The Massachusetts Appellate Tax Board has ruled that a manufacturer's sales

force had sufficient nexus with the state to subject it to corporate excise

tax (Alcoa Building Products Inc. v. Commissioner of Revenue, Sep 25, 2002).

Alcoa Building Products Inc. (Alcoa) is engaged in the business of

manufacturing and selling building products, including vinyl siding. Alcoa

maintained manufacturing facilities or offices in Ohio, South Carolina,

Texas, Illinois, and Virginia but did not maintain an office, facility,

warehouse, or other place of business in Massachusetts. Alcoa timely filed

foreign business or manufacturing corporation excise tax returns and timely

paid the minimum excise due. In 1999, the commissioner of revenue assessed

additional corporate excise tax against Alcoa for years 1994 through 1996,

and Alcoa filed applications for abatement. The commissioner denied the

applications, and Alcoa filed petitions with the Appellate Tax Board

(Board).

Alcoa argued that its activities in the commonwealth were within the

protection offered by Pub. L. 86-272, which prohibits state taxation of a

corporation whose only physical presence in the taxing jurisdiction is the

solicitation of orders. The commissioner maintained that the activities of

Alcoa's sales force, particularly their involvement in product training

seminars and warranty claims activities, exceeded the protection of Pub. L.

86-272. The Board stated that after Pub. L. 86-272 was enacted, it was

Wisconsin Department of Revenue v. Wrigley (1992) that provided guidance on

what activities were to be included in the term "solicitation". The Board

explained that the Wrigley court decision found that the in- state

recruitment, training, and evaluation of sales employees and the

intervention in credit disputes were activities entirely ancillary to

solicitation and therefore were protected by Pub. L. 86- 272. The Board

found, however, that unlike the mediating function in credit disputes

performed by the on-location sales staff in Wrigley, Alcoa's sales personnel

took active steps towards resolving warranty issues.

The Board also stated that, although there is no bright line to determine

those activities which are not entirely ancillary to solicitation, and sales

representatives in on-going customer relationships have a particular need to

be attentive to the needs of their customers, the activities of Alcoa's

field representatives sufficiently exceeded the protected realm of

soliciting sales. The Board added that Alcoa's sales personnel took active

steps towards resolving warranty issues, initiating over one-third of the

warranty claims.

Alcoa asserted that its sales force could not be expected to ignore the

concerns of its customers, but the Board stated that in the Wrigley

decision, the supreme court specifically found that industry customs and

professional practices should not dictate the results of tax cases. The

Board determined that the warranty claims activities performed by the Alcoa

sales force had independent business purposes beyond the solicitation of

orders and exceeded the protection of Pub. L. 86-272. The Board found in

favor of the commissioner.

=============== FULL TEXT ===============

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ALCOA BUILDING PRODUCTS, INC.

v.

COMMISSIONER OF REVENUE

Docket Nos. F257765, F257766, F257767

Promulgated:

September 25, 2002

[1] These are appeals under the formal procedure pursuant to G.L. c. 62C, §

39 from the refusal of the appellee to abate corporate excise taxes assessed

against the appellant under G.L. c. 63, § 38 for tax years 1994, 1995, and

1996.

[2] Commissioner Rose heard these appeals and was joined in the decision for

the appellee by Chairman Burns and Commissioners Scharaffa, Gorton, and

Egan.

[3] These findings of fact and report are made at the requests of the

appellant and the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

[4] James F. Ring, Esq., William A. Hazel, Esq., J. Thomas Price, Esq., and

Mary C. Mitchell, Esq. for the appellant.

[5] John DeLosa, Esq. and Timothy Stille, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

[6] On the basis of a Statement of Agreed Facts and testimony and exhibits

offered at the hearing of these appeals, the Appellate Tax Board ("Board")

made the following findings of fact. The appellant, Alcoa Building Products,

Inc. ("Alcoa"), is a corporation organized under the laws of Ohio with its

headquarters in that state. Alcoa is engaged in the business of

manufacturing and selling building products, including vinyl siding. At all

times relevant to these appeals, Alcoa maintained manufacturing facilities

or offices in Ohio, South Carolina, Texas, Illinois, and Virginia. Alcoa did

not maintain an office, facility, warehouse, or other place of business in

Massachusetts.

