Did Louisiana apply a throwback rule to a Louisiana corporation's sales into a state where P.L. 86-272 prevented income taxation?

Plain-English summary

Louisiana did not have a throwback rule for corporation income or franchise tax. A Louisiana corporation's sale was not attributed back to Louisiana merely because P.L. 86-272 prevented the destination state from imposing income tax on it.

What “throwback” would have done

The request involved sales into another state where solicitation occurred but orders were filled by shipment or delivery from outside that state. The ruling described P.L. 86-272 as restricting the destination state's ability to tax those sales.

Under a typical UDITPA throwback rule, a sale shipped from the seller's state can be assigned back there when the purchaser is the United States government or the taxpayer is not taxable in the purchaser's state. Louisiana had not enacted UDITPA legislation of that kind.

Louisiana's destination rule

For both corporation income tax and corporation franchise tax, the cited Louisiana statutes attributed sales to Louisiana when the purchaser received the goods, merchandise, or property in Louisiana. When transportation was involved, the ultimate place of receipt after transportation controlled.

Direct delivery into Louisiana to a person or firm designated by the purchaser also counted as delivery to the purchaser in Louisiana. The franchise-tax provision additionally excluded revenue from a property sale outside the regular course of business.

Common questions

Q: Did a destination state's P.L. 86-272 protection automatically move the sale into Louisiana's numerator?

A: No. The ruling confirmed that Louisiana had no statutory throwback rule.

Q: Where did Louisiana generally attribute sales of property?

A: To Louisiana when the purchaser ultimately received the property in Louisiana after transportation was complete.

Q: Had Louisiana adopted UDITPA's throwback provision?

A: No. The ruling said Louisiana had not enacted legislation consistent with UDITPA.

Q: Can another corporation cite this ruling as precedent?

A: No. The ruling states that it may not be used or cited as precedent and was binding only for the requesting taxpayer under the stated conditions.

Citations and references

• P.L. 86-272 — federal Interstate Income Law described in the ruling
• UDITPA § 16 — example of a typical throwback rule
• La. R.S. 47:287.95(F)(3) — corporation-income-tax sales attribution
• La. R.S. 47:606(A)(1)(a) — corporation-franchise-tax sales attribution
• LAC 61:III.101(C) — Private Letter Ruling authority and reliance limitations

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA PLR 01-001

Original ruling text

STATE OF LOUISIANA

DEPARTMENT OF REVENUE
POLICY SERVICES DIVISION
M. J. "MIKE" FOSTER, JR.

CYNTHIA BRIDGES

Governor

Secretary

Private Letter Ruling 01-001

Redacted Version
July 25, 2001
A Private Letter Ruling based upon the following scenario has been requested:
A Louisiana corporation has sales in another state which cannot charge
income tax on those sales due to the federal Interstate Income Law (P.L.
86-272). P.L. 86-272 restricts the ability of a state to charge income tax
on sales which are solicited in the state, but the orders are filled by
shipment or delivery from outside the state. If a sale is not taxable in a
destination state because of P.L. 86-272, the sales remain subject to
throwback to the appropriate state which does have jurisdiction to
impose its net income tax upon the income derived from those sales.
The Department of Revenue was asked to confirm that Louisiana law does not contain
a throwback provision which would cause the sales referred to above to be attributable
to Louisiana in apportionment ratios.
According to Black s Law Dictionary, pg. 1481 (6th ed. 1990), a throwback rule is used
if there is no income tax in the state to which a sale would otherwise be assigned for
apportionment purposes, the sale essentially is exempt from state income tax, even
though the seller is domiciled in a state that levies an income tax. Nonetheless, if the
seller s state has adopted a throwback rule, the sale is attributed to the seller s state,
and the transaction is subjected to a state-level tax.
A typical throwback rule can be found in Section 16 of the Uniform Division of Income
for Tax Purposes Act (UDITPA). Section 16 provides:
Sales of tangible personal property are in this state if:
(a)
the property is delivered or shipped to a purchaser, other
than the United States government, within this state
regardless of the f.o.b. point or other conditions of the
sale; or
Post Office Box 201 Baton Rouge 70821-0201
Telephone 225-925-7537
225-925-7533 (TDD)
An Equal Opportunity Employer

Private Letter Ruling — Redacted Version
Page 2 of 3

(b)

the property is shipped from an office, store, warehouse,
factory, or other place of storage in this state and (1) the
purchaser is the United States government or (2) the
taxpayer is not taxable in the state of the purchaser.

Louisiana has not enacted legislation consistent with UDITPA. As such, Louisiana s
statutes do not provide a throwback rule for corporation income or franchise taxes.
For income tax purposes in Louisiana, La. R.S. 47:287.95(F)(3) provides:
For the purpose of this Subsection, sales attributable to this state shall
be all sales where the goods, merchandise, or property is received in this
state by the purchaser. In the case of delivery of goods by common
carrier or by other means of transportation, including transportation by
the purchaser, the place at which the goods are ultimately received after
all transportation has been completed shall be considered as the place at
which the goods are received by the purchaser. However, direct delivery
into the state by the taxpayer to a person or firm designated by purchaser
from within or without the state shall constitute delivery to the purchaser
in this state.
For corporation franchise tax purposes in Louisiana, La. R.S. 47:606(A)(1)(a)provides:
Sales attributable to this state shall be all sales where the goods,
merchandise or property is received in this state by the purchaser. In the
case of delivery of goods by common carrier or by other means of
transportation, including transportation by the purchaser, the place at
which the goods are ultimately received after all transportation has been
completed shall be considered as the place at which the goods are received
by the purchaser. However, direct delivery into this state by the
taxpayer to a person or firm designated by a purchaser from within or
without the state shall constitute delivery to the purchaser in this state.
Revenue derived from a sale of property not made in the regular course
of business shall not be considered.

Private Letter Ruling — Redacted Version
Page 3 of 3

Questions should be directed to the Policy Services Division at (225) 925-6047.
Sincerely,
Cynthia Bridges
Secretary
By:

William (Mac) E. Little
Attorney
Policy Services Division

A Private Letter Ruling (PLR) is issued under the authority of LAC 61:III.101( C ). A PLR provides
guidance to a specific taxpayer at the taxpayer s request. It is a written statement issued to apply
principles of law to a specific set of facts or a particular tax situation and is limited to the matters
specifically addressed. A PLR does not have the force and effect of law and may not be used or cited
as precedent. A PLR is binding on the Department only as to the taxpayer making the request and only
if the facts provided with the request were truthful and complete and the transaction was carried out
as proposed. The Department s position concerning the particular tax situation addressed remains in
effect for the requesting taxpayer until a subsequent declaratory ruling, rule, court case, or statute