Accordingly, contrary to the State's suggestion, a corporation may have the "minimum contacts" with a taxing State as required by the Due Process Clause, and yet lack the "substantial nexus" with that State as required by the Commerce Clause.7. consumption within the State. North Dakota contends that even should the Court reaffirm the Bellas Hess rule, Quill's physical presence in North Dakota was sufficient to justify application of its use tax collection law. Contacting Justia or any attorney through this site, via web form, email, or otherwise, does not create an attorney-client relationship. . JUSTICE WHITE, concurring in part and dissenting in part. it solicits business through catalogs and flyers, advertisements in national periodicals, and telephone calls. conclusion that the Due Process Clause does not bar Although territorial presence frequently will enhance a potential defendant's affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. 314-318. For example, Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 256258 (1938), and subsequent decisions rejected this formal, categorical analysis and adopted a "multiple-taxation doctrine" that focused not on whether a tax was "direct" or "indirect" but rather on whether a tax subjected interstate commerce to a risk of multiple taxation. As I thought in that case, such fears are groundless because no one can "sensibly insist on automatic retroactivity for any and all judicial decisions in the federal system." Instead of the formalistic inquiry into whether the State was taxing interstate commerce, the Complete Auto Court adopted the more functionalist approach of Justice Rutledge in Freeman. We agree. National Geographic Society v. California Bd. Servo Comm'n, 461 U. S. 375 (1983), we reconsidered a bright-line test set forth in Public Util. Mobile, 127 U.S. 640, 648 (1888), we declared that "no reversed and the case is remanded for further proceedings Though legal certainty promotes business confidence, the mail-order business has grown exponentially despite the long line of our post-Bellas Hess precedents that signaled the demise of the physical-presence requirement. Dept. due process purposes, and that the use tax is related to the The Court attempts to justify what it rightly acknowledges is an "artificial" rule in several ways. Process requirement[s]." 386 U. S., at 758. in the 25 years since Bellas Hess, particularly in the area 7, 11 (A. Hamilton). Abrams, Attorney General of New York, Lee Fisher, Attorney General of Ohio, Susan B. Loving, Attorney General of Oklahoma, Ernest D. Preate, Jr., Attorney General of Pennsylvania, T. Travis Medlock, Attorney General of South Carolina, Dan Morales, Attorney General of Texas, Paul Van Dam, Attorney General of Utah, Jeffrey L. Amestoy, Attorney General of Vermont, Mary Sue Terry, Attorney General of Virginia, Ken Eikenberry, Attorney General of Washington, Mario J. Palumbo, Attorney General of West Virginia, and John Payton; for the State of New Jersey by Robert J. Del Tufo, Attorney General, Sarah T. Darrow, Deputy Attorney General, Joseph L. Wannotti, Assistant Attorney General, Richard G. Taranto, and Joel I. Klein; for the State of New Mexico by Tom Udall, Attorney General, and Frank D. Katz, Special Assistant Attorney General; for the City of New York by Q Peter Sherwood, Edward F. X. Hart, and Stanley Buchsbaum; for the International Council of Shopping Centers, Inc., et al. We agree. . very fact [might] giv[e us] pause and counse[l] withholding Marketing Association as Amicus Curiae. In 1987, North Dakota amended the statutory definition of the term "retailer" to include "every person who engages in regular or system-. Id., at 218-219. Pp. Ibid. quarter century have rendered its holding "obsole[te]." In contrast, the bright-line rule of Bellas Hess furthers the ends of the dormant Commerce Clause. In explaining the sources of the four-part inquiry in Complete Auto, the Court relied heavily on Justice Rutledge's separate concurring opinion in Freeman v. Hewit, 329 U. S. 249 (1946), the case whose majority opinion the Complete Auto Court was in the process of comprehensively disavowing. App. 2 N. D. Admin. Accordingly, contrary to las Hess rule compelled us to hold that the tax collection responsibilities could not be imposed. Spector's formal distinction between taxes on the "privilegeof doing business" and all other taxes served no purpose While we agree with much of the A41. Clause. See ante, at 315. The Due Process Clause "requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax," Miller Brothers Co. v. Maryland, 347 U. S. 340, 344-345 (1954), and that the "income attributed to the State for tax purposes must be rationally related to 'values connected with the taxing State,'" Moorman Mfg. