Evening star. [volume] (Washington, D.C.) 1854-1972, 1937-11-28
SEAL DEFENDS TAX
ON OUTSIDE FIRMS
SELLING IN D. c.
Ruling Sent to Senator Kinq
UphoIds Levy on Certain
Interstate Trade.
ACT HELD INAPPLICABLE
TO GOVERNMENT BIDS
Merchant Declared Subject to
Law If Goods Are Delivered by
Him or Sent c. O. D.

The Districts right to apply the
gross receipts business privilege tax to
certain interstate business TRANSACT
tons originating here, even though the
merchandise is shipped in from out
side, was defended yesterday by Cor
poration Counsel Seal in legal opin-
ion sent to Chairman King Of the
Senate District Committee.
The opinion was in response to
queries coming to members of the
Senate from out-of-town concerns,
questioning the application of the local
tax to interstate business, when q
concern maintains no Office or stock
of merchandise here, but sends agents
here to solicit orders that are filed
from the States. It was commended in
one complaint that the States are TAX
ing the view that local taxes cannot
be laid upon travelling salesman or
his employer for permitting him to
solicit orders to be filled from outside
the State.
Ruling Is Consistent.
Mr.. Seal advised Chairman King
that his Office has consistently ruled
as follows:
THE solicitation of orders by an
agent in the District of Columbia
amounts to commercial activity, and
gross receipts derived from such bust
ness must be reported under Title vi
Of the District Of Columbia Revenue
Act, and the tax computed thereon.
OF course, with the exemption Of
$4,000, and if such business is con-
tinued after October Is, 1887, a license
to do such business must be obtained.
Orders by mail, telephone and tele-
graph, which are not c. o. d. transac-
tons, and are delivered by an in
dependent agent of transportation. do
not amount to commercial activity in
the District of Columbia. If the
merchandise is delivered in the de-
livery equipment of the QUIT town
merchant, or If it is a c. o. d. trans
action, such sale. does amount to a
commercial activity and the gross re-
ceipts therefrom must be reported
and the tax computed thereon and a
license obtained to carry on such
business.
With respect Of Government busi-
ness procured by the submission of
bids, we have ruled as follows:
The submission of bids by an out
| of-town merchant or manufacturer to
the Government, either by letter or
even manually by an agent in the Dis
trict OF Columbia, is not doing busi-
ness by the out-of-town merchant in
the District of Columbia"
Cites Railroad Clause.
After analyzing various court de-
cisions bearing on the subject, Mr..
Seal continued:
NOW Congress has. we believe. indi-
Gated that it intends this act to ap-
ply to interstate commerce because,
In the first paragraph of the act, after
defining the term person. it states
that such term shall not include rail-
roads and railroad express companies
who report to the Interstate Com
merce. ETC. Now it seems to us that
there is an irresistible conclusion that
| congress intended all other agencies
OF interstate commerce to be included
in the act. This position is fortified
by observing that in subsequent sec
ton OF the act telephone companies
are exempt, not because they are en-
gagged in interstate commerce, as thew
are, but because they happen to nav A
gross receipts tax under another and
different law.
1T must be remembered that the
term business in the act comprises
among other things, any commercial
activity. This is broad term, and.
we believe. includes the solicitation of
business by out-of- town merchants
through their agents in the District of
Columbia"
Outside Transactions EXEMPT.
Mr.. Seal then pointed out that.
while the District law is modified after
| the New York law. the latter statute
does not authorize taxing a trans
action originating or contaminated
outside the city even though some act
| with respect to the transaction may
take place within the city. Mr.. Seal
added the following conclusion:
| when Congress came to enact the
District of Columbia law 1t omitted
the foregoing restrictive provision
which is found in the New York law.
The necessary conclusion from such
comparison is that Congress, by omit
ting such provision from the District
OF Columbia law, must have intended
that the provisions of such law apply
to transactions originating within the
District of Columbia"
The fate Of the whole gross receipts
tax plan rests with the Forthcoming
regular session of Congress. It was
enacted for one year only, with the
understanding that Congress this
winter will review the entire local tax
structure. Unless re-enacted, the gross
receipts levy will expire after one year
of operation.