[7] For tax years ending December 31, 1994, December 31, 1995, and December

31, 1996 ("the tax years at issue"), Alcoa, pursuant to valid extensions,

timely filed with the Commissioner of Revenue ("Commissioner") Forms 355B

Foreign Business or Manufacturing Corporation Excise Tax Returns and timely

paid the minimum excise of $456 shown as due thereon. After conducting an

audit of the appellant, the Commissioner issued to the appellant a Notice of

Intent to Assess ("NIA") dated October 8, 1998. Following a conference

between the parties, subsequent correspondence, and a hearing before the

Commissioner's Appeal and Review Bureau, the Commissioner issued to Alcoa a

Notice of Assessment ("NOA") dated December 28, 1999 in which the

Commissioner assessed additional corporate excises for the tax years at

issue. The additional assessments, exclusive of interest and penalties, were

$51,833, $36,931, and $86,992 for tax years 1994, 1995, and 1996,

respectively.

[8] Alcoa timely filed applications for abatement for each tax year on

January 27, 2000. By letter dated June 27, 2000, Alcoa through its attorneys

withdrew its request for a hearing on the applications for abatement. The

Commissioner subsequently issued a Notice of Abatement Denial dated June 29,

2000. Thereafter on July 7, 2000, Alcoa timely filed petitions under the

formal procedure with the Board for each of the tax years at issue. The

Board accordingly found it had jurisdiction over each of these appeals.

[9] The issue in these appeals is whether Alcoa's activities in the

Commonwealth exceeded the protection offered by Pub. L. 86- 272, which

prohibits state taxation of a corporation whose only physical presence in

the taxing jurisdiction is the solicitation of orders.1 During the tax years

at issue, Alcoa employed in Massachusetts either four or five individuals

who were known as "district sales managers." Some district sales managers

lived in Massachusetts, and all were assigned a sales territory within the

state. Alcoa maintained that its only activity in Massachusetts was the

solicitation of orders by its sales force, which sent the orders to Stuarts

Draft, Virginia or Sidney, Ohio, where they were accepted or rejected. If

accepted, the orders were then filled and items were shipped to the

customers directly from these locations. The Commissioner, however,

maintained that the activities of the sales force, namely their involvement

in product training seminars and warranty claims activities, exceeded the

protection of Pub. L. 86- 272 and, accordingly, Alcoa was properly subject

to the Massachusetts corporate excise for the tax years at issue.

1. Product training seminars.

[10] The Board made the following findings of fact relative to the product

training seminars conducted by Alcoa's sales representatives. In years prior

to tax year 1994, Alcoa sales managers conducted training sessions featuring

videos that addressed the sale and installation of Alcoa vinyl products.

These videos were shown to a small audience of contractors or distributors

from a particular customer location. Upon completion of a program, the

seminar participants would complete a questionnaire on the training session

topic. Alcoa sent the questionnaires to an independent company in Pittsburgh

called Data Banque that contracted with the appellant. Data Banque then sent

an "A+" certificate to each participant who had completed the questionnaire

and sent a report to Alcoa listing the name and company affiliation of each

certificate recipient.

[11] During the audit of the appellant, the Commissioner's auditor

corresponded with Carol Pawlos, an administrator of income and franchise tax

for Alcoa, Inc., the parent corporation of the appellant. Ms. Pawlos worked

in the parent corporation's office located in Pittsburgh, Pennsylvania. In

response to the auditor's questions about the appellant's activities during

the tax years at issue, 1994 through 1996, Ms. Pawlos reported in her

February 2, 1999 letter that an estimated eight "A+" training sessions per

year were held in Massachusetts during the tax years at issue. Because she

did not work for the appellant directly, Ms. Pawlos had relied upon

information supplied to her by Dan Mittman and Ricardo Gibellino, two of

appellant's representatives from its Ohio office, for information about

Alcoa's activities in Massachusetts.

[12] After the Commissioner assessed corporate excise taxes against it, the

appellant then engaged Massachusetts counsel to appeal the assessment.

