By Shane Lord and Andrew Appleby

The Indiana Department of State Revenue issued a Letter of Findings concluding that a taxpayer’s sales of tangible personal property from Indiana to foreign countries were attributable to Indiana for income tax purposes because the taxpayer did not show that its activities in the foreign countries exceeded the protections of Public Law 86-272 (P.L. 86-272). For income tax purposes, Indiana requires the throwback of sales under its apportionment provisions when the sales involve tangible personal property shipped from Indiana to a purchaser in a state where the taxpayer is protected from income taxation under P.L. 86-272. The taxpayer asserted that its activities exceeded the protections of P.L. 86-272, so the throwback rule would not apply. The Department conceded, without analysis, that the taxpayer’s activities in three countries for one tax period exceeded the protections of P.L. 86-272. However, the Department concluded that the taxpayer’s activities for the remaining tax years and foreign countries did not exceed the mere solicitation of sales, and thus fell within the protections of P.L. 86-272 and were subject to Indiana’s throwback rule. Ind. Dep’t of State Rev., Ltr. of Findings No. 02-20120352 (Mar. 24, 2013).