Present: All the Justices 

COMMONWEALTH OF VIRGINIA, 

DEPARTMENT OF TAXATION 

v. Record No. 960575 OPINION BY JUSTICE ELIZABETH B. LACY 

 January 10, 1997 

NATIONAL PRIVATE TRUCK COUNCIL 

 FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 

Donald H. Kent, Judge 

 In this declaratory judgment action, we determine whether 

a regulation issued by the Virginia Department of Taxation 

regarding corporate income taxation violates federal statutory 

law. 

 In 1959, Congress passed Public Law 86-272, codified as 15 

U.S.C. § 381 (§ 381). That statute provides, in pertinent 

part: 

 (a) No State . . . shall have power to impose . . . 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 . . . are . . . : 

 (1) the solicitation of orders by such 

person . . . 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. [Emphasis added.] 

 The Virginia Department of Taxation (the Department) 

maintains that the solicitation of goods and the delivery of 

goods are two separate transactions and considers § 381 to 

provide immunity for solicitation only. Based on this premise, 

the Department adopted a regulation extending the immunity from 

state income taxation afforded under § 381 only to those 

instances in which the shipment or delivery of goods is 
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accomplished by common carrier. Va. Reg. § 630-401(G) (1985) 

(the Virginia Regulation). Thus, under the Department's 

interpretation, any foreign company that solicits and approves 

orders for its merchandise under the conditions described in 

§ 381, but delivers the merchandise to Virginia using its own 

vehicles, is subject to Virginia tax on the income derived from 

such sales. 

 The National Private Truck Council (the Council), a 

national trade association representing more than 1,000 

companies that operate their own private truck fleets, filed a 

bill of complaint for declaratory judgment seeking a 

declaration that the Virginia Regulation violates § 381 because 

it limits immunity from state income taxation to those 

instances in which goods are delivered by common carrier. 

Cross motions for summary judgment were filed, and the trial 

court entered an order granting summary judgment to the 

Council. We awarded the Department an appeal and will affirm 

the judgment of the trial court.* 

 * *The Department initially filed a demurrer challenging 

the standing of the Council, see Carnes v. Board of Supervisors 

of Chesterfield County, 252 Va. 377, ___ S.E.2d ___ (1996), but 

withdrew the demurrer prior to a ruling by the trial court. 

Therefore, that issue has been waived. Princess Anne Hills 

Civic League, Inc. v. Susan Constant Real Estate, 243 Va. 53, 

59 n.1, 413 S.E.2d 599, 603 n.1 (1992); Lynchburg Traffic 

Bureau v. Norfolk and Western Railway Co., 207 Va. 107, 108, 

147 S.E.2d 744, 745 (1966). Similarly, the Department did not 

assert a claim that its sovereign immunity had not been waived 

for declaratory judgment actions, see Virginia Physical Therapy 

Ass'n v. Virginia Board of Medicine, 245 Va. 125, 427 S.E.2d 

183 (1993), and, therefore, we do not address that issue. 
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 Section 381, by plain and clear language, extends immunity 

to a particular income-generating transaction. This 

transaction consists of soliciting orders, approving the 

orders, and shipping or delivering the goods ordered. To limit 

the tax immunity granted by § 381 to the activity of 

solicitation only, as the Department suggests, renders the 

protection intended by that section meaningless. Potentially 

taxable income is not generated within the taxing state until 

there has been a successful "shipment or delivery" of goods. 

Exempting merely "solicitation" is no exemption at all. 

 Whether a particular activity constitutes solicitation, 

approval, or delivery may require construction of those terms. 

Wisconsin Dep't of Revenue v. William Wrigley, Jr., Co., 505 

U.S. 214, 223-231 (1992) (whether certain actions constitute 

solicitation). A joint congressional committee studying the 

matter of state taxation of interstate commerce has stated 

that, although § 381 "makes it clear that delivery of goods 

into a State does not deprive the selling company of statutory 

immunity, there can be doubt about the meaning of delivery." 

H.R. Rep. No. 88-1480, at 146 (1964). Thus, while the meaning 

of the word "delivery" may be disputed in a particular factual 

situation, delivery is a protected activity under § 381 when 

undertaken in conjunction with the other elements of the 

immunized income-producing transaction. 

 In this case, the Department has conceded that the use of 
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company-owned trucks constitutes "delivery" of the goods as 

that term is used in § 381. The only issue is whether the 

Virginia Regulation, which defines the manner of delivery 

necessary to qualify for immunity from state taxation under 

§ 381, violates federal law. Code § 58.1-205. 

 In enacting § 381, Congress did not identify any manner of 

delivery necessary to qualify for the immunity. Section 381 

does not specify common carrier, contract or private carrier, 

or any other particular method of delivery. In the absence of 

a qualification in the federal statute, the Department may not 

add conditions to, or otherwise limit, the protection offered 

by § 381. See Comm'r of Revenue v. Kelly-Springfield Tire Co., 

643 N.E.2d 458, 461 (Mass. 1994). Therefore, the Virginia 

Regulation violates the plain meaning of § 381 because it 

limits the conditions under which a company is entitled to 

immunity from state taxation. 

 Accordingly, we will affirm the judgment of the trial 

court. 

Affirmed.