conducting Entire Business Within Virginia
Topic
Allocation and Apportionment
Date Issued
08-21-1998
August 21, 1998
Re: Request for Ruling: Corporation Income Tax
Dear *****
This will respond to your letter in which you request a nexus ruling regarding Virginia corporate income tax on behalf of an anonymous client (the ``Taxpayer').
FACTS
The Taxpayer is incorporated and headquartered outside Virginia. The Taxpayer employs a salesman who solicits sales in Virginia of the Taxpayer's products. The salesman has inventory and office equipment of the Taxpayer in his in-home office and maintains a separate telephone number for transacting business for the Taxpayer. In addition to the solicitation of sales, the salesman also has the authority to approve the sales, provide maintenance service, repair and warranty service. The salesman also helps in the collection of delinquent accounts and picks up and replaces damaged products. You request a ruling as to whether these circumstances create taxing nexus in Virginia for the Taxpayer.
RULING
The Taxpayer has income from Virginia sources because the Taxpayer sold tangible personal property in Virginia in the years in question. Based on the facts presented, the Taxpayer has sufficient nexus with Virginia to subject it to the Virginia Corporation Income Tax. Public Law (``P.L') 86-272, codified at 15 U.S.C.A. Secs. 381-384, prohibits Virginia from imposing an income tax on the taxpayer if the only business activities within Virginia by, or on behalf of a taxpayer during the taxable year are the solicitation of orders for the sale of tangible personal property.
The Taxpayer's salesman's actions, such as approving sales, providing maintenance service, repair and warranty service on a regular basis go beyond the mere solicitation of sales. These actions are neither ancillary to the solicitation of sales nor de minimis in nature. They serve as a business function apart from the solicitation of sales. See Wisconsin Department of Revenue v. William Wrigley. Jr., Co. 122 S. Ct. 2447 (1992). In addition, the Taxpayer owned tangible personal property (i.e., inventory and office equipment) located in Virginia.
Consequently, the Taxpayer has income from Virginia sources and is required to file Virginia income tax returns for all years in which it has conducted business in Virginia as described above.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at***
Sincerely,
Re: Request for Ruling: Corporation Income Tax
Dear *****
This will respond to your letter in which you request a nexus ruling regarding Virginia corporate income tax on behalf of an anonymous client (the ``Taxpayer').
FACTS
The Taxpayer is incorporated and headquartered outside Virginia. The Taxpayer employs a salesman who solicits sales in Virginia of the Taxpayer's products. The salesman has inventory and office equipment of the Taxpayer in his in-home office and maintains a separate telephone number for transacting business for the Taxpayer. In addition to the solicitation of sales, the salesman also has the authority to approve the sales, provide maintenance service, repair and warranty service. The salesman also helps in the collection of delinquent accounts and picks up and replaces damaged products. You request a ruling as to whether these circumstances create taxing nexus in Virginia for the Taxpayer.
RULING
The Taxpayer has income from Virginia sources because the Taxpayer sold tangible personal property in Virginia in the years in question. Based on the facts presented, the Taxpayer has sufficient nexus with Virginia to subject it to the Virginia Corporation Income Tax. Public Law (``P.L') 86-272, codified at 15 U.S.C.A. Secs. 381-384, prohibits Virginia from imposing an income tax on the taxpayer if the only business activities within Virginia by, or on behalf of a taxpayer during the taxable year are the solicitation of orders for the sale of tangible personal property.
The Taxpayer's salesman's actions, such as approving sales, providing maintenance service, repair and warranty service on a regular basis go beyond the mere solicitation of sales. These actions are neither ancillary to the solicitation of sales nor de minimis in nature. They serve as a business function apart from the solicitation of sales. See Wisconsin Department of Revenue v. William Wrigley. Jr., Co. 122 S. Ct. 2447 (1992). In addition, the Taxpayer owned tangible personal property (i.e., inventory and office equipment) located in Virginia.
Consequently, the Taxpayer has income from Virginia sources and is required to file Virginia income tax returns for all years in which it has conducted business in Virginia as described above.
If you have any questions regarding this ruling, please contact ***** of the Office of Tax Policy at***
Sincerely,
Rulings of the Tax Commissioner