Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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E

220.0000 "ENGAGED IN BUSINESS"

Annotation 220.0073

220.0073 Trade Shows. An out-of-state taxpayer who is in the business of selling software holds five or six trade shows, each generally lasting from one-half to two days, in California per year. The purpose of the trade shows is to demonstrate the products it sells. The taxpayer does not enter into actual contracts for sale during the trade shows, nor does it take deposits for sales. The taxpayer solicits sales over the telephone from its out-of-state location. The taxpayer does no advertising in California nor does it solicit sales by catalog or flyers. The taxpayer does not have any resident employees, locations, or telephone listings in California. However, on rare occasions, a sales person may visit a potential customer within this state. No sale is ever consummated on such visits and orders are not approved within California. All products sold are sent directly to the purchaser by common carrier or mail from outside California.

In this case, the taxpayer is entering the state in order to make sales. The fact that the taxpayer refuses to accept orders for software is irrelevant. It is holding the trade shows for the specific purpose of making sales of tangible personal property. That is, it is entering California for the purpose of selling. It is a retailer engaged in business in this state within the meaning of section 6203. It also appears that the taxpayer's sales person entering this state to "visit" potential customers is intended to maintain or enlarge its market in California. These visits are an additional basis for regarding the taxpayer as engaged in business in California. 3/22/96; 5/9/01. (Am. 2002–1; Am. 2002–2).

(Note: Subdivision (e) was added to Revenue and Taxation Code section 6203, operative April 1, 1998 and further amended operative January 1, 2001, to add a limited exception from the definition "retailer engaged in business" for specified trade show activities.)