If an out-of-state trade-show promoter's only New York activity is renting a convention center for a single three-day franchise expo, does that one event make it subject to New York corporate franchise tax?

Plain-English summary

Blenheim Franchise Shows, Inc. produces small franchise trade shows and earns fees from exhibitors. Its only office, management, and controlling operations are all in Winter Park, Florida, with no employees anywhere else in the country. To run a show, it rents convention-center or hotel space, advertises through three media channels, hires local temporary staff, and typically sends one company representative -- a show usually runs two open days plus one set-up day. In 1990 the company produced 43 shows nationwide, but only one was in New York: a single event at the Buffalo Convention Center, licensed from the City of Buffalo for one set-up day and two open days, generating a little over one percent of the company's revenue. The company employs no capital, owns no property, and maintains no office in New York. It asked whether this single event makes it subject to Article 9-A.

The answer: yes. Applying the multi-factor "doing business" test in Regulations section 1-3.2(b) -- nature, continuity, frequency, and regularity of New York activity compared to activity elsewhere -- the Department found the Buffalo show sufficient, drawing an analogy to prior rulings where in-state activity created nexus despite no office or property: Theatron Data Systems, TSB-A-90(10)C (installing and testing automated systems, training customers), Project Technology, Inc., TSB-A-89(13)C (teaching software seminars in New York), and Quantum Resources Corporation, TSB-A-91(2)C (placing temporary employees who worked at a client's New York facility). None of those cases required an office, owned property, or ongoing presence either -- a single, self-contained event or engagement was enough in each. Here, renting convention space, advertising, hiring local staff, and having a company representative present for a three-day show was likewise enough to constitute "doing business" for the years the company produces a show in New York.

What this means for you

Event producers, trade-show organizers, and traveling exhibitions

Producing even one event in New York -- renting a venue, advertising, and staffing it, however briefly -- can create Article 9-A nexus, even without an office, owned property, or ongoing New York presence. A single three-day show and roughly one percent of company revenue was enough here.

Companies with intermittent or one-off New York activity

Don't assume that occasional, self-contained engagements (a seminar, an installation job, a single trade show) fall below some activity threshold. The Department's prior rulings cited here show a consistent pattern: temporary but substantive on-the-ground activity -- as opposed to mere order solicitation -- tends to create nexus regardless of duration or revenue share.

Accountants and tax professionals

This ruling, read together with Theatron, Project Technology, and Quantum Resources, illustrates that the "doing business" factors in Regulations 1-3.2(b) don't require any single factor (continuity, revenue, employee presence) to be substantial on its own -- the Department weighs the totality of in-state activity.

Common questions

Q: Does a single trade show or event in New York create nexus?
A: Yes, based on this ruling -- a one-time, three-day event involving venue rental, advertising, staffing, and a company representative was enough, even though it generated only about 1% of revenue.

Q: Do you need an office or owned property in New York to be "doing business" there?
A: No. This company had no office, no property, and employed no capital in New York, yet was still found to be doing business based on its event activity alone.

Q: Is there a revenue threshold below which one-time activity doesn't count?
A: This ruling didn't apply one -- roughly one percent of total revenue from a single show was still sufficient for nexus.

Citations and references

Statutes and regulations:

• Tax Law section 209.1 (Article 9-A franchise tax)
• Business Corporation Franchise Tax Regulations section 1-3.2(b) (doing-business factors)
• Business Corporation Franchise Tax Regulations section 1-3.2(c) (employing capital)
• Business Corporation Franchise Tax Regulations section 1-3.2(d) (owning/leasing property)

Prior opinions cited in the ruling:

• Theatron Data Systems, Inc., TSB-A-90(10)C
• Project Technology, Inc., TSB-A-89(13)C
• Quantum Resources Corporation, TSB-A-91(2)C

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a91_21c.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91(21)C
Corporation Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. C910715A

