New York discusses a corporation’s eligibility for the exemption and its filing requirements.
The Department of Taxation and Finance has issued a corporate franchise tax advisory in regard to out-of-state companies who plan to hire NY residents as sales representatives, operating out of their residences. If sales orders are approved and shipped from outside of New York and no office is maintained in NY, either in a separate location or in the sales representative’s home, and the company’s only activity in NY is the solicitation of orders pursuant to the provisions of P.L. 86-272, the company will be exempt from NY’s corporate franchise tax.
In the state of New York, to be exempt by virtue of P.L. 86-272, the activities of the foreign corporation must be limited to the following activities:
Solicitation of orders includes offering tangible personal property for sale, pursuing offers for the purchase of tangible personal property, and ancillary activities, other than maintaining an office, that serve no independent business function apart from their connection to the solicitation of orders.
However, the company would be required to annually file an activities report on Form CT-245, Maintenance Fee and Activities Return for Foreign Corporation Disclaiming Tax Liability. In addition, if the corporation is authorized to do business in New York under Article 13 or 15-A of the Business Corporation Law, the corporation would be required to pay a maintenance fee.
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