Counsel examined all responses to the Commissioner's auditors and closely

questioned Mr. Gibellino, a regional sales manager, about the "A+" training

sessions. Upon his re-examination of this issue, Mr. Gibellino reviewed

documentary records, including the list of individuals who had completed

"A+" questionnaires compiled by Data Banque. Based on the information he

reviewed, Mr. Gibellino concluded that contrary to the information that had

been supplied to Ms. Pawlos, the "A+" training sessions in Massachusetts had

ended prior to tax year 1994. Mr. Gibellino explained that district sales

managers participated in a few trade shows in Massachusetts per year for

each of the tax years at issue - four shows in 1994, two shows in 1995, and

three shows in 1996. During these trade shows, the district sales managers

made product video tapes and related workbooks available to distributors

and, on occasion, to building contractors attending the trade shows. These

parties could have reviewed the materials and answered questionnaires on

their own and then mailed completed questionnaires to Data Banque, who would

have furnished them with the "A+" certificates. However, this activity would

have been performed independently without the conducting of training

seminars by Alcoa. Mr. Gibellino signed sworn interrogatory answers, which

were admitted into evidence in these appeals, to this effect.

[13] Alcoa's counsel alerted the Commissioner's counsel to the difference

between the new interrogatory responses and the statements previously

submitted by Ms. Pawlos during audit. Alcoa agreed to allow the Commissioner

to conduct depositions of both Ms. Pawlos and Mr. Gibellino. Ms. Pawlos also

testified at the hearing of these appeals. Ms. Pawlos admitted that she did

not have personal knowledge of the facts relative to the training sessions

held in Massachusetts by the appellant, and that she had relied upon

information from Mr. Mittman and Mr. Gibellino from the appellant's Ohio

office in responding to the auditor's questions. The Board found Ms. Pawlos'

testimony to be credible.

[14] The appellant also submitted into evidence a list of all individuals

who had received "A+" certificates generated by Data Banque. According to

this list, only four individuals received certificates in 1994, and only two

individuals received certificates in 1995 and 1996. These participants were

affiliated with different companies with the exception of two individuals

from the same company who received certificates in 1994. However, one of

these individuals received one certificate and the other individual received

four certificates during this year. The Board found that the very small

number of "A+" certificate recipients and the varied customer locations

among these recipients indicated that Alcoa did not conduct training

seminars before groups of individuals during the tax years at issue.

[15] The Board found the testimony, answers to interrogatories, and the

other documents submitted into evidence by Alcoa to be credible on the issue

of whether Alcoa had conducted training seminars in Massachusetts during the

tax years at issue. On the basis of the evidence, the Board found that the

appellant had ceased conducting its "A+" training program in Massachusetts

prior to the start of the tax years at issue. Accordingly, the Board did not

reach the issue of whether this training program would have created a

sufficient nexus with Massachusetts for purposes of corporate excise

liability under Pub. L. 86-272.

2. Warranty claims activities.

[16] The Board made the following findings of fact relative to warranty

claims activities performed in Massachusetts by the Alcoa sales force.

Documents submitted by Alcoa indicated that Alcoa district sales managers

assumed responsibility for initiating Massachusetts warranty claims and

investigating these claims in Massachusetts during the entire period at

issue. In tax years 1994 and 1995, district sales managers initiated 37% of

the total number of warranty claims filed nationally with Alcoa, and in tax

year 1996, district sales managers initiated 35% of the company's total

warranty claims. District sales managers initiated more claims than their

customers, the distributors, for tax years 1994 and 1995, and they initiated

more claims than homeowners for all three tax years. The Board also found

that district sales managers visited warranty claim sites in Massachusetts

on a consistent basis during the audit periods. The district sales managers

made an average of 1.73 visits to Massachusetts per month in tax year 1994,

1.60 visits per month in tax year 1995, and 1.31 visits per month in tax

year 1996 to investigate the merits of warranty claims.

[17] Moreover, the Board found that as a matter of courtesy to their

customers, with whom they had ongoing professional relationships, district

sales managers provided assistance with various tasks relative to filing

their claims. According to testimony from Mr. Gibellino, a regional sales

manager with Alcoa during the tax years at issue, district sales managers

visiting a warranty claim site would retrieve and send a sample of the

defective product to Alcoa's warranty claims department when the claim

involved fading of the Alcoa product. When asked whether he had ever filled

out claim forms when he visited a warranty claim site, Terrance Costello, a

district sales manager during the periods at issue, testified, "I can't say

that I never did do that, but that was not the focus of what I was doing."

