Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 220.0163

220.0163 Marketing Representatives Visit California. An out-of-state company has two manufacturing divisions that are also located out of state. One of the divisions sent marketing representatives within the State of California six times over a three-year period. The purpose of these visits was to meet both customers and non-customers of the division to conduct informal market surveys within California regarding the use of the division's products. The purpose of the survey questions was to identify customer needs that the division could better serve. No product orders were taken or filled by the marketing representatives during these visits. These trips averaged over a week and occurred once during the first half of each year and once during the last half of each year.

The activities of the representatives in California are clearly selling activities coming within section 6203(b). Making personal contact with customers to identify their needs with respect to the company's products is clearly a selling activity. Contacting non-customers regarding the retailer's products is also clearly a selling activity regardless how the contact is characterized. The physical presence in California related to maintaining or enhancing the retailer's market in California is the substantial nexus with California that supports the State's imposition of a use tax collection duty on the retailer. Accordingly, the out-of-state company is a retailer engaged in business in California within the meaning of section 6203(b) (including all of its divisions). 1/15/97. (Am. 2001–3).