quill corp vs north dakota

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Pp. Due process centrally concerns the fundamental fairness latter test was whether "the state has provided some are animated by different constitutional concerns and business "from a relatively inconsequential market niche" Here, convenience should give way. It is very doubtful. 3 Felt & Tarrant Mfg. Id., at 391-392. 430 U. S., at 281. North Dakota by and through its Tax Commissioner, Heitkamp. Even before Bellas Hess, we had held, correctly I think, that state regulatory jurisdiction could be asserted on the basis of contacts with the State through the United States mail. Although we agree "follow the mechanical test set out in Attleboro, or the balance-of-interests test applied in our Commerce Clause cases." corporation also meets the Commerce Clause "substantial These requirements are not identical and are animated by different constitutional concerns and policies. 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. 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. (1988); H. R. 3521, as a trap for the unwary draftsman." And finally, in. Instead of rewarding companies for ignoring the studied judgments of duly elected officials, we should insist that the appropriate way to challenge a tax as unconstitutional is to pay it (or in this case collect it and remit it or place it in escrow) and then sue for declaratory judgment and refund.4 Quill's refusal to comply with a state tax statute prior to its being held unconstitutional hardly merits a determination that its reliance interests were reasonable. decide whether, when, and to what extent the States mayburden interstate mail order concerns with a duty to collect Accordingly, contrary to 263 (1989), we expressed "doubt that termination of an That South Carolina State Highway Dept. of governmental activity. Thus, the "substantial nexus" requirement is L. 86-272, codified at 15 U. S. C. § 381. This and subsequent rulings, the court maintained, indicated that the Commerce Clause no longer mandated the sort of physical-presence nexus suggested in Bellas Hess. than communicate with customers in the State by mail or its own force" prohibits certain state actions that interfere Freeman line of cases); as discussed above, Bellas Hess (1987); Undue burdens on interstate commerce may be avoided not See, e. g., Tyler Pipe Industries, Inc. v. Washington 1991). action by Congress. 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. The State contends that the nexus requirements imposed by Code § 57-40.2-07 (Supp. of Clarity that would remove Listen as Scott Peterson discusses the origins of … Student posts one state case summary: Quill Corp. v. North Dakota (91-0194), 504 U.S. 298 (1992) This is a case where south Dakota state enacted a law imposing 4.5% of sales tax in case their annual sales increased more than $100,000 or more than 200 transactions in state. 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 Despite the similarity in phrasing, the nexus requirements of the Due Process and Commerce Clauses are not identical. physical presence in the taxing State and therefore do not might raise thorny questions concerning the retroactive application of licensed software to some of its North Dakota clients. fosters demand for" Quill's products, maintained a legal Thus, the Court concludes, Bellas Hess "did not automatically fall with Free-. 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." continuous and widespread solicitation of business within In the trial court, the State argued that because Quill gave its 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. Similarly, with respect to the Due Process Clause, the North Dakota court observed that cases following Bellas Hess had not construed "minimum contacts" to require physical presence within a State as a prerequisite to the legitimate exercise of state power. State taxes and duties hindered and suppressed interstate 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. that spirit, we have abandoned more formalistic tests that and use taxes. And given the estimated loss in revenue to States of more than $3.2 billion this year alone, see Brief for Respondent 9, it is a sure bet that the vagaries of "physical presence" will be tested to their fullest in our courts. with interstate commerce. Finally, the Court accords far greater weight to stare decisis than was given to that principle in Complete Auto itself. directed' toward residents of another State, we have the exercise of [the State's power to tax]. See Quill is a Delaware corporation with offices and warehouses in Illinois, California, and Georgia. We have, therefore, often identified sion that our decision in Complete Auto undercut the Bellas Hess rule. or the maintenance of local retail stores in the State, between direct burdens on interstate commerce, which were branches of the Government." 