(a) In
Commonwealth v. Gilmour Manufacturing Corporation, 573 Pa.
143, 822 A.2d 676 (2003), the Supreme Court held that for purposes of
calculating its Pennsylvania sales apportionment factor for the Corporate Net
Income Tax, a Pennsylvania corporation is not required to include in the
numerator sales of goods to out-of-State buyers who retrieve the goods at the
seller's place of business in this Commonwealth and then transport the goods
out of this Commonwealth. The Court determined that section 401(3)2(a)(16) of
the Tax Reform Code (
72 P. S. §
7401(3) 2(a)(16)) mandated
that conclusion with regard to the "dock sales," regardless of whether the
buyer personally retrieves the item using his own means of transport or by
engaging the services of a for-hire motor carrier. The Court ruled that the
Department regulation on the subject, §
153.26(b)(2)
(relating to sales factor), was inconsistent with the statutory requirement
insofar as it required the inclusion of the sales in the numerator of the
taxpayer's sales factor.
(b) The
Court's holding excludes from the Pennsylvania portion of the apportionment
factor only sales to out-of-State buyers who transport the goods out of this
Commonwealth. Sales to purchasers who do not transport the goods outside of
this Commonwealth for use or resale are Pennsylvania sales for purposes of
calculating the sales factor numerator. Thus, in the absence of sufficient
evidence establishing an ultimate destination to an out-of-State location,
sales of goods in which delivery is made to the buyer at a Pennsylvania
location must be reported as Pennsylvania sales and included in the numerator
of the Pennsylvania sales apportionment fraction.
(c) Documentation sufficient to establish an
out-of-State sale includes:
(1) Bills of
lading of the carrier establishing that the goods were destined for or
delivered to an out-of-State location.
(2) Delivery instructions from the purchaser
to the carrier establishing that the goods were to be transported out of this
Commonwealth.
(3) Warehouse
receipts of the purchaser showing that the goods were delivered to an
out-of-State location.
(4) Invoices
issued by the taxpayer/seller to the purchaser showing an out-of-State delivery
address.
(d)
Documentation which will be deemed insufficient to establish that the ultimate
destination of goods is to an out-of-State location:
(1) Invoices issued by the taxpayer/seller to
the purchaser showing an out-of-State mailing address.
(2) Affidavits or other declarations from the
seller, its employees or agents that the ultimate destination of goods was an
out-of-State location.
(e) Examples of documentation are as follows:
A taxpayer sells plumbing fixtures to Company X, a New Jersey corporation which
has retail stores in New Jersey and Pennsylvania.
(1)
Examples of sufficient
documentation:
Example 1. Company X uses a carrier to pick the goods
up at A's warehouse in Pennsylvania. Company X provides documentation it
procured from the carrier showing that the merchandise was delivered to X's
warehouse in New Jersey.
Example 2. A taxpayer secures a copy of the delivery
instructions from Company X to the carrier directing that the fixtures be taken
to Company X's warehouse in New Jersey.
Example 3. Company X uses a carrier to pick up the
merchandise. The taxpayer secures a copy of the bill of lading showing the
fixtures were delivered to the New Jersey location.
(2)
Examples of insufficient
documentation:
Example 1. A taxpayer produces invoices submitted to
Company X at its headquarters in New Jersey and a remittance letter
accompanying the check from X's New Jersey headquarters.
Example 2. The same as Example 1, except the taxpayer
provides an affidavit from its sales manager asserting that the merchandise
sold to Corporation X was delivered to X's warehouse in New
Jersey.