Then, when asked whether he had ever intervened in a warranty claim that had

been rejected by the warranty department, Mr. Costello testified, "[a]gain,

in the interest of selling, if this guy I've got to sell tomorrow wanted me

to accompany him on a particular problem, I might have gone. I won't tell

you I didn't." The Board found that Mr. Gibellino's and Mr. Costello's

testimonies supported a finding that the sales force performed various

warranty claims tasks to foster continuing relationships with their

customers.

[18] The Board further found that visiting certain job sites to investigate

warranty claims was actually considered part of an Alcoa sales manager's

job. Mr. Gibellino stated during his deposition, the transcript of which was

submitted as an exhibit in these appeals, that the sales force was expected

to call on sites involving new construction because the warranty claims

there often resulted from the inappropriate use of an Alcoa product rather

than from a defect in the product itself. As indicated by the following

deposition excerpt, these visits were considered a form of damage-control

for Alcoa's reputation among its customers, and therefore, integral to the

district manager's job:

CROSS-EXAMINATION BY MR. RING:

Q: Did Alcoa encourage salespeople to go out and deal with technical

issues on the outside or discourage them from doing that?

A: Well, again, it's differences in new construction. I think new

construction is a little different than a home owner because number one,

you're normally talking about a bigger job. So you don't want to ignore the

people. No, we don't - again, on a claim in process, we don't want to have

them to begin with, but again, this is all in context to, you know, material

coming out of the box.

You know, in any customer, and again, bigger, would want to get out

there and make sure that they just don't say the hell with this and take it

out and put somebody else's on it. And a lot of times our experience is with

builders, I would say 95 percent of the time, it's not our problem.

It's - so it's not the same as - say a builder would call in with a

job that's been on there for five years. Yeah. And it's a fade. We don't

want them to go out because again, he just has to send it back. That's not

his thing. But any job where that's happening and we do encounter it a lot

more on new construction we probably got there pretty quick because a lot of

times it's not our problem. It's something else or we get a bad [r]ap I

guess is the thing.

Q: When salesmen are asked to go out the tendency is they go out. Is

that what your testimony is?

A: Well, again, we discourage them to go out on old claims that they

can't do anything about that is not a salesman issue. Again, this builder is

a repeat or whatever we're talking about here that the job is going on.

There could be a problem with our product.

And you do want to take care of them so he continues to buy, finish

that job because as you know, there is other builders or buys the other

project from us. And then I refer to experience that a lot of times it's not

our problem so you end up going out there even knowing that but you want to

get it resolved so everybody is happy and understands it's not the product.

Q: Is that considered to be part of the sales function?

A: Oh, yes.

Based on this evidence, the Board found that the Alcoa sales managers and

other personnel understood that the sales managers' job included

investigating warranty claims at ongoing construction sites to protect Alcoa

from losing sales to competitors or gaining a bad reputation with its

customers.

[19] While the sales representatives may have understood their activities to

be related to maintaining good client relations with their ongoing

customers, the Board found that the activities of initiating warranty

claims, investigating on-site claims, remitting samples for review of the

claim, and filling out paperwork were not sufficiently related to the

solicitation of sales. Instead, these activities were intended to protect

Alcoa's reputation and to increase sales. As will be explained in the

Opinion, the difference between activities intended to facilitate the

solicitation of sales and those intended to facilitate sales in general can

be subtle, but it is not one without a legal distinction for purposes of the

corporate excise and the protection afforded by Pub. L. 86-272. Moreover,

the Board found that because the district sales managers initiated more than

one-third of the warranty claims filed with Alcoa and made an average of

more than one visit per month to Massachusetts sites to review warranty

claims during all three of the tax years at issue, the warranty claims

activities performed by the sales personnel could not be classified as de

minimis. The Board thus found that Alcoa was properly subject to

Massachusetts corporate excise for the tax years at issue. Accordingly, the

Board issued a decision for the appellee in these appeals.

