Uline, Inc. vs. Commissioner of Revenue
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A Wisconsin-based corporation, Uline, Inc., sells industrial and packaging products and employs sales representatives who visit customers in Minnesota. Uline did not pay Minnesota income or franchise taxes for 2014 and 2015, claiming exemption under 15 U.S.C. § 381, which protects certain out-of-state business activities from state taxation. The Minnesota Commissioner of Revenue audited Uline and assessed taxes for those years, arguing that Uline's activities in Minnesota went beyond mere solicitation of orders.
The Minnesota Tax Court upheld the tax assessment, finding that Uline's sales representatives engaged in activities beyond solicitation, specifically the preparation of "Market News Notes," which included detailed market research and competitor information. Uline appealed, arguing that these activities were either protected solicitation or de minimis and thus not subject to state taxation.
The Minnesota Supreme Court reviewed the case to determine whether Uline's activities created a sufficient nexus with Minnesota to justify the imposition of state taxes. The court found that the preparation of Market News Notes by Uline's sales team went beyond the solicitation of orders because it involved detailed market research that served independent business functions. The court also determined that these activities were not de minimis, as they were regular and systematic, with over 1,600 Market News Notes prepared during the two years in question.
The Minnesota Supreme Court affirmed the tax court's decision, holding that Uline's activities in Minnesota were not protected from state income or franchise taxation under 15 U.S.C. § 381 and were not de minimis. Therefore, Uline was subject to Minnesota state taxes for the years 2014 and 2015.
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