Current through Register Vol. 49, No. 10, October, 2024
Rule 8.26-51-702 - Unprotected and Protected ActivitiesExamples of activities presently considered by the Department to be either protected or unprotected are as follows:
A. UNPROTECTED ACTIVITIES: The following in-state activities, assuming they are not of a "de minimis" level, are not considered to be solicitation of orders or ancillary thereto or otherwise protected under 15 U.S.C. § 381 and will cause otherwise protected sales to establish nexus:
1. Making repairs or providing maintenance or service to the property sold or to be sold;2. Collecting current or delinquent accounts, whether directly or by third parties, through assignment or otherwise;3. Investigating credit worthiness;4. Installation or supervision of installation after shipment and delivery;5. Conducting training courses, seminars or lectures for people other than those involved only in solicitation;6. Providing any kind of technical assistance or service including, but not limited to, engineering assistance or design service, when one of the purposes thereof is other than the facilitation of the solicitation of orders;7. Investigating, handling, or otherwise assisting in resolving customer complaints;8. Approving or accepting orders;9. Repossessing property;10. Securing deposits on sales;11. Picking up or replacing damaged or returned property;12. Hiring, training, or supervising personnel, other than personnel involved only in solicitation;13. Using agency stock checks or any other similar instruments or processes by which sales are made within Arkansas by sales personnel;14. Maintaining a sample or display room in excess of two weeks (14 days) at any one location within Arkansas during the tax year;15. Carrying samples for sale or for distribution in any manner in exchange for valuable consideration;16. Owning, leasing, using or maintaining any of the following facilities or property within Arkansas:c. Any kind of office (other than an in-home office as described and permitted under 8. 26-51-702(A)(18) and 8. 26-51-702(B)(2));e. Meeting place for the taxpayer's directors, officers, or employees;f. Stock of goods (other than samples for sales personnel or that are used entirely ancillary to solicitation);g. Telephone answering service that is publicly attributed to the taxpayer or to employees or agent(s) of the taxpayer in their representative capacity. For example, a listing in a telephone directory would constitute a "public" attribution;h. Mobile stores, such as vehicles with drivers who are sales personnel making sales from the vehicles;i. Real property or fixtures to real property of any kind;17. Consigning a stock or inventory of goods or other tangible personal property to any person, including an independent contractor, for sale to customers;18. Maintaining, by any employee or other representative, an office or place of business of any kind. However, an "in-home" office will not cause a loss of protection if such an office is located within the residence of the employee or representative and: (a) is not publicly attributed to the taxpayer or to the employee or representative of the taxpayer in an employee or representative capacity; and(b) the use of such office is limited to soliciting and receiving orders from customers, for transmitting such orders outside of Arkansas for acceptance or rejection by the taxpayer, and for such other activities that are protected under 15 U.S.C. § 381 or under 8. 26-51-702(B) of this regulation. A telephone listing or other public listing within the state for the taxpayer or for an employee or representative of the taxpayer in such capacity or other indications through advertising or business literature that the taxpayer or its employees or representative can be contacted at a specific address within Arkansas shall normally be determined as the taxpayer maintaining within Arkansas an office or place of business attributable to the taxpayer or to its employee or representative in a representative capacity. However, the normal distribution and use of business cards and stationery identifying the employee's or representative's name, address, telephone and fax numbers and affiliation with the taxpayer shall not, by themselves, be considered as advertising or otherwise publicly attributing an office to the taxpayer or its employee or representative.
The maintenance of any office or other place of business in Arkansas that does not strictly qualify as an "in-home" office as described above shall, by itself, cause the loss of protection under this regulation.
For the purpose of this regulation, it is not relevant whether the taxpayer pays directly, indirectly, or not at all for the cost of maintaining such in-home office;
19. Entering into franchising or licensing agreements, selling or otherwise disposing of franchises and licenses, or selling or otherwise transferring tangible personal property pursuant to such franchise or license by the franchisor or licensor to its franchisee or licensee within Arkansas;20. Shipping or delivering goods into Arkansas by means of private vehicle, rail, water, air or other carrier, regardless of whether a shipment or delivery fee or other charge is imposed, directly or indirectly, upon the purchaser; or21. Conducting any activity in Arkansas not listed in paragraph "B" below which is not entirely ancillary to requests for orders, even if such activity helps to increase purchases (such as some marketing and promotional activities).B. PROTECTED ACTIVITIES: The following in-state activities will not cause the loss of protection for otherwise protected sales:
1. Soliciting orders for sales by any type of advertising. However, other marketing and promotional activities conducted within Arkansas can cause a loss of protection;2. Soliciting of orders by an Arkansas resident employee or representative of the taxpayer, so long as such person does not maintain or use any office or other place of business in Arkansas other than an "in-home" office as described in 8. 26-51-702(A)(18) above;3. Carrying samples and promotional material only for display or for distribution without charge or other valuable consideration;4. Furnishing and setting up display racks and advising customers on the display of the taxpayer's products without charge or other valuable consideration;5. Providing automobiles to sales personnel for their use in conducting protected activities;6. Passing orders, inquiries and complaints on to the home office;7. Missionary sales activities, which is the solicitation of indirect customers for the taxpayer's goods. For example, a manufacturer's solicitation of retailers to buy the manufacturer's goods from the manufacturer's wholesale customers would be protected if such solicitation activities are otherwise protected;8. Coordinating shipment or delivery without payment or other valuable consideration and providing information relating thereto either prior or subsequent to the placement of an order;9. Checking of customers' inventories without a charge therefor (for reorder, but not for other purposes such as quality control);10. Maintaining a sample or display room for two weeks (14 days) or less at any one location within Arkansas during the tax year;11. Recruiting, training or evaluating sales personnel, including occasionally using homes, hotels or similar places for meetings with sales personnel; or12. Owning, leasing, using or maintaining personal property for use in the employee or representative's "in-home" office or automobile, where the use of such personal property is solely limited to the conducting of protected activities. As such, the use of personal property such as a cellular telephone, facsimile machine, duplicating equipment, personal computer and computer software in an "in-home" office or automobile that is strictly limited to the conducting of protected solicitation or activities entirely ancillary to such solicitation would be protected.