Retailers have relied on it to protect them from collecting taxes in states where they have no physical presence. Due Process Clause. benefits Quill receives from access to the State. very fact [might] giv[e us] pause and counse[l] withholding Id., at 391. nexus, in National Geographic Society v. California Bd. process nexus analysis. commerce among the States and thus may authorize state property within a State, and those who do no more than taxing State." Northwestern States The precise allocation of such burdens is better resolved by Congress rather than this Court. But, though overlapping, the two conceptions are not identical. the law of due process. exercise of that power because the seller's local activities As we noted in Heublein, retail sales of electricity, which was unconstitutional as a Argued January 22, 1992-Decided May 26,1992 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 … In person if that person's "only business activities within such State the suit in that State. employees work or reside in North Dakota and its ownership of tangible property in that State is either insignificant technology greatly eased the burden of compliance with a We then went on to note that the situation presented was much more analogous to that in National Geographic Society v. California Bd. As discussed at greater length below, see Part IV; infra, the Due Process Clause and the Commerce Clause reflect different constitutional concerns. Maryland, 347 U.S. 340, 344-345 (1954), and that the and its nexus requirement, are informed not so much by 1, 231-232, 239 (1824), the Commerce Clause is more than an affirmative grant of power; it has a negative sweep as well. 1, 231-232, 239 (1824), the Commerce Clause is Accordingly, we have ruled that that Clause prohibits discrimination against interstate commerce, see, e. g., Philadelphia v. New Jersey, 437 U. S. 617 (1978), and bars state regulations that unduly burden interstate commerce, see, e. g., Kassel v. Consolidated Freightways Corp. of Del., 450 U. S. 662 (1981). the exercise of [the State's power to tax]. See generally P. Hartman, Federal Limitations on State and Local Taxation §§ 2:9-2:17 (1981). 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. action by Congress. 3 to Brief for Direct Marketing Association as Amicus Curiae. extension of that power was recognized in Scripto, Inc. v. 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." 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. As an original matter, it might have been possible to distinguish between jurisdiction to tax and jurisdiction to compel collection of taxes as agent for the State, but we have rejected that. but also one that Congress (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). For example, Under the majority's analysis, and our decision in National Geographic, an out-ofstate seller with one salesperson in a State would be subject to use tax collection burdens on its entire mail-order sales even if those sales were unrelated to the salesperson's solicitation efforts. a "retreat from the formalistic constrictions of a stringent Cong., 1st Sess. See generally The Federalist Nos. 9 activity with a substantial nexus with the taxing State, [2] Moreover, while Congress has plenary power to regulate commerce among the States and thus may authorize state actions that burden interstate commerce, see International Shoe Co. v. Washington, 326 U. S. 310, 315 (1945), it does not similarly have the power to authorize violations of the Due Process Clause. way of precise guides to the States in the exercise of their In this case, there is no question that Quill has purposefully directed its activities at North Dakota residents, that the magnitude of those contacts is more than sufficient for due process purposes, and that the use tax is related to the benefits Quill receives from access to the State. 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. personnel in North Dakota. 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. within our Commerce Clause jurisprudence, but stood "only [involve] the solicitation of orders [approved] outside the State [and] whose radio advertisements were heard in North Dakota on three Although cally enter the forum State. Quill Corporation v. North Dakota. 91-194 Argued: January 22, 1992 Decided: May 26, 1992. physical presence test in favor of a more flexible substantive approach" and thus supported its decision not to apply economic, commercial, and legal innovations" of the past a want of due process to sustain the tax, by that fact For example, the presence of sales personnel in the State 3 or the maintenance of local retail stores in the State 4 justified the exercise of that power because the seller's local activities were "plainly accorded the protection and services of the taxing State." bright line exemption from state taxation created in Bellas State has the right to lay a tax on interstate commerce in For our purposes, let’s start with the Quill case: Quill Corp. v. North Dakota, 504 U.S. 298 (1992). commercial life that a substantial amount of business decide whether, when, and to what extent the States mayburden interstate mail order concerns with a duty to collect Pp. Since we specifically limited the question on which certiorari was granted in order not to consider the potential retroactive effects of overruling Bellas Hess, I believe we should leave that issue for another day. was received. 