Q&A with the Pennsylvania Department of Revenue

Scenario: A non-U.S. corporation makes sales into Pennsylvania

Jan 12, 2018
Q:

For CNIT and PIT purposes, does P.L. 86-272 apply to sales in international commerce? For example, a non-U.S. corporation makes sales into Pennsylvania. The activities of the non-U.S. corporation do not exceed “solicitation.” Would the activities of the non-U.S. company be protected under P.L.86-272? 

A:

PIT- While P.L. 86-282 is a Federal, not state, law (it is codified at 15 U.S.C. § 381, et seq.), the Department believes that, for PIT purposes, P.L. 86-272 would apply to a company making sales of tangible personal property into Pennsylvania if its only activity in Pennsylvania is solicitation.

Protection would apply to a nonresident partner/shareholder. A resident partner/shareholder is taxed on income everywhere and is not protected under P.L. 86-272. However, CNIT - P.L. 86-272 by its terms only applies to interstate commerce and does not apply to foreign commerce. If this question concerns a specific taxpayer, consideration should be given to disclosing the identity of the taxpayer and all relevant facts to the Department and requesting a ruling. 

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.