The taxpayer was an out of state company without a permanent physical presence in the state. Three employees visited major customers in Washington about two or three times a year. During those visits, the employees did NOT solicit sales directly, but they answered questions and provided information about the taxpayer's products.
The taxpayer argued that they did not have "substantial nexus" because in order for a taxpayer to have "physical presence" in a state, the taxpayer must have a "small sales force, plant or office" in the taxing state. The taxpayer also suggested that the United States Supreme Court requires "continuous local solicitation" to establish substantial nexus.
The Washington State Supreme Court disagreed with the taxpayer. The Court stated that "the crucial factor governing nexus is whether the activities performed in this state on behalf of the taxpayer are significantly associated with the taxpayer's ability to establish and maintain a market in this state."
The Court held that the taxpayer's activities in the state were designed to maintain its relationships with its customers and to maintain its market within Washington State. In addition, the activities were not slight or incidental to some other purpose or activity.
For your reference, the case is Lamtec Corporation v. Department of Revenue, State of Washington, Washington Supreme Court, No. 83579-9, January 20, 2011.
Does your company or client have minimal activity (in your opinion) in Washington State that would be treated as "designed to maintain the company's relationships with its customers and to maintain its market within Washington State"?
If the answer is "yes," you may want to take advantage of Washington's amnesty program that is currently in effect. For more information on the amnesty program, go to WASHINGTON's AMNESTY PROGRAM.