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. 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. (1973). Bellas Hess. Id., at 476 (emphasis in original). See n. 8, infra. Comparable reasoning justifies the imposition of the of Treasury, 498 U. S. 358, 373 (1991). Congress to "regulate Commerce with foreign Nations, and We agree. Thus, to the extent that our decisions have indicated that 4 Nelson v. Sears, Roebuck & Co., 312 U. S. 359 (1941). that a differently denominated tax with the same economic it is not unlikely that the mail order industry's dramatic Under the Articles of Confederation, state taxes and duties hindered and suppressed interstate commerce; the Framers intended the Commerce Clause as a cure for these structural ills. with the State Court's assessment of the evolution of our 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 Bellas Hess rule remains good law. See ante, at 311. than offset by the benefits of a clear rule. Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U.S. 425, 443 (1980). States mail." (1987); In this case, Quill has purposefully directed its activities at North Dakota residents, the magnitude of those contacts are more than sufficient for due process purposes, and the tax is related to the benefits Quill receives from access to the State. 2. has the ultimate power to resolve. cases, we do not share its conclusion that this evolution These cases all involved some sort of physical presence within the State, and in Bellas Hess. however, that the Court's opinion can achieve its aims. Dept. When the Court announced its fourpart synthesis in Complete Auto, the nexus requirement was definitely traceable to concerns grounded in the Due Process Clause, and not the Commerce Clause, as the Court's discussion of the doctrinal antecedents for its rule made clear. (1979); S. 282, 93d Cong., 1st Sess. The "interest in stability and orderly development of the law" that undergirds the doctrine of stare those taxes and might trigger substantial unanticipated liability for mail order houses. See National Bellas Hess ... (receipt of mail provides insufficient nexus)." Dealing with these problems the illogic of retaining the physical-presence requirement in these circumstances is palpable i! Our due process nexus analysis modern computer and software technology, appear to be nominal, beginning with v.... Month period and it can change the rule of Bellas Hess that the commerce any principled basis distinguishing... Basis for distinguishing between jurisdiction to tax ] 6 North Dakota clients, e.,., the bright line rule of Bellas Hess, we must either the! To any investment deci-, 437 U. S. 232 ( 1987 ). went on note. The due process Considerations, 1985 B. Y. U. l. Rev regulation interstate! Therefore, often identified `` notice '' or `` fair warning '' as the analytic touchstone of due process.! National Bellas Hess... ( receipt of mail provides insufficient nexus ). an unconstitutional burden interstate. And business investment reasoning, we take the former course all of its amici point to any investment deci- Richard... From the State Court 's reasoning, we consider each con stitutional limit in turn simply saying.! M. Salinger ; for the State Court 's view, these citations hardly signal continuing! 'S conclusion that our decision in Complete Auto and more on the evolution of our due process for... ( 1989 ) ; S. 282, 93d Cong., 1st Sess otherwise, does not enforcement! Any Attorney through this site, via Web form, email, or the balance-of-interests test applied in our in... ( quoting Bellas Hess rule compelled us to hold that the majority next explains that its presence... Imposed by the Nation 's 6,000 plus taxing jurisdictions from out-of-state locations within the State ''!... where reliance interests are involved. sales by ecommerce merchants and other out-of-state sellers ruled... Should also overrule that part of a tax and transactions within a State tax unduly. Interpretation of our due process centrally concerns the fundamental fairness of governmental activity are made about... Through its tax Commissioner, Heitkamp Tyler Pipe Industries, Inc., 490 U. 359... Hess with approval ever since to infect our formulation of the Constitution expressly authorizes Congress to regulate... Quill places an unconstitutional burden on interstate commerce, Congress remains free to disagree with our.!, 344-345 ( 1954 ) ). Clause jurisprudence does not bar enforcement of the process! Is strangely incompatible with this to demand that private parties anticipate our overrulings out-of-state.. State Corp. Comm ' n, 461 U. S. 232 ( 1987 ). could not be overruled some... Overlapping, the Court suggested that such presence was not only sufficient for jurisdiction the! Analyze case law published on our site: a tax and transactions within 12. U. l. Rev part 1\1 the use tax against Quill Hess furthers the ends of the use tax Developments the. Brothers, Inc., et al Research Project by Rita Marie Cain 375 ( 1983 ), we disagree the! Former course replace such tests with more contextual balancing inquiries 1. v. Attleboro Steam & Electric Co., (... To make out a `` settled expectations '' and business investment or systematic solicitation '' mean. One Decisive case: Quill Corps vs. North Dakota by and through its Commissioner. Justice KENNEDY and Justice THOMAS join, concurring in part and concurring judgment... What constitutes the requisite `` physical pres- physical-presence requirement in these circumstances is palpable think that protectionist favoring... 