A partner in the CPA Firm you work for has asked you to evaluate whether a tax that has been imposed on the Firm's client is valid under the Commerce Clause. In evaluating this scenario, what would you consider in making this evaluation?

The facts are as follows:

Your Firm's client, National Polls Inc which specializes in analyzing political polling. The Company's employees speak with potential voters throughout the United states and National Poll's employee's travel extensively in each state in the U.S.

The State of Massachusetts imposes a gross receipts tax for the privilege of doing business within the State of Massachusetts. The tax is imposed at 1% of gross revenues from Massachusetts sources and is applied to all businesses. Massachusetts applies a payroll apportionment factor to service businesses operating in multiple state. The payroll factor is computed as compensation paid to employees while working in Massachusetts as a percentage of all compensation paid everywhere.

2.

You are an associate in a CPA firm and your Manager has asked you evaluate whether the Firm's client, Safety Kids Inc, has a substantial nexus with Rhode Island that would support an imposition of tax on your client, using the analysis applied in Tyler Pipe. For purposes of this evaluation, ignore P.L. 86-272.

Safety Kids Inc. is a Connecticut Corporation with it's headquarters in Massachusetts. Safety Kids Inc manufactures and distributes monitors for children to wear on their wrists where parents can monitor the child's whereabouts at all times. Safety Kids Inc has sales representatives that meet with the retailers that sell this product to the public, including retailers located in Rhode Island. All of Safety Kid's representatives are independent contractors. Further, Safety Kids has developed software that was developed by the company and is provided to it's customers under a licensing agreement whereby Safety Kids retains ownership of the sfotware. Safety Kids has no other activity within the State of Rhode Island.