Nexus Not Established Merely By Sporadic Sales Call

Author:Mr Bruce Ely, William T. Thistle, II, Chris R. Grissom, Alex B. Leath and James E. Long, Jr.
Profession:Bradley Arant Boult Cummings LLP
 
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The Administrative Law Division of the Alabama Department of Revenue has ruled that one sales call by a single salesman in a local taxing jurisdiction does not establish nexus with the local jurisdiction for purposes of obligating a retailer to collect and remit that jurisdiction's sales tax. Van Horn v. Ala. Dep't of Rev., Admin. L. Div. Dkt. No. S. 12-863 (Jan. 3, 2013). The assessment for city and county use tax was therefore voided.

The taxpayer, Paris John Van Horn, II, operated a sports photography business in Montgomery, Alabama, through a single-member (disregarded) LLC. The taxpayer primarily photographed youth sports teams and individual team members and subsequently sold the photos to the players' parents, etc. The taxpayer solicited sales largely by telephone from his Montgomery office. He, or one of his employees, would then travel to the location of the teams or players to photograph them. After returning to Montgomery, the taxpayer printed off the photos and delivered them through the U.S. mail or via Federal Express or UPS to the customer. On four separate occasions during the 31-month audit period, the taxpayer made an in-person sales presentation at certain customers' locations outside Montgomery. The taxpayer paid Montgomery County and City sales tax on sales to customers in Montgomery. He was assessed for city and county use tax by the Alabama Department of Revenue (ADOR) on the sales made to customers located in various municipalities or counties other than Montgomery.

Despite his disagreement with the holding of the landmark nexus case, Yelverton's, Inc. v. Jefferson County, 742 So. 2d 1216 (Ala. Civ. App. 1997), cert. denied 742 So. 2d 1224 (Ala. 1999), Judge Thompson determined that the case was and remains controlling precedent. In Yelverton's, a furniture store located in Walker County sold and delivered furniture to customers in neighboring Jefferson County. The furniture store advertised in Jefferson County, but did not have a store location within Jefferson County and did not send salespersons into the County. The Yelverton's court held that in order to subject the business to Jefferson County sales or...

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