N.H. Admin. Code § Rev 304.01 - Availability or Requirement of Apportionment for Business Organization

(a) A New Hampshire domiciled business organization shall apportion its income outside of New Hampshire if:

(1) Its business activities are conducted both within and without New Hampshire; and

(2) The business organization's activities were sufficient in another state for that state to impose a:

a.Net income tax;

b.Franchise tax based upon net income; or

c.Capital stock tax.

(b) A business organization not domiciled in New Hampshire shall apportion a portion of its income to New Hampshire if:

(1) Its activities within New Hampshire are sufficient to meet the due process requirements of the New Hampshire constitution in part 1, article 12 and part 2, articles 5 and 6; and

(2) Its in-state activities exceed the protection of 15 USC Section 381, P.L. 86-272.

(c) A business organization shall not apportion a portion of its income to another state when:

(1) Its activities within the other state were not sufficient for that state to impose the taxes referred in (a)(2) above;

(2) It pays a minimal fee for qualifying to do business within that state; or

(3) It voluntarily files and pays a tax referred to in (a)(2), above, which it was not legally required to do.

(d) A business organization shall determine its immunity under 15 USC Section 381, P.L. 86-272, by comparing its activities within New Hampshire to the:

(1) Business activities which exceed the protection of P.L. 86-272 when conducted in New Hampshire, such as:

a.Making repairs or providing maintenance;

b.Owning, maintaining, leasing, or otherwise using any of the following facilities or property:

1.Repair shop;

2.Parts department;

3.Purchasing office;

4.Employment or recruiting office;

5.Warehousing facilities including the use of public warehouses;

6.Meeting place for directors, officers or employees;

7.Stock of goods other than samples used entirely ancillary to the solicitation of orders;

8.Mobile stores such as a truck with a driver salesman making sales from the vehicle; or

9.Real property, fixtures or equipment of any kind;

c.Collecting current or delinquent accounts;

d.Installing merchandise or equipment or supervising such work;

e.Conducting training programs, seminars or lectures for personnel other than personnel involved only in the solicitation of sales;

f.Investigating, handling, or otherwise assisting in resolving customer complaints, other than mediating direct customer complaints when the sole purpose of such mediation is to ingratiate the sales personnel with the customer;

g.Approving or accepting customer orders;

h.Providing any kind of technical assistance or services, such as engineering assistance or services, when one of the purposes thereof is other than the facilitation of the solicitation of orders;

i.Accepting deposits on customer orders;

j.Picking up or replacing damaged or returned property.

k.Hiring, training, or supervising personnel, other than personnel involved only in solicitation;

l.Repossessing property;

m.Providing shipping information and coordinating deliveries;

n.Maintaining a sample or display room in excess of 14 days at any one location during the taxable period;

o.Carrying samples for sale, exchange or distribution in any manner for consideration;

p.Consigning tangible personal property to any person, including an independent contractor;

q.Using agency stock checks or any other instruments or process by which sales are made within New Hampshire by sales personnel;

r.Maintaining, by any representative, an office or place of business in the home or otherwise that is publicly attributed to the business organization or to the agent of the business organization in their agency status, even if such office is for the exclusive use of soliciting orders; or

s.Conducting any activity in addition to those described in Rev 304.01(d)(2) which is not entirely ancillary to the solicitation of orders, even if such activity helps to increase purchases; and

(2) Business activities which fall within the protection of P.L. 86-272 when conducted in New Hampshire such as:

a.Soliciting orders for sales by any type of advertising;

b.Carrying samples only for display or for distribution without charge or other consideration;

c.Owning or furnishing motor vehicles to sales personnel;

d.Submitting inquiries and complaints received to the home office;

e.Checking of customers' inventories without a charge for the purpose of a replacement order but not for other purposes such as quality control;

f.Soliciting orders using an in-state resident representative of the business organization provided the representative maintains no in-state sales office or place of business whether in-home or otherwise that is attributable to the business organization or to the business organization's agent in his agency capacity;

g.Conducting missionary sales activities;

h.Maintaining a sample or display room for 14 days, or less, at any one location during the taxable period;

i.Recruiting, training, or evaluating sales personnel, including occasionally using homes, hotels or similar places for meetings with sales personnel;

j.A representative maintaining an in-home office that is not:

1.Paid for directly or indirectly by the business organization;

2.Attributable to the business organization; or

3.Attributable to the business organization's agents in their agency capacity; or

k.Mediating direct customer complaints when the purpose thereof is solely for ingratiating the sales personnel with the customer and facilitating requests for orders.

(e) Independent contractors conducting activities in New Hampshire on behalf of a business organization shall cause the business organization to:

(1) Lose its immunity when the activities include:

a.Maintaining a consignment inventory of the organization's products other than for purposes of display; or

b.Entering into any other type of arrangement extending beyond the solicitation of orders; or

(2) Not lose its immunity when the activities include:

a.Soliciting and making sales for the business organization; or

b.Maintaining their own office.

(f) A business organization whose activities do not exceed the protection of P.L. 86-272, claiming exemption under the federal law and desiring to commence the 3 year statute of limitation shall:

(1) Indicate on the front page of their applicable New Hampshire business profits tax return that the business organization is exempt by typing or clearly printing "exempt under P.L. 86-272 "; and

(2) Attaching a New Hampshire business profits tax return including zero apportionment and a federal tax return with schedules.

(g) To reconcile the combined reporting method with the limitations imposed by P.L. 86-272 on states' taxing jurisdictions, if any member of a combined group has nexus with New Hampshire, and one member does not have nexus with New Hampshire or another state the following shall apply:

(1) An individual business organization shall be subject to the tax jurisdiction of New Hampshire or another state for purposes of Rev 304.01(b) and (c) respectively only on the basis of the separate activities of that individual business organization and its representatives; and

(2) A business organization shall not be subject to the tax jurisdiction of New Hampshire or another state for purposes of Rev 304.01(b) and (c) respectively, merely because an affiliate of the business organization conducts business activities in New Hampshire or another state that are unitary with the individual business organization's business activities.

Notes

N.H. Admin. Code § Rev 304.01

#4192, eff 12-23-86; ss by #4438, eff 6-22-88; ss by #5490, eff 10-19-92; amd by #5910, eff 10-14-94; ss by #6853, eff 9-23-98; ss by #8709, eff 8-25-06

Amended byVolume XXXV Number 06, Filed February 12, 2015 , Proposed by #10758, Effective 1/16/2015, Expires1/16/2025.