Our company has sales representatives that travel to many different states to solicit businesses in order to sell our cleaning products. We are wondering if we are subject to corporate tax filing requirements and state withholding tax for doing as such?

ANSWER

The BIDaWIZ Team's Answer:

Each state has different requirements for registering as a foreign entity and withholding taxes on earned income. Having said that, it may be possible to argue that the nature of the work was so incidental that it falls under Public Law 86-972. This law is part of the interstate income act of 1959 that essentially allows a business to go, or send representatives, into a state to solicit orders for goods without being subject to a net income tax. Based on the facts and circumstances that you've provided, this law may be applicable. If actual services were performed, then that's different.