Supreme Court chews on Wrigley.

• Author: Rowan, R. Edward
• Position: Wisconsin Department of of Revenue vs. Wm. Wrigley Jr. Co.

In 1959, Congress wanted to establish a minimum standard that taxpayers had to exceed in order to be subject to income tax on interstate commerce. PL 86-272 prohibits states from taxing income derived from interstate commerce if the only activities within the state by the out-of-state taxpayer, are the "solicitation of orders" that were sent outside of the state for approval. In effect, this law established immunity for taxpayers for a low level of activity within a state when their only activity meets the definition of "solicitation of orders."

Under PL 86-272, states are specifically barred from imposing an income tax on the sale of tangible goods if "[s]olicitation of orders by such person, or his representative, in such State for sales of tangible personal property, which orders are sent outside the State for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the State...." However, the law does not clearly define what constitutes "solicitation orders" and case law in the various states has taken both a narrow and a broad approach to the definition.

On June 21, 1985, the MultiState Tax Commission adopted a resolution outlining the items it considered to be "solicitations of orders" and outlined both immune and nonimmune activities for nexus. The items outlined by the resolution were not binding but were issued as guidelines for the states' actions. The Commission stated: "For the in-state activity to be immune, it must be limited solely to solicitation.... If there is any other activity unrelated to solicitation, the immunity shall be lost." The following in-state activities will cause otherwise immune sales to lose their immunity: making repairs; providing maintenance; collecting delinquent accounts; investigating creditworthiness; installing or supervising an installation; conducting training courses, seminars or lectures; providing engineering functions; handling customer complaints approving or accepting orders, repossessing property; securing deposits on sales; picking up or replacing damaged or returned property; hiring, training or supervising personnel; providing shipping information and coordinating deliveries; maintaining sample or display rooms in excess of two weeks (14 days) during the tax year; carrying samples for sale, exchange or distribution in any manner for consideration or other value; owning, leasing maintaining or otherwise using any of the following facilities or...