OPINION

[20] G.L. c. 63, § 39, imposes an excise for the privilege of doing business

on "every foreign corporation . . . actually doing business in the

commonwealth . . . ." However, this broad taxing authority is limited by

Congress' plenary powers granted under the Commerce Clause of the United

States Constitution to regulate interstate commerce. Pursuant to this power,

Congress enacted Pub. L. 86-272, which prohibits individual states from

taxing the income earned by an out-of-state person or entity, if the person

or entity's only business activities within the state consist of the

following:

(1) the solicitation of orders by such person, or his

representative, in such State for sales of tangible personal property, which

orders are sent outside the State for approval or rejection, and, if

approved, are filled by shipment or delivery from a point outside the State;

and

(2) the solicitation of orders by such person, or his

representative, in such State in the name of or for the benefit of a

prospective customer of such person, if orders by such customer to such

person to enable such customer to fill orders resulting from such

solicitation are orders described in paragraph (1).

15 U.S.C. § 381(a).

[21] After Congress enacted Pub. L. 86-272 in 1959, there was little federal

guidance on what activities, beyond the actual proposal of a sale, were to

be included in "solicitation" until 1992 when the Supreme Court decided

Wisconsin Department of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214

(1992). The taxpayer in that case, William Wrigley, Jr., Co. ("Wrigley"), a

manufacturer of chewing gum, was based in Chicago but conducted business

nationwide through the activities of its district managers, regional

managers, and sales or "field" representatives. Id. at 216-17. At issue in

Wrigley were the activities of a district manager who had his office in

Illinois and visited Wisconsin only six to nine days each year, a regional

manager for the Milwaukee region who resided in Wisconsin but was not

provided a company office, and field representatives assigned to the

Milwaukee region who resided in Wisconsin and used Wrigley-supplied company

cars but were not provided with offices. Id. Wrigley also provided field

representatives with a stock of gum with an average wholesale price of about

$1,000, a supply of display racks, and promotional literature. Id. at

217-18. Most field representatives stored these items at home, but one

representative whose apartment was small rented storage space for about $25

per month for which Wrigley reimbursed him. Id. at 218.

[22] The main tasks of the sales force were distributing promotional

materials and free samples and requesting orders of Wrigley's products at

retail stores. Often, the field representatives also replaced their retail

customers' stale gum supplies ("stale gum swaps") and supplied gum, at a

cost, to their retail customers when the customers' supplies were low and

they did not want to wait for their next order ("agency stock checks"). Id.

The regional managers were responsible for recruiting, training and

evaluating all regional sales representatives, including presiding at

meetings in hotels and homes located in Wisconsin. Id. at 217. On occasion,

perhaps two or three times a year, a regional sales manager would also

contact the Chicago office about "'rather nasty' credit disputes involving

important accounts in order to 'get the account and [Wrigley's] credit

department communicating.'" Id. at 217, 235.

[23] The Supreme Court considered whether the following six activities cited

by the Wisconsin Department of Revenue exceeded the "solicitation of orders"

protected by Pub. L. 86-272: the replacement of retail customers' stale gum

by sales representatives; the agency stock checks; the storage of gum,

racks, and promotional materials by field representatives; the rental of

storage space; the regional managers' recruitment, training, and evaluation

of employees in Wisconsin; and the regional managers' intervention in some

credit disputes. Id. at 232. In its analysis, the Court separated the

activities "between those activities that are entirely ancillary to requests

for purchase -- those that serve no independent business function apart from

their connection to the soliciting of orders -- and those activities that

the company would have reason to engage in anyway but chooses to allocate to

its in-state sales force." Id. at 228-29 (emphasis in original).

[24] The Court emphasized that solicitation was not to be extended to any

activity simply connected with sales in general, drawing a distinction

between sales and solicitation of sales: "it is not enough that the activity

facilitate sales; it must facilitate the requesting of sales. . . ." Id.

(emphasis in original). In drawing this distinction, the Court noted that a

certain activity, such as repair or servicing, "may help to increase

purchases; but it is not ancillary to requesting purchases, and cannot be

converted into 'solicitation' by merely being assigned to salesmen." Id. at

229 (emphasis in original). The Court was careful, however, not to construe

the "entirely ancillary to solicitation" standard in a manner that was

"hopelessly unworkable." Id. at 230. To that end, the Court found that

activities that occurred after a sale could still be "entirely ancillary" to

solicitation, especially since "manufacturers and distributors ordinarily

have ongoing relationships that involve continuous sales, making it often

impossible to determine whether a particular incidental activity was related

to the sale that preceded it or the sale that followed it." Id. at 230-31.

