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contemporary, common meaning. See Commissioner v. Soliman, 506
U.S. 168, 174 (1993); Perrin v. United States, 444 U.S. 37, 42
(1979). In United States v. Kjellstrom, 916 F. Supp. 902 (W.D.
Wis. 1996), affd. 100 F.3d 482 (7th Cir. 1996), the District
Court rejected an argument that a limited percentage of sales
made to foreign customers qualified the taxpayer’s headquarters
as a “world headquarters”.
We believe that an essential requirement of a “world
headquarters” is that a company have substantial international
operations or intend to have such operations in the immediate
future. Having employees outside the United States is one
indicium of international operations. Other indicia of
international operations might include exports or foreign source
income, payment of foreign taxes, or the existence of a foreign
permanent establishment such as a subsidiary or joint venture
operation in a foreign country. Payless had no exports or
foreign source income. Before 1994, Payless owned no stores or
other facilities outside the United States and had no employees
located outside the United States, except when engaged in short-
term travel.
Despite having no foreign facilities or employees stationed
outside the United States and no sales outside the United States,
Payless argues that it has sufficient “international activities”
to justify classifying its headquarters as a “world
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Last modified: May 25, 2011