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L.L. BEAN v. COMMONWEALTH PENNSYLVANIA (10/22/86)

decided: October 22, 1986.

L.L. BEAN, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF REVENUE, RESPONDENT



Original Jurisdiction in case of L.L. Bean, Inc. v. Commonwealth of Pennsylvania, Department of Revenue.

COUNSEL

George S. Isaacson, with him, Martin I. Eisenstein, Brann & Isaacson, and Thomas L. Wenger, Wix, Wenger and Weidner, for petitioner.

George T. Bell, Chief Counsel, with him, Arthur F. McNulty, Assistant Counsel, and Karen L. Stevens, Assistant Counsel, for respondent.

Judges Craig, MacPhail, Doyle, Barry, Colins and Palladino. Opinion by Judge Doyle. President Judge Crumlish did not participate in the decision in this case.

Author: Doyle

[ 101 Pa. Commw. Page 437]

L.L. Bean, Inc. (L. L. Bean) seeks from this Court a declaratory judgment as to whether it is liable to collect and remit certain use taxes on behalf of the Commonwealth of Pennsylvania or, in the alternative, to provide transactional sales information or permit auditors from the Department of Revenue (Department) of the Commonwealth of Pennsylvania to review its books to gain such information with respect to sales conducted by mail with Pennsylvania residents. L. L. Bean seeks in addition a permanent injunction restraining the Department from imposing upon it a duty to collect and remit said taxes. The Department of Revenue has moved for summary judgment; no corresponding motion for summary judgment has been made by L. L. Bean.

Section 237(b) of the Tax Reform Code of 1971 (Code), Act of March 4, 1971, P.L. 6, as amended, 72 P.S. ยง 7237(b) provides in pertinent part:

(1) Every person maintaining a place of business in this Commonwealth and selling or leasing tangible personal property or services . . . the sale or use of which is subject to tax shall collect the tax from the purchaser or lessee at the time of making the sale or lease, and shall remit the tax to the department.

(2) Any person required under this article to collect tax from another person, who shall fail to collect the proper amount of such tax, shall be liable for the full amount of the tax which he should have collected.

[ 101 Pa. Commw. Page 438]

"Maintaining a place of business" as that term is used in Section 237(b) is defined in Section 201(b) of the Code, 72 P.S. 7201(b), as follows:

(1) Having or maintaining within this Commonwealth, directly or by a subsidiary, an office, distribution house, sales house, warehouse, service enterprise or other place of business, or any agent of general or restricted authority irrespective of whether the place of business or agent is located here permanently or temporarily or whether the person or subsidiary maintaining such place of business or agent is authorized to do business within the Commonwealth; or

(2) The engaging in any activity as a business within this Commonwealth by any person, directly or by a subsidiary, in connection with a lease, sale or delivery of tangible personal property or the performance of services thereon for use, storage or consumption including, but not limited to, having, maintaining or using any office, distribution house, sales house, warehouse or other place of business, any stock of goods or any solicitor, salesman, agent or representative under its authority, at its direction or with its permission, regardless of whether the person or subsidiary is authorized to do business in this Commonwealth.

(3) Regularly or substantially soliciting orders within this Commonwealth in connection with the lease, sale or delivery of tangible personal property to or the performance thereon of services for residents of this Commonwealth by means of catalogues or other advertising, whether such orders are accepted within or without this Commonwealth.

[ 101 Pa. Commw. Page 439]

    items sold to Pennsylvania residents are not exempt under Pennsylvania's use tax. Products similar to those pictured in L. L. Bean catalogs can be purchased from Pennsylvania vendors and if so purchased would be subject to Pennsylvania sales tax.

L. L. Bean purchases some items from Pennsylvania manufacturers for resale; all such products are received by L. L. Bean at its Maine facilities. L. L. Bean employees make infrequent visits to Pennsylvania-based manufacturers from whom L. L. Bean purchases merchandise for resale. Such visits are made for the purpose of discussing problems concerning past shipments and future purchases.

L. L. Bean once engaged a Pennsylvania law firm to file a proof of claim in a U.S. Bankruptcy Court. L. L. Bean has never enlisted a Pennsylvania credit bureau or collection agency. L. L. Bean operates a toll-free "800" number which can be used by Pennsylvania residents. Local telephone companies which are necessary to complete such calls are under the jurisdiction of the Pennsylvania Public Utility Commission, but "800" telephone service is regulated by the Federal Communications Commission. L. L. Bean makes its customer lists available to other mail-order companies.

In addition to the above-mentioned facts, the parties have also stipulated as to L. L. Bean's transactions with V.F. Corporation (V.F.), a Pennsylvania corporation which maintains, owns and operates several outlet stores in the Reading, Pennsylvania area. V.F. is in no way affiliated through stock ownership with L. L. Bean. V.F. does collect Pennsylvania sales tax at its outlet stores and remits such collections to the Department. Beginning in October 1983, L. L. Bean began selling and shipping to V.F. goods which had been returned to L. L. Bean by its ...


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