The Court also allowed exception for activities that, while not entirely

ancillary to solicitation of sales, were nonetheless de minimis. Id. at

231-32.

[25] Ultimately, the Court found that the replacement of stale gum, the

agency stock checks, and the storage of gum in Wisconsin were not activities

protected by Pub. L. 86-272. Id. at 233-34. The replacement of stale gum was

not entirely ancillary to solicitation of sales because, while quality

control facilitated sales in general, it did not sufficiently relate to the

specific act of requesting sales: "Wrigley would wish to attend to the

replacement of spoiled product whether or not it employed a sales force."

Id. at 233. Accordingly, this quality control "serve[d] an independent

business function quite separate from requesting orders . . . ." Id. The

Court also found that the supplying of gum through "agency stock checks" was

not ancillary to solicitation. While the gum was provided to fill

complimentary display racks and promotional materials designed to solicit

the retailer's customers,2 the retailers had to pay for the gum. Id.

Focusing on this important fact, the Court found that the business purpose

for supplying purchased merchandise was "quite independent from the purpose

of soliciting consumers." Id. at 234. The Court likewise found that the

storage activities were not entirely ancillary to the solicitation of sales,

because the gum stored in the Wisconsin homes and rental space was used

primarily for the unprotected activities of stale gum swaps and "agency

stock checks." Id. Finally, the Court found that these activities "taken

together" occurred too frequently to be considered de minimis. Id. at 235.

[26] However, the Court found that the in-state recruitment, training, and

evaluation of sales employees and the intervention in credit disputes were

activities entirely ancillary to solicitation and therefore protected by

Pub. L. 86-272. Id. at 234. First, the Court succinctly stated that the

recruitment, training, and evaluation of the sales force in Wisconsin hotels

and homes "served no purpose apart from their role in facilitating

solicitation." Id. The Court likewise found the credit dispute activity to

be entirely ancillary to the solicitation of sales. The Court found that

this occasional activity simply served a "mediating function," the purpose

of which was to "ingratiate the salesman with the customer, thereby

facilitating requests for purchases." Id. Because of this direct link

between mediating on behalf of established customers and soliciting sales

from those established customers, this activity would hardly have been

assigned to another employee, "some company ombudsman, so to speak," apart

from the sales force. Id. Accordingly, the Court found this activity to be

entirely ancillary to the solicitation of sales and thus within the

protection of Pub. L. 86-272. Id.

[27] The Massachusetts Supreme Judicial Court has followed these principles

from Wrigley and applied them to other scenarios. First, in Kennametal, Inc.

v. Commissioner of Revenue, 426 Mass. 39 (1997), cert. denied, 523 U.S.

1059(1998), the court addressed a manufacturing company conducting business

in Massachusetts through the activity of its sales force, which consisted

primarily of tooling systems engineers ("TSEs"). In the course of soliciting

orders, these experienced engineers engaged in various technical activities,

including using samples to test the performance of Kennametal's products,

preparing reports on these tests, preparing inventory analyses for a tool

standardization program, and making frequent in- plant presentations of up

to six hours in length on the use of Kennametal's products. Id. at 44-45.

While acknowledging that "[t]here exists no bright line to distinguish those

activities that are entirely ancillary to the solicitation of orders from

those that also serve an independent business function," the court upheld

the Board's finding that the TSEs' activities exceeded the solicitation of

orders. Id. at 45. The court affirmed the finding that Kennametal had

reasons independent of soliciting orders for having its TSEs perform the

tests, analyses, and presentations, including improving the performance of

Kennametal's products and relieving Kennametal from producing "lengthy and

detailed product manuals for customers." Id. Moreover, the court emphasized

the Wrigley principle that "the activities must facilitate the actual

solicitation of orders; they may not merely serve to increase general

sales." Id. (citing Wrigley, 505 U.S. at 233).

