The Corporation is a foreign corporation engaged in the business of selling industrial vacuum cleaners to various consumers. The Corporation will employ a salesperson who is not a resident of Massachusetts and who will market the Corporation's products in Massachusetts and neighboring states. The salesperson will not have an office in Massachusetts. The salesperson will keep some of the Corporation's products as samples to be used solely for demonstration purposes. The salesperson will store and carry the samples in a car leased by the Corporation. No inventory will be maintained in Massachusetts. All orders taken by the salesperson must be approved outside of Massachusetts. Shipments of merchandise to customers will be by common carrier. The salesperson will not assemble, install or repair the equipment.
Whether the Corporation is subject to the Massachusetts corporate excise depends upon whether the Corporation's activities in Massachusetts constitute solicitation of sales, within the meaning of P.L. 86-272 (15 U.S.C. 5 381). We conclude that the Corporation's activities in Massachusetts, according to the facts in your letter, constitute solicitation of sales and that the corporation is not subject to the Massachusetts corporate excise, subject to the conditions stated in this ruling.
Under G.L. c. 63, § 39, an excise is levied on foreign corporations on any one or all of the following incidents:
- The qualification to carry on or do business in this state or the actual doing of business within the commonwealth in a corporate form. The term "doing business" as used herein shall mean and include each and every act, power, right, privilege, or immunity exercised or enjoyed in the commonwealth, as an incident to or by virtue of the powers and privileges acquired by the nature of such organizations, as well as, the buying, selling or procuring of services or property.
- The exercising of a corporation's charter or the continuance of its charter within the commonwealth.
- The owning or using any part or all of its capital, plant or other property in the commonwealth in a corporate capacity.
Public Law 86-272, also known as the Interstate Income Tax Act of 1959, provides immunity from state net income-based taxation for interstate activities constituting mere solicitation of sales. P.L. 86-272 provides in part as follows:
A. No State, or political subdivision thereof, shall have power to impose, for any taxable year ending after the date of the enactment of this Act, 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 during such taxable year are either, or both, of the following:
- The solicitation of orders by such person, or his representative, 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; and
- the solicitation of orders by such person, or his representative, in such State in the name of or for the benefit of a prospective customer of such person, if orders by such customer to such person to enable such customer to fill orders resulting from such solicitation are orders described in paragraph (1) 
The facts you state indicate that the Corporation's activities in Massachusetts constitute mere solicitation of sales within the meaning of P.L. 86-272. For example, the storage and carrying of samples solely for demonstration purposes is within the ambit of solicitation of sales. The furnishing of an automobile to the salesperson is also within the ambit of mere solicitation. The solicitor's means of transportation does not change the character of the solicitor's promotional activities.
In Letter Ruling 1984-1, we ruled that a corporation's salespersons' use of company-owned automobiles, where the salespersons were residents of Massachusetts working out of their homes, caused the corporation to be subject to the corporate excise. Here, because the salesperson is not a resident of Massachusetts, we assume that the car is not principally garaged, leased, registered, or principally used in Massachusetts.
In summary, if the Corporation's activities in Massachusetts amount to mere solicitation within the meaning of P.L. 86-272, the salesperson's use of an automobile leased by the corporation for the solicitation activities will not by itself cause the Corporation to be subject to the Massachusetts corporate excise. If the Corporation performs any activities in Massachusetts in addition to solicitation or owns or uses any property in Massachusetts, it will be subject to the corporate excise.
Please note that this ruling relates only to the corporate excise and does not affect the Corporation's sales tax and withholding obligations.
Very truly yours,Ira Jackson
Commissioner of Revenue
1 In Massachusetts "solicitation" protected by P.L. 86-272 is a narrow concept. In 1975 the legislature amended G.L. c. 63 § 39, to include as an incident of taxation "the owning or using any part or all of its capital, plant, or other property in the Commonwealth in a corporate capacity." St.1975, c. 684 § 52. This amendment shows legislative intent that protected "solicitation" be limited to its most narrow sense. We follow that intent in our administration of the corporate excise.(1)
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