Court Opinion

ID: 7824660
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:04:03.321475+00
Date Added: 2024-06-11T16:30:49.602751
License: Public Domain

Otis H. Turner, Justice, dissenting. The federal statute relied upon by the appellant is 15 U.S.C. § 381(a) (1982 and Supp. IV 1986). This statute provides for immunity from income taxation of revenue derived from business activities within a state if such activities are limited to an agent’s solicitation of orders which are “filled by shipment or delivery from a point outside the state.” The applicable provision of the statute is quoted in the majority opinion. The majority goes to great length to sustain an extremely narrow interpretation of the federal statute in order to defeat the immunity granted to the appellant. The intent of the federal law is to exempt from state income taxation all revenue derived from “solicitation of orders” in a particular state but sent to another state for approval or rejection and thereafter filled by out-of-state shipment. The statute also exempts solicitation of those orders that amount to consignment orders. The legislative history of the act reflects federal concern that the individual states might impose taxes on earnings from sales obtained through mere solicitation within the state of an out-of-state company having no other significant activity within the state. S. Rep. No. 658, 86th Cong., First Sess., Reprinted in 1959 U.S.C. Code Cong, and Admin. News 2549. The activities conducted by the appellant in the State of Arkansas are discussed in the majority opinion. I believe that those activities carried out by the agents for the appellant are logically classified as part of parcel of the solicitation of orders within the meaning of the federal statute. The revenue should thus be immune from income taxation by the State of Arkansas. With facts quite similar to those presented here, the Supreme Court of the Commonwealth of Pennsylvania correctly concluded: Where a corporation enjoined in interstate commerce seeks to do business in this Commonwealth, and that corporation’s sole activity in the state consists of the representatives seeking to induce the purchase of a corporation’s products by informing customers of new products, taking orders, and assisting in the display of those products, Congress intended that such corporation be exempt from any state tax based on the corporation’s net income. U.S. Tobacco Co. v. Commonwealth, 478 Pa. 125, 386 A.2d. 471, cert. denied, 439 U.S. 880 (1978). I would reverse the trial court and hold that the appellant’s activities within the State of Arkansas are tax-exempt under the federal statute.