218 A.D. 1 | N.Y. App. Div. | 1926
The State Tax Law imposes an income tax upon the net income of a non-resident to the extent that such income is derived “ from all property owned and from every business, trade, profession or occupation carried on in this State by natural persons not residents of the State.” (Tax Law, § 351, as added by Laws of 1919, chap. 627.) A law imposing such a tax is constitutional (Shaffer v. Carter, 252 U. S. 37.) The tax is not laid upon the person but upon the thing. In the case cited, Mr. Justice Pitney, in holding that a State may tax the net income of a non-resident, said: “ That it may tax the land but not the crop, the tree but not the fruit, the mine or well but not the product, the business but not the profit derived from it, is wholly inadmissible.” Again he said: “As to non-residents, the jurisdiction extends only to their property owned within the State and their business, trade, or profession carried on therein, and the tax is only on such income as is derived from those sources.” In the case of a non-resident complaining of an income tax assessed against his profits, therefore, the question is one of jurisdiction and power to tax. In such a case it must appear that the income taxed .is the product of a New York business, otherwise a subject of taxation is non-existent.
The relator is a resident of the State of Connecticut. He conducts an extensive business in buying and selling raw furs. He has a principal office in New York city and a branch office in St. Louis. He also buys and sells large quantities of fur in Europe through agents in Paris, London and Leipzig. It was established
In the Kohlman case the complaining taxpayer was a domestic corporation. The tax complained of was assessed under article 9-A of the Tax Law, which imposes a franchise tax upon domestic business corporations, except as therein exempted, the prescribed measure of which was net income derived from New York State business. The question involved was whether certain “ bills and accounts receivable arose from orders received or accepted by any officer or agent, or at any place of business, in this State ” within the meaning of section 214 of the Tax Law (added by Laws of 1917, chap. 726, as amd by Laws of 1920, chap. 640). The taxpayer had rested content with the bare statement that some of its accounts were for goods sold through agents who, outside the State, accepted orders therefor, without further specification as to the amount of such accounts. It was held that the tax was presumably correct; that upon the relator was cast the burden of showing any error in the assessment and the quantum thereof; that.it had failed to overcome the presumption of the validity of the tax; that the tax must stand. Nevertheless, the court said: “ We leave the question open whether power to remit exists if it appears that the Commission in stating the account has proceeded upon a principle or theory fundamentally erroneous though the court is without the data that enable it to substitute the right assessment for the wrong one.” In that case the taxpayer was a resident of the State to the jurisdiction of which its person was at all times subject It was susceptible to taxation, if the
The case of People ex rel. Stafford v. Travis (supra) is a precise authority justifying a determination herein that the matter be remitted. That case involved a tax upon the income of a nonresidént. It appeared therein that a portion of the net income of the relator was derived from sales consummated outside of the State of New York. The extent of the income so derived did not appear. Nevertheless, the matter was remitted to the Comptroller (now Tax Commission) to take proof in relation to the amount of income so derived and to fix the tax upon net incbme derived from sales consummated within the State of New York. The court said:
“ As counsel for respondent substantially concedes that some or all of the orders taken by the relator in foreign countries by traveling salesmen employed by him are by authority of the relator accepted for him by such salesmen and there become consummated agreements of purchase and sale between the relator and such customers, it will
The determination should be annulled and the proceedings remitted to the Tax Commission to proceed in accordance herewith.
All concur.
Determination annulled, with fifty dollars costs and disbursements, and matter remitted to the State Tax Commission to proceed in accordance with the opinion herein.