Current through Register Vol. XLI, No. 38, September 20, 2024
11.1. Persons domiciled outside a
municipality who (a) lease tangible personal property to lessees in the
municipality, or (b) perform construction or installation contracts in the
municipality, or (c) render services to others therein, are doing business in
the municipality, irrespective of the domicile of such persons and irrespective
of whether or not such persons maintain a permanent place of business in the
municipality.
11.2. Persons
domiciled outside a municipality who sell tangible personal property to persons
in the municipality, may be doing business in the municipality, irrespective of
the domicile of such persons and irrespective of whether or not such persons
maintain a permanent place of business in the municipality.
11.3. Persons domiciled in and having a place
of business in a municipality, who (a) sell or lease personal property to
buyers or lessees outside the municipality, or (b) perform construction or
installation contracts outside the municipality, or (c) render services to
others outside the municipality, are doing business both within and without the
municipality. Whether or not such persons are subject to municipal business and
occupation tax under the law depends upon the kind of business and the manner
in which it is transacted. The following general principles govern in
determining tax liability under the municipal business and occupation tax.
11.3.1. When the business involves a
construction or installation contract in the municipality, no deduction from
the measure of the tax is permitted, even though the contractor is domiciled
outside the municipality and maintains a place of business outside the
municipality which may contribute to the contract performed in the
municipality.
11.3.2. When the
business involves a construction or installation contract outside the
municipality, the tax does not apply to any part of the income derived
therefrom (except such part of the income as may be applicable to the
manufacturer in the municipality by the contractor of articles used or
incorporated in such construction or installation), even though the contractor
is domiciled in the municipality and maintains a place of business therein
which may contribute to the contract performed outside the
municipality.
11.3.3. When the
business involves a transaction taxable under the service classification, the
tax does not apply upon any part of the gross income received for services
incidentally rendered to persons in the municipality by a person who does not
maintain a place of business in the municipality and who is not domiciled
therein. However, the tax applies upon the income received for services
incidentally rendered to persons outside the municipality by a person domiciled
therein who does not maintain a place of business within the jurisdiction of
the place of domicile of the person to whom the service is rendered.
11.3.4. For example, persons domiciled in a
municipality, but having no place of business outside the municipality, are
taxable upon the following types of income:
11.3.4.1. An insurance agency upon
commissions received for insurance placed outside the municipality;
11.3.4.2. An attorney upon fees received from
persons outside the municipality, even though a portion of his services were
necessarily performed without the municipality;
11.3.4.3. A collection agency upon income
received from clients without the municipality or with respect to collections
made from persons without the municipality;
11.3.4.4. An accountant upon income received
from persons for services performed without the municipality;
11.3.4.5. An investment company upon income
received from loans placed without the municipality;
11.3.4.6. A commodity broker upon commissions
received from persons without the municipality;
11.3.4.7. An advertising agency upon income
received from advertising solicited and secured from firms without the
municipality;
11.3.4.8. An
employment agency upon income received for securing employees for firms without
the municipality;
11.3.4.9. A
physician upon income received from the treatment of patients without the
municipality;
11.3.4.10. A
purchasing agency upon commissions received from clients without the
municipality or with respect to purchases made without the
municipality.
11.3.5.
Conversely, persons engaged in business without the municipality, but having no
place of business within the municipality, are not taxable with respect to the
reverse of the above situations. It is assumed, of course, that such services,
to avoid taxation, are rendered only incidentally to persons within the
municipality.
11.3.6. Persons
engaged in a business taxable under the service classification and who maintain
places of business both within and without the municipality which contribute to
the performance of a service, shall apportion to the municipality that portion
of gross income derived from services rendered by them in that municipality.
Where it is not practical to determine such apportionment by separate
accounting methods, the taxpayer shall apportion to each the proportion of
total income which the cost of doing business within each bears to the total
cost of doing business within and without each municipality.