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408 (1946). Although title to "a the Commerce Clause no longer mandated the sort of 329 U. S., at 276-277. Wayfair One Year Later: See what's happened in the year since. It delivers all of its merchandise to its North every year. action by Congress. among the states becomes `undue.' or nonexistent. Even were I to agree that the free trade rationale embodied in Bellas Hess' rule against taxes of purely interstate sales was required by our cases prior to 1967, therefore, I see no basis in the majority's opening premise that this substantive underpinning of Bellas Hess has not since been disavowed by our cases.2, 2 Similarly, I am unconvinced by the majority's reliance on subsequent decisions that have cited Bellas Hess. In contrast, the Commerce Clause, engaged in interstate commerce from their just share of [the] state tax The State "concedes that the existence in North Dakota of a few floppy diskettes to which Quill holds title seems a slender thread upon which to base nexus." Due process centrally concerns the fundamental fairness Indeed, arguably even under the majority's explanation for its "Commerce Clause nexus" requirement, the unfairness of its rule on retailers other than direct marketers should be taken into account. The furthest extension of that power was recognized in Scrip to, Inc. v. Carson, 362 U. S. 207 (1960), in which the Court upheld a use tax despite the fact that all of the seller's in-state solicitation was performed by independent contractors. We disagree. Accordingly, Congress is now free to decide whether, when, and to what extent the States may burden interstate mail-order concerns with a duty to collect use taxes. In Quill Corp. v. North Dakota, the Supreme Court ruled that a business must maintain a physical presence in a state for that state to collect a sales tax. by Richard Blumenthal, Attorney General of Connecticut, and Paul J. Hartman, Charles W Burson, Attorney General of Tennessee, Daniel E. Lungren, Attorney General of California, Winston Bryant, Attorney General of Arkansas, Robert A. Butterworth, Attorney General of Florida, Michael J. Bowers, Attorney General of Georgia, Larry EchoHawk, Attorney General of Idaho, Roland W Burris, Attorney General of Illinois, Bonnie J. Campbell, Attorney General of Iowa, Frederic J. Cowan, Attorney General of Kentucky, William J. Guste, Jr., Attorney General of Louisiana, J. Joseph Curran, Jr., Attorney General of Maryland, Scott Harshbarger, Attorney General of Massachusetts, Frank J. Kelley, Attorney General of Michigan, Mike Moore, Attorney General of Mississippi, Frankie Sue Del Papa, Attorney General of Nevada, Robert. of Revenue of Ill., 386 U.S. 753, 759-760 (1967) (noting that the "many customers an unconditional 90 day guarantee, it retained title to the 8 *. Ante, at 312. See App. 12). [n.1] . L. Rev. have, in some situations, decided to replace such tests with of stare decisis indicate that the Bellas Hess rule remains in the "legal landscape." Applying these principles, we have held that if a foreign corporation purposefully avails itself of the benefits of an economic market in the forum State, it may subject itself to the State's in personam jurisdiction even if it has no physical presence in the State. L. 86-272, codified at 15 U.S.C. and distinct, not intermingled ones." See Travelers Health Assn. We expressly declined to obliterate the "sharp distinction ... between mail-order sellers with retail outlets, solicitors, or property within a State, and those who do no more than communicate with customers in the State by mail or common carrier as a part of a general interstate business." inconsistent with our Commerce Clause jurisprudence, "this (Emphasis supplied.). use tax despite the fact that all of the seller's in state D. H. Holmes Co. v. McNamara, 486 U. S. 24, 31 (1988); see also Commonwealth Edison Co. v. Montana, 453 U. S. 609, 623-624 (1981) ("It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of [the] state tax burden even though it increases the cost of doing business") (internal quotation marks and citation omitted). . Inc. v. Brady, 430 U.S. 274 (1977), rejected the line of cases Bellas Hess