On July 15, 1991, a Petition for Advisory Opinion was received from Blenheim Franchise
Shows, Inc., 1133 Louisiana Ave., Suite 210. Winter Park. Florida 32789.
The issue raised by Petitioner, Blenheim Franchise Shows, Inc., is whether it is doing
business in New York State and therefore is subject to franchise tax under Article 9-A of the Tax
Law.
Petitioner was organized for the purpose of producing small franchise shows and its income
is derived from the fees charged to the exhibitors. Petitioner's only office is located in Winter Park,
Florida, where it is managed and controlled.
All of Petitioner's solicitation, service, contractual obligations, etc. are provided from
Petitioner's office in Florida by its employees and contractors. Petitioner does not have employees
anywhere else in the United States.
When Petitioner organizes the shows, it rents space in convention centers or hotels,
advertises through three medias, and hires local temporaries. Usually one Petitioner representative
is present at each show. A show usually consists of two open days plus one day to set up.
In 1990, Petitioner produced 43 small franchise expos. Only one show was held in New
York State. It was held in the City of Buffalo. Petitioner received a license from the City of Buffalo
to rent space in the Buffalo Convention Center in October 1990 for one set-up day and two open
days. The receipts from the Buffalo show represented a little over one percent of Petitioner's
revenues.
Petitioner does not otherwise employ capital, or own or lease property in New York State nor
does it maintain an office in New York State.
Section 209.1 of Article 9-A of the Tax Law imposes the business corporation franchise tax
on every foreign corporation, unless specifically exempt, for the privilege of doing business, or of
employing capital, or of owning or leasing property in New York State in a corporate or organized
capacity, or of maintaining an office in New York State.
Section 1-3.2(b) of the Business Corporation Franchise Tax Regulations (hereinafter "Article
9-A Regulations") provides that:
(1) [t]he term doing business is used in a comprehensive sense and includes all
activities which occupy the t/me or labor of men for profit. Regardless of the nature
of its activities, every corporation organized for profit and carrying out any of the
purposes of its organization is deemed to be doing business for the purposes of the
TP-9(9/88)

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TSB-A-91(21)C
Corporation Tax

tax. In determining whether a corporation is doing business, it is immaterial whether
its activities actually result in a profit or a loss.
(2) Whether a corporation is doing business in New York State is determined by the
facts in each case. Consideration is given to such factors as:
(i) the nature, continuity, frequency, and regularity of the activities of the corporation
in New York State, compared with the nature, continuity, frequency, and regularity
of its activities elsewhere;
(ii) the purposes for which the corporation was organized, compared with its
activities in New York State;
(iii) the location of its offices and other places of business;
(iv) the income of the corporation and the portion thereof derived from activities in
New York State;
(v) the employment in New York State of agents, officers and employees; and
(vi) the location of the actual seat of management or control of the corporation. 20
NYCRR 1-3.2(b)
Section 1-3.2(c) of the Article 9-A Regulations provides that:
[t]he term employing capital is used in a comprehensive sense. Any of a large variety
of uses, which may overlap other activities, may give rise to taxable status. In
general, the use of assets in maintaining or aiding the corporate enterprise or activity
in New York State will make the corporation subject to tax. Employing capital
includes such activities as:
(1) maintaining stockpiles of raw materials or inventories; or
(2) owning materials and equipment assembled or construction. 20 NYCRR 1-3.2(c)
Section 1-3.2(d) of the Article 9-A Regulations provides that:
[t]he owning or leasing of real or personal property within New York State
constitutes an activity which subjects a foreign corporation to tax. Property owned
by or held for the taxpayer in New York State, whether or not used in the taxpayer's
business, is sufficient to make the corporation subject to tax. Property held, stored
or warehoused in New York State creates taxable status. Property held as a nominee
for the benefit of others creates taxable status. . . 20 NYCRR 1-3.2(d).

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TSB-A-91(21)C
Corporation Tax

It has been held that where a foreign corporation has no office or assets located in New York
and no employees based in New York, the corporation was doing business in New York and was not
exempt pursuant to Public Law 86-272 when it sent employees into New York to install automated
management systems for movie theatres by connecting the hardware, loading the software, testing
the system and training the customers to use the system. Theatron Data Systems, Inc., Adv Op
Comm T & F, April 16, 1990, TSB-A-90(10)C.
Also, a foreign corporation was held to be doing business in New York when its employees
taught software development seminars conducted in New York even though the corporation did not
employ capital or own or lease property in New York and did not maintain an office in New York,
Project Technology, Inc., Adv Op Comm T & F, November 6, 1989, TSB-A-89(13)C.
Where a foreign corporation's only presence in New York is the temporary employees placed
by the foreign corporation whereby such employees provided clerical and technical services using
the client's equipment and supplies at the client's facilities under the client's supervision, it was held
that the foreign corporation was doing business in New York. Quantum Resources Corporation, Adv
Op Comm T & F, January 18, 1991, TSB-A-91(2)C.
Herein, Petitioner is not employing capital in New York, does not own or lease property in
New York and does not maintain an office in New York. However, giving due consideration to the
factors set forth in section 1-3.2(b)(2) of the Article 9-A Regulations, and viewing Petitioner's
activities as set forth above, such activities in New York State constitute "doing business" within the
meaning of section 209.1 of the Tax Law.
When a corporation is doing business in New York State pursuant to section 209.1 of the Tax
Law, such corporation is subject to tax under Article 9-A of the Tax Law.
Accordingly, pursuant to section 209.1 of the Tax Law and section 1-3.2(b) of the Article 9-A
Regulations, Petitioner is subject to the franchise tax imposed under Article 9-A of the Tax Law for
all taxable years Petitioner does business in New York State.

DATED: October 25, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.