Did an out-of-state manufacturer lose Public Law 86-272 protection when its Florida employee regularly worked from a desk in a customer's office?

Subject

Nexus

Plain-English summary

The original ruling concluded that the manufacturer was subject to Florida corporate income tax, but the official source says this ruling was superseded by revised TAA 93C1-002R on December 1, 1993.

In the original facts, a Florida resident employee discussed a purchaser's new and remodeled stores, converted those plans into specific orders for the manufacturer's products, and regularly used a desk in the purchaser's Florida office. The Department treated that location as an office maintained on the corporation's behalf.

Because Public Law 86-272 does not protect a company maintaining an in-state office, the original ruling required a Florida corporate income tax return. That conclusion should be read only as the superseded ruling's historical position.

What this means for you

This page is useful for understanding the original analysis, not for reliance. The Department's source expressly directs readers to the later revised ruling.

Common questions

Q: What created nexus in the original ruling? The employee's regular conduct of business from a desk in the purchaser's Florida office.

Q: Did the original ruling find Public Law 86-272 protection? No.

Q: Is this the Department's final ruling on the facts? No. The official source says it was superseded by TAA 93C1-002R.

Citations and references

• Fla. Stat. § 220.02(1) — Florida corporate income tax purpose and nexus
• Public Law 86-272 — interstate-sales solicitation protection, as cited in the ruling
• Wisconsin Department of Revenue v. William Wrigley, Jr., Co., 112 S. Ct. 2447 (1992)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93C1-002

Original ruling text

Status: Superseded by TAA 93C1-002R (Revised), December 1,
1993

Jul 20, 1993

Re: Technical Assistance Advisement - 93C1-002
Nexus
XXX (hereafter referred to as "the Corporation")

Your request to XXX for a Technical Assistance Advisement
has been forwarded to me for response. Specifically, you have
requested a determination of whether the Corporation is subject
to the Florida corporate income tax.

STATEMENT OF FACTS

The scenario presented was as follows. The Corporation is
a XXX corporation which is headquartered in XXX. It
manufactures XXX and sells them to retail stores. All orders
are accepted in XXX, and all products are shipped or delivered
from XXX to the customer.

Since January 1991, the Corporation has employed a Florida
resident employee to assist it in obtaining orders from XXX
(hereafter referred to as "the Purchaser"). The employee
discusses the Purchaser's plans for opening new stores or
remodeling existing ones and then prepares a written order which
converts that information into a list of the specific type and
number of shelves, racks and displays which the Purchaser will
order from the Corporation.

The Corporation's employee uses a desk at the Purchaser's
office. The Corporation does not have an office or other place
of business in Florida.

DISCUSSION OF LAW

In enacting the Florida Income Tax Code (Chapter 220,

F.S.), it was specifically provided in s. 220.02(1), F.S., that:

... [It] is the intent of the Legislature to subject such
corporations and other entities to taxation hereunder for
the privilege of conducting business, deriving income, or
existing within the state....

The corporation is conducting business within the state,
deriving income within the state, and existing within the state
by employing a Florida resident employee.

It was asserted in the request for a Technical Assistance
Advisement that the Corporation is protected by Public Law 86272. In Wisconsin Department of Revenue v. William Wrigley, Jr.,
Co. -U.S.-, 120 L. 13d 2d, 74, 112 S. Ct. 2447 (1992), the
United States Supreme Court addressed the issue of what
activities are protected by Public Law 86-272. In pertinent
part, it stated:

... the text of the statute (the "office" exception in
subsection (c)) requires one exception to this principle:
Even if engaged in exclusively to facilitate requests for
purchases, the maintenance of an office within the State,
by the company or on its behalf, would go beyond the
"solicitation of orders." We would not make any more
generalized exception to our immunity standard on the basis
of the "office" provision. It seemingly represents a
judgment that a company office within a State is such a
significant manifestation of company "presence" that,
absent a specific exemption, income taxation should always
be allowed....

The American Heritage Dictionary defines, in part, an
office to be "[a] place in which business, clerical, or
professional activities are conducted."

Black's Law Dictionary is defines an office as "... [a]
place for the regular transaction of business or performance of
a particular service."

CONCLUSION

The Corporation, since January 1991, has maintained an
employee in Florida at a place (the Purchaser's office) for the
regular transaction of business or performance of a particular
service. Therefore, it is concluded that the Corporation is
maintaining an "office" within the State of Florida. A
corporation is not protected by Public Law 86-272 when an office
is maintained within the state. Therefore, it is concluded that
the Corporation is subject to the Florida Income Tax Code and is
required to file a corporate income tax return.

This response constitutes a technical assistance advisement
under s. 213.22, F.S., which is binding on the department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the department
before disclosure. In an effort to protect confidential
information, we request you notify the undersigned in writing
within 15 days of any deletions you wish made to the request or
this response.

Sincerely,

Joan L. Eckert
Tax Audit Specialist III
Technical Assistance Section B

JLE/tb