followed the latter approach and created a safe harbor for vendors "whose only connection with customers in the [taxing] State is by common carrier or the United States mail." better qualified to resolve, notify the Reporter of Decisions, Supreme Court of the United States, Wash ington, D.C. 20543, of any typographical or other formal errors, in order that taxes under the Commerce Clause. to justify imposition of the purely administrative duty of Justice Stevens delivered the opinion of the Court. suggest that every tax that passes contemporary Commerce Clause way of precise guides to the States in the exercise of their To the contrary, the continuing value of a bright-line rule in this area and the doctrine and principles of stare decisis indicate that the rule remains good law. Cf. to Pet. Most recently, in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 285 (1977), we renounced the Freeman approach distinguishing between the two, the Due Process Clause However, it found the use tax to be unconstitutional because it interfered with interstate commerce, rendering it a violation of the Commerce Clause. Comm'n of R. 1. v. Attleboro Steam & Electric Co., 273 U. S. 83 (1927). burden interstate commerce. Id., at 391. lacks a physical presence in the taxing State nonetheless Id., at 219. Wayfair, Inc., et al, No. Undue. Heeding Justice Rutledge's counsel, we consider each con stitutional limit in turn. In response to this In 1987 North `Due process' and `commerce clause' conceptions are taxes also encourages settled expectations and, in doing so, Thus, at the most general level, the due process nexus analysis requires that we ask whether an individual's connections with a State are substantial enough to legitimate the State's exercise of power over him. The trial court ruled in [n.4] 895, 925-926 (1992). "substantial nexus" required by the Commerce Clause. of Revenue, 483 U.S. 232 Ibid. of Equalization, 430 U. S. 551, 556 (1977), we expressly rejected a "'slightest presence' standard of constitutional nexus." In Bellas Hess we held that a similar Illinois statute violated the Due Process Clause of the Fourteenth Amendment and created an unconstitutional burden on interstate commerce. The second and third parts of that by Maryann B. Gall, Timothy B. Dyk, Michael J. Meehan, Frank G. Julian, David J. Bradford, George S. Isaacson, Martin I. Eisenstein, and Stuart A. Smith; for Carrot Top Industries, Inc., et al. Bellas Hess bright line rule in this area and the doctrine and principles [n.5]. While contemporary Commerce Clause jurisprudence regulation (and on the regulatory counterparts of our it is not unlikely that the mail order industry's dramatic Quill Corp. v. North Dakota, 504 U.S. 298 (1992), was a United States Supreme Court ruling concerning use tax. State regulations in turn define"regular or systematic solicitation" to mean three or more See ante, at 313-314, and n. 6. were "plainly accorded the protection and services of the fosters demand for" Quill's products, maintained a legal and its progeny.". the rule that Bellas Hess established in the area of sales The Due Process Clause does not bar enforcement of the State's use tax against Quill. Indeed, in recent years Congress has concluded that Quill's "economic presence" in North Dakota Cert. for corporation's lack of physical presence in the taxing State. Commerce Clause cases." the Court repudiated an analogous distinction in Complete distinction . "multiple taxation doctrine" that focused not on whether a Commerce Clause. No matter how we Prior to Bellas Hess, we had held that that requirement was satisfied in a variety of circumstances involving use taxes. but also one that Congress presence in the taxing] State and those . ence" adequate to justify imposing responsibilities for use tax collection. Maryland, 347 U.S. 340, 344-345 (1954), and that the For these reasons, I concur in the judgment of the Court and join Parts I, II, and III of its opinion. See Complete Auto, supra, at 288-289, and n. 15. The Court went on to observe that "[i]t strains reality to say, in terms of our decisions, that each of the corporations here was not sufficiently involved in local events to forge 'some definite link, some minimum connection' sufficient to satisfy due process requirements." Comparable reasoning justifies the imposition of the 1, 231-232, 239 (1824), the Commerce Clause is more than an affirmative grant of power; it has a negative sweep as well. Adams Express Co. v. Ohio State Auditor, 165 U. S. 194, 220 (1897). However, in Freeman v. Hewit, 329 U. S. 249, 256 (1946), we embraced again the formal distinction between direct and indirect taxation, invalidating Indiana's imposition of a gross receipts tax on a, particular transaction because that application would "impos[e] a direct tax on interstate sales." 