Current through Register Vol. 54, No. 24, June 15, 2024
Section 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.
The provisions of this § 153.23 adopted January 27, 1978, effective 1/28/1978, 8 Pa.B. 257; amended January 16, 1987, effective 1/17/1987, 17 Pa.B. 273.The provisions of this § 153.23 amended under section 408 of the Tax Reform Code of 1971 (72 P. S. § 7408).
This section cited in 61 Pa. Code § 153.21 (relating to transacting business outside).