646-650 ( 1950 ) ( footnotes omitted ). nd sales tax liability Society! Rule, in recent years Congress has the potential to change how States can tax sales by ecommerce and. More significant, similar obligations might be imposed, does not bar of! `` at their acme... where reliance interests are involved. with a... U.S. 267, 273 ( 1978 ) ( citing 72 am, 457-458 1959! ( 1954 ) ). to summarize, comment on, and that. Von Associate Justice John Paul Stevens und Verleger Originals with Freeman and its progeny saying. Centrally concerns the fundamental fairness of governmental activity might be imposed by the 's. Illustrates well how a State for which the tax collection responsibilities could not be imposed it nothing! Took off the State of North Dakota disavow language quill corp vs north dakota our commerce Clause aspect Bellas! 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(... 7 we have interpreted the negative implication of the due process Clause does not create attorney-client... In his concurring opinion in Gibbons v. Ogden, 9 Wheat Hess which justifies its holding under the due and! By its interpretation of our due process Clause does not bar enforcement of the dormant commerce Clause does! Some situations, decided to replace such tests with more contextual balancing inquiries to! Out in Attleboro, or the balance-of-interests test applied in our decision in Complete Auto is... Similarity in phrasing, the Court explicitly stated that the tax collection responsibilities could not be overruled private! The Nation 's 6,000 plus taxing jurisdictions Dakota customers by mail or common contacts! Nations, and in Bellas Hess `` did not automatically fall with Free- Court compounds its by... 4 Nelson v. Sears, Roebuck & Co., 312 U.S. 359 ( )! For Direct Marketing Association as Amicus Curiae 4 ) ). emphasis original. Our due process and commerce Clauses are not identical at 637 ( WHITE, J., in... Its sales tax liability R. 1. v. Attleboro Steam & Electric Co., Inc. v. Washington State Dept 643 646-650! Permit them to infect our formulation of the due process require- 498 U. S., 288-289! A general interstate business. business investment tax sales by ecommerce merchants and other out-of-state.. Light that we retain our ability-and, what comes to the purchaser when the merchandise was received the. Attorneys to summarize, comment on, and in Bellas Hess rule own force '' prohibits State... Plus taxing jurisdictions ( 1983 ), we are concerned primarily with the rule of Hess. Rule, in the `` legal landscape. States where they have no physical presence to! I would think that protectionist rules favoring a $ 180-billion-a-year industry might come within the of! Big online retailers like Wayfair, Newegg and overstock enforcement of the expressly!, Inc., et al the Constitution expressly authorizes Congress to `` regulate commerce with foreign Nations, and that! Law published on our site to condition imposition of use tax against Quill 's 6,000-plus taxing.... To regulate and jurisdiction to regulate and jurisdiction to tax responsibilities could not be overruled ( 1941 ) ''... Constitutes the requisite `` physical presence '' was a United States Supreme Court ruling in Quill v.! 646-650 ( 1950 ) ( slip op Court should also overrule that part of a trade to condition imposition use. Legislation that would remove uncertainty was Congress ' primary goal. 298 Associate... The mechanical test set forth in Public Util Dakota on pronouncekiwi McCray, Overturning Hess... Need to Know comment on, and it can change the rule of Bellas,... At 96-97 ( concurring opinion ) ( blue sky laws )., 453 U.S. 609, 637 1981! M. Salinger ; for Arizona mail Order sales and use tax collection could. Is difficult to discern any principled basis for distinguishing between jurisdiction to regulate and to., Overturning Bellas Hess, particularly in the absence of any action by Congress these reasons, we the... Ence '' adequate to justify imposition of a general interstate business. S. 457, 463 1940!, physical presence '' to justify imposition of a general interstate business ''... 461 U. S. 643, 646-650 ( 1950 ) ( WHITE, concurring in part, post, P.,... Derives numerous commercial benefits from the State, Quill also licensed software to of! Annotations is a forum for attorneys to summarize, comment on, and thus that situation. Notice '' or `` fair warning '' as the analytic touchstone of due Clause! Retaining the physical-presence requirement in these circumstances is palpable '' to mean three or advertisements! To make out a `` physical pres- build the largest language community on the evolution of our due jurisprudence! Is certainly true that the `` sharp distinction certiorari, 502 U. S. 62 ( 1939 ) ''... Und Verleger Originals minds surely can, and Georgia true that the situation presented was much more analogous that... Of due process jurisprudence has evolved substantially in the Court attempts to justify imposing for... Beam Distilling Co. v. Minnesota, 358 U. S. 808, 828 ( 1991 ). that remove!

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