[28] Then, in Amgen Inc. v. Commissioner of Revenue, 427 Mass. 357 (1998),

the court addressed activities performed on behalf of a drug company by

professional sales representatives ("PSRs") and clinical support specialists

("CSSs"). The primary responsibility of the PSRs was to call on doctors and

nurses to persuade them to prescribe Amgen's products. Id. at 358. The PSRs

were not medical professionals, and they did not carry samples. Id. However,

the activities of the CSSs were far more extensive, including conducting

frequent programs on Amgen's products at hospitals and other facilities

attended by nurses and patients and occasionally reviewing individual

patient charts or answering questions about the use or dosage of Amgen's

products in relation to specific patients. Id. at 358-59. The court found

that the Board had correctly ruled that reviewing patient charts and

answering questions about use and dosage for specific patients had an

independent business function beyond the solicitation of orders for Amgen's

products. Id. at 361-62. Even though the Board did not specify what the

independent business function might have been, the court nonetheless found

that the existence of possible business purposes, including the reduction of

calls to Amgen's Professional Services Group or to its "hotline," justified

the Board's finding that Amgen had assigned to the CSSs tasks that exceeded

the solicitation of orders. Id. at 362.

[29] Based on the court's specific applications of Wrigley in the above

cases, the Board in these appeals found that the warranty claims activities

performed by the field representatives were not entirely ancillary to

solicitation but instead had separate business purposes. Although no "bright

line" exists to parcel out those activities which are not entirely ancillary

to solicitation, and sales representatives in on- going customer

relationships have a particular need to be attentive to the needs of their

customers, the Board found and ruled that the activities of Alcoa's field

representatives sufficiently exceeded the protected realm of soliciting

sales. Unlike the "mediating function" in credit disputes performed by the

on-location sales staff in Wrigley, Alcoa's sales personnel took active

steps towards resolving warranty issues. District sales managers initiated

over one-third of the warranty claims during all three tax years and visited

Massachusetts sites periodically to review claims in order to protect

Alcoa's reputation. The sales force also provided some assistance with

preparing paperwork relative to filing warranty claims, including remitting

samples to the warranty claims department for evaluation. Regardless of

whether the sales force could actually resolve claims without approval from

the claims department, the Board found and ruled that their active steps

exceeded a mere mediating function to "ingratiate the salesman with the

customer, thereby facilitating requests for purchases." Wrigley, 505 U.S. at

235. Instead, the Board found that these warranty activities had independent

business purposes, including the improvement of Alcoa's products and the

enhancement of Alcoa's reputation among buyers, which purposes have been

found by the court to exceed the solicitation of sales:

Kennametal had reasons independent of soliciting orders that

motivated it to provide the activities in question, even if no sales force

operated in the Commonwealth. For example, the proper use of Kennametal's

products improves performance and enhances the company's reputation among

buyers. This can be especially important for companies such as Kennametal

that attempt to promote their products as being of higher quality than those

of competitors.

Kennametal, 426 Mass. at 45.

[30] Despite Alcoa's argument that its sales force could not be expected to

ignore the concerns of its customers, the Supreme Court has specifically

found that industry customs and professional practices should not dictate

the results of tax cases. Wrigley, 505 U.S. at 227 ("If, moreover, the

approach were to be applied (as respondent apparently intends) on an

industry-by-industry basis, it would render the limitations of § 381(a)

toothless, permitting 'solicitation of orders' to be whatever a particular

industry wants its salesmen to do."). The Board's ruling in these appeals

should not be influenced by whether these activities were suitable for

performance by a sales force. See Wrigley, 505 U.S. at 227 (specifically

rejecting a "'customarily-performed-by-salesmen' approach"). Instead, based

on the evidence, the Board here found and ruled that the activities at issue

sufficiently exceeded the solicitation of sales protected by Pub. L. 86-272

to create a solid nexus with Massachusetts and, accordingly, justify Alcoa's

liability for corporate excise.

[31] The Board found and ruled that the warranty claims activities performed

by the Alcoa sales force had independent business purposes beyond the

solicitation of orders and thus exceeded the protection of Pub. L. 86-272.

Because Alcoa had sufficient nexus with the Commonwealth, the Commissioner

properly assessed corporate excise for the tax years at issue. Accordingly,

the Board issued a decision for the appellee in these appeals.