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Geoffrey, Inc. v. S.C. Tax Comm'n - 313 S.C. 15, 437 S.E.2d 13 (1993)


The taxpayer need not have a tangible, physical presence in a state for income to be taxable there. The presence of intangible property alone is sufficient to establish nexus.


Geoffrey, Inc. (Geoffrey) received royalty payments based upon sales made in South Carolina from a licensee that did business in South Carolina. South Carolina required appellant to pay income tax on the royalty income, and a corporate license fee. Geoffrey paid the taxes under protest and filed an action for a refund. The trial court upheld the assessment of taxes. Geoffrey sought review and maintained that the Due Process Clause, U.S. Const. amend. XIV, § 1, and the Commerce Clause, U.S. Const. art. I, § 8, cl. 3, prohibited the taxation of its royalty income.


Did the trial court err in ordering Geoffrey to pay South Carolina income tax and business license fees?




The court found that Geoffrey had the minimum connection with the state that was required by due process because it licensed intangibles for use in the state and received income in exchange for their use, and had intangible property in the state. Further, South Carolina had conferred benefits upon Geoffrey to which the challenged tax was rationally related. The Due Process Clause therefore did not prohibit South Carolina's taxation of appellant's royalty income. Also, the court found that the challenged taxation was permitted under the Commerce Clause. The judgment of the trial court was thus affirmed.

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