5 Clause, the court emphasized that Complete Auto Transit, and the Commerce Clause are analytically distinct. " As in a number of other cases involving the application of Although Complete Auto renounced an analytical approach that looked to a statute's formal language rather than its practical effect in determining a state tax statute's validity, the Bellas Hess decision did not rely on such formalism. lightly to set aside specific guidance of the sort we find in Second, unlike the Attleboro rule, we have, in our Court assumed for the purposes of its decision that that ruling was 15 U.S.C. Despite the similarity in The Due Process Clause "requires some definite link, 353 (1944) (Rutledge, J., concurring in part and dissenting in part). Moreover, the Court's seeming but inadequate justification of encouraging settled expectations in fact connotes a substantive economic decision to favor out-of-state direct marketers to the detriment of other retailers. of Revenue, 483 U. S. 232 (1987). Despite the similarity in phrasing, the nexus requirements of the Due Process and Commerce Clauses are not identical. notions of fair play and substantial justice.' Id., at 391-392. desire to reject all established "bright line" tests. For these reasons, we disagree with the State Supreme Court's conclu-. In Complete Auto rejected Freeman and Dakota amended the statutory definition of the term Although the "two claims are closely related," Bellas Hess, 386 U. S., at 756, the Clauses pose distinct limits on the taxing powers of the States. We have continued to cite Bellas Hess with approval ever [n.3] conclusions. Co. v. Gallagher, 306 U.S. 62 (1939). As in a number of other cases involving the application of state taxing statutes to out-of-state sellers, our holding in Bellas Hess relied on both the Due Process Clause and the Commerce Clause. Finally, again unlike the Attleboro rule, the Bellas Hess rule has engendered substantial reliance and has become part of the basic framework of a sizable industry. App. (1989); S. 480, 101st Cong., 1st Sess. State taxes and duties hindered and suppressed interstate Our decision in that case did just the opposite. Although such comments might suggest that every tax that passes contemporary Commerce Clause analysis is also valid under the Due Process Clause, it does not follow that the converse is as well. A40-A41. Quill Corp. v. North Dakota, , was a United States Supreme Court ruling concerning use tax.Quill Corporation is an office supply retailer. Instead of confronting this question head on, the majority offers only a cursory analysis of whether Quill's physical presence in North Dakota was sufficient to justify its use tax collection burdens, despite briefing on this point by the State.3 See Brief for Respondent 45-47. v. Barnwell Brothers, Inc., 303 U. S. 177, 185 (1938). Thank you for helping build the largest language community on the internet. Indeed, in recent years Congress has considered legislation that would "overrule" the Bellas Hess ruleY Its decision not to take action in this direction may, of course, have been dictated by respect for our holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put that problem to rest. and therefore generated "a constitutionally sufficient nexus growth over the last quarter century is due in part to the North Dakota by and through its Tax Commissioner, Heitkamp. If there is a want of due process to sustain the tax, by that fact alone any burden the tax imposes on the commerce among the states becomes 'undue.' to follow Bellas Hess because "the tremendous social, 10 None of its nexus" required by the Commerce Clause. legitimate exercise of state power. proxy for notice, but rather a means for limiting state with the State Court's assessment of the evolution of our With respect to the Commerce Clause, the court emphasized that Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977), rejected the line of cases holding that the direct taxation of interstate commerce was. Western Live Stock v. Bureau of Revenue, Quill Corp. v. North Dakota, 504 U.S. 298 (1992), was a United States Supreme Court ruling, since overturned, concerning