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The protection has conditions
The person’s only in-state activities must be the specified solicitation of orders for tangible personal property. The orders must meet the out-of-state approval/rejection and fulfilment conditions. The statute also excludes specified state-incorporated corporations and resident or domiciled individuals.
Even for goods, this is not protection from sales/use, payroll, unemployment or gross-receipts taxes, or an answer to company qualification. Its defined independent-contractor treatment is not a general worker-status ruling.
No office does not mean no tax
A fictional foreign service brand contracts for work at U.S. customer sites but has no local office. Its assumption—no office, no tax—skips what it sells, who works where and which tax is involved.
Cleaning, consulting, training and managed IT services do not become physical-goods solicitation by analogy. But failure to establish this protection does not itself prove a particular state tax or return is due. That answer depends on the actual state, tax and activities.
Scope
- This explains the federal boundary only; it determines no state/local tax connection, threshold, sourcing, apportionment, taxability or return obligation.
Next step
Identify the income and tax involved before relying on a goods-solicitation rule to price a service contract.
Sources & review notes
U.S. House of Representatives, Office of the Law Revision Counsel
Passage, dates and research notes
primary · § 381(a)–(d), complete operative section
sales of tangible personal property
Read complete section: net-income-tax protection for only specified tangible-property solicitation with out-of-state approval/fulfilment, state-incorporated/resident exceptions and defined contractor treatment. It does not create an all-tax or services exemption. Displayed text currency through Public Law 119-124 (October 15, 2026).
Detailed rule records (1)
15 USC § 381 limits state net-income taxation only for the specified interstate tangible-property solicitation activities and conditions. It is not an all-tax or all-service safe harbour.
15 USC § 381: limited protection from state net income taxKeep this reading in your learning library.
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