15 U.S.C. § 381 : US Code - Section 381: Imposition of net income tax

Search 15 U.S.C. § 381 : US Code - Section 381: Imposition of net income tax

(a) Minimum standards
No State, or political subdivision thereof, shall have power to
impose, for any taxable year ending after September 14, 1959, 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:
(1) 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
(2) 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).
(b) Domestic corporations; persons domiciled in or residents of a
State
The provisions of subsection (a) of this section shall not apply
to the imposition of a net income tax by any State, or political
subdivision thereof, with respect to -
(1) any corporation which is incorporated under the laws of
such State; or
(2) any individual who, under the laws of such State, is
domiciled in, or a resident of, such State.
(c) Sales or solicitation of orders for sales by independent
contractors
For purposes of subsection (a) of this section, a person shall
not be considered to have engaged in business activities within a
State during any taxable year merely by reason of sales in such
State, or the solicitation of orders for sales in such State, of
tangible personal property on behalf of such person by one or more
independent contractors, or by reason of the maintenance, of an
office in such State by one or more independent contractors whose
activities on behalf of such person in such State consist solely of
making sales, or soliciting orders for sales, or tangible personal
property.
(d) Definitions
For purposes of this section -
(1) the term "independent contractor" means a commission agent,
broker, or other independent contractor who is engaged in
selling, or soliciting orders for the sale of, tangible personal
property for more than one principal and who holds himself out as
such in the regular course of his business activities; and
(2) the term "representative" does not include an independent
contractor.