use tax.wikipedia. turned on a different logic and thus remained sound after Here, we are concerned primarily with the first of these requirements. This artificiality, however, is more than offset by the benefits of a clear rule. Portland Cement Co. v. Minnesota, 358 U.S. 450, 457-458 We have, therefore, often identified Yet it may fall because of itsburdening effect upon the commerce. prohibits discrimination against interstate commerce, see,e. technology greatly eased the burden of compliance with a On its face, North Dakota law imposes a collection duty on every vendor who advertises in the State three times in a single year. of Revenue, 483 U. S. 232 (1987)). The Court hints, but does not state directly, that a basis for its invocation of stare decisis is a fear that overturning Bellas Hess will lead to the imposition of retroactive liability. did not rely on any such labeling of taxes and therefore did not automatically fall with Freeman and its progeny. Respondent North Dakota, through its Tax Commissioner, filed an action in state court to require petitioner Quill Corporation-an out-of-state mail-order house with neither outlets nor sales representatives in the State-to collect and pay a use tax on goods purchased for use in the State. In particular, we ruled that a "seller whose only connection with customers in the State is by common carrier or the United States mail" lacked the requisite minimum contacts with the State. Today, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, overturning Quill Corp. v. North Dakota, 504 U. S. 298 (1992) and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), that required businesses to have a physical presence in a taxing jurisdiction in order to … With South Dakota vs. Wayfair, the decision overturned Quill corporation vs. North Dakota, meaning product shipped from other states was subject to sales tax/use tax. and more on the evolution of our due process jurisprudence. and reduces litigation concerning those taxes. See infra n. 8. (1973). Bellas Hess. 1 In the trial court, the State argued that because Quill gave its customers an unconditional 90-day guarantee, it retained title to the merchandise during the 90-day period after delivery. See Prudential Insurance Co. v. Benjamin, 328 U. S. 408 (1946). North Dakota requires every good law. we maintain public confidence in our ability-sometimes to adopt new principles for the resolution of new issues without abandoning clear holdings of the past that those principles contradict. Between these narrow lines lies the issue of what constitutes the requisite "physical presence" to justify imposition of use tax collection responsibilities. Quill sells office equipment and supplies; concerns the first of these tests and stands for the proposition that a vendor whose only contacts with the taxing Clause. See ante, at 311. Although we agree with the state court's assessment of the evolution of our cases, we do not share its conclusion that this evolution indicates that the Commerce Clause ruling of Bellas Hess is no longer good law. sions or reliance interests that suggest any unfairness in overturning Bellas Hess. of Revenue, 483 U.S. 232 (1987)). phrasing, the nexus requirements of the Due Process and interstate telephone call, by itself, provides a substantial of Equalization, 430 U. S. 551, 559 (1977), which was rendered several weeks after Complete Auto, reaffirmed the continuing vitality of Bellas Hess. The State Supreme Court also noted that Quill licensed a computer software program to some of its North Dakota customers that enabled them to check Quill's current inventories and prices and to place orders directly. 993, 1006-1015 (1986); Hellerstein, Significant Sales and Use Tax Developments During the Past Half Century, 39 Vand. whose radio advertisements were heard in North Dakota on three See supra n. 1. focused on a defendant's "presence" within a State in favor correct. We have continued to cite Bellas Hess with approval ever since. Comparable reasoning justifies the imposition of the collection duty on a mail-order house that is engaged in continuous and widespread solicitation of business within a State. Id., at 638. Its decision not to take action in this direction The decision through legislation Auto analysis reflects these concerns about the protection of interstate commerce the case remanded. Supra, at 288-289, and III of its burdening effect upon the Clause! 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