Present:    All the Justices

COMMONWEALTH OF VIRGINIA,
DEPARTMENT OF TAXATION

v.     Record No. 960575   OPINION BY JUSTICE ELIZABETH B. LACY
                                  January 10, 1997
NATIONAL PRIVATE TRUCK COUNCIL

          FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA
                        Donald H. Kent, Judge


        In this declaratory judgment action, we determine whether

a regulation issued by the Virginia Department of Taxation

regarding corporate income taxation violates federal statutory

law.
        In 1959, Congress passed Public Law 86-272, codified as 15

U.S.C. § 381 (§ 381).      That statute provides, in pertinent

part:
        (a) No State . . . shall have power to impose . . . a
        net income tax on the income derived within such
        State by any person from interstate commerce if the
        only business activities within such State by or on
        behalf of such person . . . are . . . :

             (1) the solicitation of orders by such
             person . . . 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. [Emphasis added.]


        The Virginia Department of Taxation (the Department)

maintains that the solicitation of goods and the delivery of

goods are two separate transactions and considers § 381 to

provide immunity for solicitation only.     Based on this premise,

the Department adopted a regulation extending the immunity from

state income taxation afforded under § 381 only to those

instances in which the shipment or delivery of goods is
accomplished by common carrier.             Va. Reg. § 630-401(G) (1985)

(the Virginia Regulation).      Thus, under the Department's

interpretation, any foreign company that solicits and approves

orders for its merchandise under the conditions described in

§ 381, but delivers the merchandise to Virginia using its own

vehicles, is subject to Virginia tax on the income derived from

such sales.

     The National Private Truck Council (the Council), a

national trade association representing more than 1,000

companies that operate their own private truck fleets, filed a

bill of complaint for declaratory judgment seeking a

declaration that the Virginia Regulation violates § 381 because

it limits immunity from state income taxation to those

instances in which goods are delivered by common carrier.

Cross motions for summary judgment were filed, and the trial

court entered an order granting summary judgment to the

Council.       We awarded the Department an appeal and will affirm
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the judgment of the trial court.
     *     *
         The Department initially filed a demurrer challenging
the standing of the Council, see Carnes v. Board of Supervisors
of Chesterfield County, 252 Va. 377, ___ S.E.2d ___ (1996), but
withdrew the demurrer prior to a ruling by the trial court.
Therefore, that issue has been waived. Princess Anne Hills
Civic League, Inc. v. Susan Constant Real Estate, 243 Va. 53,
59 n.1, 413 S.E.2d 599, 603 n.1 (1992); Lynchburg Traffic
Bureau v. Norfolk and Western Railway Co., 207 Va. 107, 108,
147 S.E.2d 744, 745 (1966). Similarly, the Department did not
assert a claim that its sovereign immunity had not been waived
for declaratory judgment actions, see Virginia Physical Therapy
Ass'n v. Virginia Board of Medicine, 245 Va. 125, 427 S.E.2d
183 (1993), and, therefore, we do not address that issue.




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     Section 381, by plain and clear language, extends immunity

to a particular income-generating transaction.   This

transaction consists of soliciting orders, approving the

orders, and shipping or delivering the goods ordered.   To limit

the tax immunity granted by § 381 to the activity of

solicitation only, as the Department suggests, renders the

protection intended by that section meaningless.   Potentially

taxable income is not generated within the taxing state until

there has been a successful "shipment or delivery" of goods.

Exempting merely "solicitation" is no exemption at all.
     Whether a particular activity constitutes solicitation,

approval, or delivery may require construction of those terms.

 Wisconsin Dep't of Revenue v. William Wrigley, Jr., Co., 505

U.S. 214, 223-231 (1992) (whether certain actions constitute

solicitation).   A joint congressional committee studying the

matter of state taxation of interstate commerce has stated

that, although § 381 "makes it clear that delivery of goods

into a State does not deprive the selling company of statutory

immunity, there can be doubt about the meaning of delivery."

H.R. Rep. No. 88-1480, at 146 (1964).   Thus, while the meaning

of the word "delivery" may be disputed in a particular factual

situation, delivery is a protected activity under § 381 when

undertaken in conjunction with the other elements of the

immunized income-producing transaction.

     In this case, the Department has conceded that the use of



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company-owned trucks constitutes "delivery" of the goods as

that term is used in § 381.    The only issue is whether the

Virginia Regulation, which defines the manner of delivery

necessary to qualify for immunity from state taxation under

§ 381, violates federal law.    Code § 58.1-205.

     In enacting § 381, Congress did not identify any manner of

delivery necessary to qualify for the immunity.    Section 381

does not specify common carrier, contract or private carrier,

or any other particular method of delivery.   In the absence of

a qualification in the federal statute, the Department may not

add conditions to, or otherwise limit, the protection offered

by § 381.   See Comm'r of Revenue v. Kelly-Springfield Tire Co.,

643 N.E.2d 458, 461 (Mass. 1994).    Therefore, the Virginia

Regulation violates the plain meaning of § 381 because it

limits the conditions under which a company is entitled to

immunity from state taxation.

     Accordingly, we will affirm the judgment of the trial

court.
                                                        Affirmed.




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