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Keywords

tax lawcorporation

statutetax lawcorporation

Related Cases

General Trading Co. v. State Tax Commission of Iowa, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309

Facts

General Trading Company, a Minnesota corporation, sold goods to Iowa residents through traveling salesmen who solicited orders in Iowa. The orders were accepted in Minnesota, and the goods were shipped to Iowa by common carriers. The Iowa Tax Commission sought to collect use taxes on these transactions, arguing that the company was a 'retailer maintaining a place of business' in Iowa, despite the company not being registered to do business in Iowa or having any physical presence there.

From these it appears that General Trading Company had never qualified to do business as a foreign corporation in Iowa nor does it maintain there any office, branch or warehouse. The property on which the use tax was laid was sent to Iowa as a result of orders solicited by traveling salesmen sent into Iowa from their Minnesota headquarters.

Issue

Whether Iowa may collect a use tax from General Trading Company on property sold and shipped from Minnesota to purchasers in Iowa.

The question now presented is, in short, whether Iowa may collect, in the circumstances of this case, such a use tax from General Trading Company, a Minnesota corporation, on the basis of property bought from Trading Company and sent by it from Minnesota to purchasers in Iowa for use and enjoyment there.

Rule

The Iowa Use Tax Law imposes a tax on the use of tangible personal property purchased for use in Iowa, and the tax is owed by the retailer maintaining a place of business in Iowa.

By the Iowa Use Tax Law a tax is ‘imposed on the use in this state of tangible personal property purchased * * * for use in this state, at the rate of two percent of the purchase price of such property.'

Analysis

The Iowa Supreme Court determined that General Trading Company was indeed a retailer maintaining a place of business in Iowa because it solicited orders from within the state, even though it did not have a physical presence there. The court referenced previous cases that supported the imposition of use taxes on out-of-state sellers when the goods were ultimately consumed in Iowa, affirming that the tax was non-discriminatory and applicable to all personal property used in the state.

Upon these facts and its holding that Trading Company was a ‘retailer maintaining a place of business in this state’ within the meaning of the Iowa Statute, the Iowa Supreme Court held that Iowa had not exceeded its powers in the imposition of this use tax on Iowa purchasers, and that collection could validly be made through the Trading Company.

Conclusion

The court affirmed the judgment in favor of the State Tax Commission, allowing Iowa to collect the use tax from General Trading Company.

The court's final decision or holding in 1–2 sentences.

Who won?

The State Tax Commission of Iowa prevailed in the case because the court upheld the imposition of the use tax on the basis that the company was engaged in business activities that established a sufficient connection to Iowa.

The application by that Court of its local laws and the facts on which it founded its judgment are of course controlling here.

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Bloomingdale Bros., Div. of Federated Dept. Stores, Inc. v. Chu, 119 A.D.2d 41, 505 N.Y.S.2d 258

General Mills v. Franchise Tax Bd., 172 Cal.App.4th 1535, 92 Cal.Rptr.3d 208, 09 Cal. Daily Op. Serv. 4510, 2009 Daily Journal D.A.R. 5363

McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876, 1940 A.M.C. 467, 22 O.O. 84

Culliton v. Chase, 174 Wash. 363, 25 P.2d 81

Acme Royalty Co. v. Director of Revenue, 96 S.W.3d 72