Frank Handfield v. Commissioner of Internal Revenue

Frank Handfield (plaintiff) was a nonresident alien living in Canada. Handfield manufactured picture postcards in Canada that were called Folkards. Handfield operated as Folkard Company of America, but Handfield’s business was a sole proprietorship. During the time in question, Handfield visited the United States for 24 days over four trips. Folkards were made in Canada from Canadian materials. The postcards were distributed in the United States solely by American News Company, Inc. Handfield signed a contract with American News Company under which American News Company had exclusive distribution rights of Folkards through mutually agreeable American cities. The contract controlled the price of the sale of Folkards to American News Company, the price of Folkards on sale to the public, and returns of any unused or unsold Folkards. Payment was then to be issued by American News Company to Handfield by check sent to Canada. The issue in this case was whether Handfield was engaged in business in the United States during the year in question. The Commissioner of Internal Revenue (the commissioner) (defendant) believed that Handfield was so engaged and accordingly found a deficiency of $639.67 in Handfield’s taxes paid. Handfield asserted that he sold the cards to American News Company in Canada and was not doing business in the United States.