61 Pa. Code § 153.23. Jurisdiction to subject.

§ 153.23. Jurisdiction to subject.

(a)  A particular state has ‘‘jurisdiction to subject’’ the taxpayer to a net income tax, if the taxpayer’s business activity in the state is sufficient to give the State jurisdiction to impose at least a net income tax under the constitution and statutes of the United States. See section 401(3)2.(a)(1)(F) of the TRC (72 P. S. §  7401(3)2.(a)(1)(F)). Whether the state does in fact impose a tax is not relevant. Jurisdiction to tax is not present where the state is prohibited from imposing the tax by reason of the provisions of 15 U.S.C.A. § §  381—385.
(b)  The determination of whether the state has ‘‘jurisdiction to subject’’ the taxpayer to a net income tax shall be made upon the same rules that are applied in determining whether a taxpayer has sufficient activity in this Commonwealth to subject the taxpayer at least to the Pennsylvania Corporate Net Income Tax. See section 401 of the TRC (72 P. S. §  7401).

   Example 1. Taxpayer manufactures pin ball machines in this Commonwealth. Taxpayer has salesmen in State N who have the right to, and do in fact, accept orders there. State N has no corporate tax statutes. State N has ‘‘jurisdiction to subject’’ taxpayer to a net income tax because 15 U.S.C.A. § §  381—385 does not apply. Example 2. Taxpayer manufactures farm equipment in this Commonwealth and in foreign country B. Both the Commonwealth and foreign country B impose a net income tax, but foreign country B exempts corporations engaged in manufacturing farm equipment. Foreign country B has jurisdiction to subject taxpayer to a net income tax.

Authority

   The provisions of this §  153.23 amended under section 408 of the Tax Reform Code of 1971 (72 P. S. §  7408).

Source

   The provisions of this §  153.23 adopted January 27, 1978, effective January 28, 1978, 8 Pa.B. 257; amended January 16, 1987, effective January 17, 1987, 17 Pa.B. 273. Immediately preceding text appears at serial page (36121).

Cross References

   This section cited in 61 Pa. Code §  153.21 (relating to transacting business outside).

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