Wisconsin Department of Revenue v. William Wrigley, Jr., Co.

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Holding= Respondent's activities in Wisconsin fell outside the protection of § 381(a)
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Wisconsin Department of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214 (1992), is a case decided by the United States Supreme Court regarding franchise tax.

Background

Wrigley, the world’s largest manufacturer of chewing gum, sells its product nationwide through a marketing system of regional managers, district managers, and local sales representatives. Wrigley is headquartered in Chicago, but does have sales representatives and managers who travel to Wisconsin. The sales managers often deal with Wisconsin credit resolutions, and the sales representatives routinely take stock of Wrigley's shelf products in retail outlets. They have no offices in Wisconsin.

Wrigley felt that it was exempt to Wisconsin taxation under Public Law 86-272 - which reads that "states cannot impose a 'net income tax' on 'any person' if the only contact with a state is limited to the solicitation of orders for sales of tangible personal property".cite web|url=http://www.allbusiness.com/accounting-reporting/corporate-taxes/320508-1.html|title=Nexus for state corporate income tax|last=Delong|first=Thomas|accessdate=2008-10-08] In the United States, a "person" can be an individual or a corporation.cite web|url=http://topics.law.cornell.edu/wex/corporations|title=corporations: an overview|publisher=Cornell Law School|accessdate=2008-10-08]

Wisconsin calls for taxation

Wisconsin believed that the presence of Wrigley in the state was enough to call for a franchise tax. The state believed that Wrigley was not afforded protection, under Public Law 86-272, because it violated solicitation by the follow practices:

*Recruitment, training, and evaluation of sales employees by regional manager
*Intervention in credit disputes by regional manager
*Use of hotel rooms and homes for sales meetings
*Replacement of stale gum at no cost to retailer
*"Agency stock checks" -- billing of retailer for gum supplied from in-state inventory to fill display racks
*Storage of gum in sales representatives' homes or in rented space

Result

The Court found that Wrigley’s activities in Wisconsin did not exceed the provisions of the state code and did not allow the imposition of the tax.cite web|url=http://www.law.cornell.edu/supct/html/91-119.ZS.html|title=WISCONSIN DEPARTMENT OF REVENUE v. WILLIAM WRIGLEY, JR., CO.|publisher=Cornell University|accessdate=2008-10-08] Although the Court ruled that the replacement of stale gum; "agency stock checks;" and maintenance of inventory for those purposes were not protected, the Court sided with Wrigley; redefining solicitation to mean:

*Activities that are necessary when asking for orders
*Activities that are ancillary to asking for orders
*Other activities that, taken together, are de minimis

References

External links

*ussc|505|214|1992 Full text of opinion at findlaw.com