U.S. Code » Title 15 » Chapter CHAPTER 10B— STATE TAXATION OF INCOME FROM INTERSTATE COMMERCE › Subchapter SUBCHAPTER I— NET INCOME TAXES

15 U.S.C. § 381

Imposition of net income tax

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(a) Minimum standardsNo State, or political subdivision thereof, shall have power to impose, for any taxable year ending after September 14, 1959, a net income tax on the income derived within such State by any person from interstate commerce if the only business activities within such State by or on behalf of such person during such taxable year are either, or both, of the following:(1) the solicitation 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; and(2) the solicitation of orders by such person, or his representative, in such State in the name of or for the benefit of a prospective customer of such person, if orders by such customer to such person to enable such customer to fill orders resulting from such solicitation are orders described in paragraph (1).(b) Domestic corporations; persons domiciled in or residents of a StateThe provisions of subsection (a) shall not apply to the imposition of a net income tax by any State, or political subdivision thereof, with respect to—(1) any corporation which is incorporated under the laws of such State; or(2) any individual who, under the laws of such State, is domiciled in, or a resident of, such State.(c) Sales or solicitation of orders for sales by independent contractors

For purposes of subsection (a), a person shall not be considered to have engaged in business activities within a State during any taxable year merely by reason of sales in such State, or the solicitation of orders for sales in such State, of tangible personal property on behalf of such person by one or more independent contractors, or by reason of the maintenance, of an office in such State by one or more independent contractors whose activities on behalf of such person in such State consist solely of making sales, or soliciting orders for sales, or tangible personal property.

(d) DefinitionsFor purposes of this section—(1) the term “independent contractor” means a commission agent, broker, or other independent contractor who is engaged in selling, or soliciting orders for the sale of, tangible personal property for more than one principal and who holds himself out as such in the regular course of his business activities; and(2) the term “representative” does not include an independent contractor.(Pub. L. 86–272, title I, § 101, Sept. 14, 1959, 73 Stat. 555.)Statutory Notes and Related SubsidiariesStudy and Report by Congressional Committees of State Taxation From Interstate Commerce

Title II of Pub. L. 86–272, as amended by Pub. L. 87–17, Apr. 7, 1961, 75 Stat. 41; Pub. L. 87–435, Apr. 21, 1962, 76 Stat. 55; Pub. L. 88–42, June 21, 1963, 77 Stat. 67; Pub. L. 88–286, Mar. 18, 1964, 78 Stat. 166, and repealed by Pub. L. 94–455, title XXI, § 2121(a), Oct. 4, 1976, 90 Stat. 1914, provided for a study by the Committee on the Judiciary of the House of Representatives and the Committee on Finance of the United States Senate, acting separately or jointly, or any duly authorized subcommittee thereof, of all matters pertaining to the taxation of interstate commerce by the States, territories, and possessions of the United States, the District of Columbia, and the Commonwealth of Puerto Rico, or any political or taxing subdivision of the foregoing, and for a report together with their proposals for legislation on or before June 30, 1965.

Notes of Decisions
Cited in 106 cases (8 in the last 5 years), 1964–2026 · leading case: Wisconsin Dep't of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214 (1992).
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Wisconsin Dep't of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214 (1992). · cites it 13× “555, 15 U. S. C. § 381 , prohibits a State from taxing the income of a corporation whose only business activities within the State consist of "solicitation of orders" for tangible goods, provided that the orders are sent outside the State for approval and the goods are delivered…”
Matthew Bender & Co. v. Comptroller of Treasury, 509 A.2d 702 (Md. Ct. Spec. App. 1986). · cites it 13× “81 § 316(c) (now codified as § 316) and 15 U.S.C. § 381 (1976). These statutes govern the ability of a state to tax a foreign corporation conducting business within its borders.”
Comptroller of Treasury v. World Book Childcraft Int'l, Inc., 508 A.2d 148 (Md. Ct. Spec. App. 1986). · cites it 5× “Restricting the right of states to impose such taxes is 15 U.S.C. § 381 et seq. (1976), which prohibits a state from imposing taxes on net income derived in the state from interstate commerce unless the business activities of the corporation within the state meet certain minimum…”
Goldberg v. State Tax Comm'n, 639 S.W.2d 796 (Mo. 1982). · cites it 6× “Following Portland Cement, Congress acted to establish minimum standards for the exercise of that power by providing, among other things, that a state may not tax a foreign corporation on income derived from the transaction of business in interstate commerce if the corporation's…”
Peterson v. State Tax Assessor, 1999 ME 23 (Me. 1999). · cites it 8× “The Petersons contend that the court erroneously concluded that their activities in Maine on behalf of Peterson Dental Supply (PDS) from 1989 through 1992 were not exempt from Maine income tax by virtue of the provisions of 15 U.S.C. § 381 (1994). 1 We disagree and affirm the…”
Tax Comm'r v. MBNA Am. Bank, N.A., 640 S.E.2d 226 (W. Va. 2007). · cites it 4× “§ 381 (a) (2000), which provides that, No State, or political subdivision thereof, shall have power to impose, for any taxable year ending after September 14, 1959, a net income tax on the income derived within such State by any person from interstate commerce if the only…”
Dover Corp. v. Dep't of Revenue, 648 N.E.2d 1089 (Ill. App. Ct. 1995). · cites it 6× “The parties agree that the employees of Groen and Bernard engaged in activities in these destination States that exceeded the mere solicitation of sales as defined in Public Law 86-272 ( 15 U.S.C. §§ 381 through 384 (1988)). The Department's auditor determined that sales from…”
Blue Buffalo v. Comptroller, 243 Md. App. 693 (Md. Ct. Spec. App. 2019). · cites it 8× “CORPORATE TAXATION – IMMUNITY – SOLICITATION OF ORDERS: Because the systematic gathering of competitive information exceeded the protection granted to the solicitation of orders, and was not de minimus, the corporation’s in-state activities were not immune from taxation under 15…”
Amway Corp., Inc. v. Dir. of Revenue, 794 S.W.2d 666 (Mo. 1990). · cites it 9× “The questions presented are whether 15 U.S.C. § 381 or the United States Constitution prohibit Missouri from imposing an apportioned net income tax on Amway.”
Drackett Prods. Co. v. Conrad, 370 N.W.2d 723 (N.D. 1985). · cites it 11× “Drackett objected to the tax assessments on the ground that its activities in North Dakota merely constituted “solicitation of orders” which, under 15 U.S.C. § 381 [ Public Law 86-272 ], cannot be taxed by the State.”
Heublein, Inc. v. South Carolina Tax Comm'n, 409 U.S. 275 (1972). · cites it 5× “In this case we must determine whether South Carolina may tax the income from local sales of Heublein’s products, consistent with the limitations on the State’s power to tax imposed by 15 U. S. C. § 381 (a). 1 The South Carolina Tax Commission assessed Heublein, Inc.”
Troester v. Starbucks Corp., 421 P.3d 1114 (Cal. 2018). “The high court concluded that the de minimis principle applied, rejecting Wisconsin's argument that "the plain language of the statute bars this recognition of a de minimis exception, because the immunity is limited to situations where 'the only business activities within [the]…”
Show all 106 citing cases →
— 15 U.S.C. § 381(a) — 1 case
Herff Jones Co. v. State Tax Comm'n, 430 P.2d 998 (Or. 1967).
— 15 U.S.C. § 381(d) — 1 case
Herff Jones Co. v. State Tax Comm'n, 430 P.2d 998 (Or. 1967).
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