993, 1006-1015 (1986); Hellerstein, Significant Sales and Use Tax Developments During the Past Half Century, 39 Vand. For our purposes, let’s start with the Quill case: Quill Corp. v. North Dakota, 504 U.S. 298 (1992). of Equalization, 430 U. S. 551, 559 (1977), we affirmed the continuing vitality of Bellas Hess' "sharp distinction ... between mail-order sellers with [a physical presence in the taxing] State and those ... who do no more than communicate with customers in the State by mail or common carrier as part of a general interstate business." suggested in his concurring opinion in Gibbons v. Ogden, 9 relied on formal distinctions between "direct" and "indirect" This will be news to commentators, who have rightly criticized Bellas Hess.1 Indeed, the majority displays no small amount of audacity in claiming that our decision in National Geographic Society v. California Bd. we embraced again the formal distinction between direct matters little that such solicitation is accomplished by a the national economy. None of those factors obtains in this case. indispensable power of taxation." Nevertheless, as Justice Johnson suggested in his concurring opinion in Gibbons v. Ogden, 9 Wheat. Between these narrow lines lies the issue of what constitutes the requisite "physical presence" to justify imposition of use tax collection responsibilities. Despite the similarity in JUSTICE WHITE, concurring in part and dissenting in part. consistently rejected the notion that an absence of "direct regulation" of commerce. We have long recognized that the doctrine of stare decisis has "special force" where "Congress remains free to alter what we have done." Building on the seminal case of International Shoe Co. v. Washington, 326 U. S. 310 (1945), we have framed the relevant inquiry as whether a defendant had minimum contacts with the jurisdiction "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" the court was the remarkable growth of the mail order Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 220 (1897). sions or reliance interests that suggest any unfairness in overturning Bellas Hess. past "the formal language of the tax statute [to] its practical consumption within the State. We therefore conclude that Quill's Hess . It delivers all of its merchandise to its North In deciding to reject the Attleboro analysis, we were influenced by the fact that the "mechanical test" was "anachronistic," that the Court had rarely relied on the test, and that we could "see no strong reliance interests" that would be upset by the rejection of that test. For example, in 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. This case, like National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), involves a State's attempt to require an out-of-state mail-order house that has neither outlets nor sales representatives in the State to collect and pay a use tax on goods purchased for use within the State. allowed the validity of statutes to hinge on "legal terminol ogy," "draftsmanship and phraseology." Hess furthers the ends of the dormant Commerce Clause. It is strangely incompatible with this to demand that private parties anticipate our overrulings. Quill is a Delaware corporation with offices and warehouses in Illinois, California, and Georgia. These cases all involved some sort of physical presence within the State, and in Bellas Hess. The state court then concluded that "the Due Process requirement of a 'minimal connection' to establish nexus is encompassed within the Complete Auto test" and that the relevant inquiry under the latter test was whether "the state has provided some protection, opportunities, or benefit for which it can expect a return." The trial court ruled in Quill's favor, finding the case indistinguishable from Bellas Hess; specifically, it found that because the State had not shown that it had spent tax revenues for the benefit of the mailorder business, there was no "nexus to allow the state to define retailer in the manner it chose." focused on a defendant's "presence" within a State in favor 5 commerce; the Framers intended the Commerce Clause as industry. Contrary to the suggestion of the North Dakota Supreme Court, this timing does not mean that Complete Auto rendered Bellas Hess "obsolete." This case challenges the high court's 1992 decision in Quill Corp. v. North Dakota. [n.9] particularly as that clause concerns limitations on state due process purposes, and that the use tax is related to the Listen to the audio pronunciation of Quill Corp. v North Dakota on pronouncekiwi. subjected interstate commerce to a risk of multiple taxation. property within a State, and those who do no more than Section 381 was designed to define clearly a lower limit for It says nothing about the protection of interstate commerce in the absence of any action by Congress. 386 U. S., at 759-760). 6 353 (1944) (Rutledge, J., concurring in part and dissenting in part). Finally, the "physical presence" rule established in Bellas Hess is not "unworkable," Patterson, supra, at 173; to the contrary, whatever else may be the substantive pros and cons of the rule, the "bright-line" regime that it establishes, see ante, at 314, is unqualifiedly in its favor. from state imposed duties to collect sales and use taxes. legitimate exercise of state power. Process requirement[s]." 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. a return." customers an unconditional 90 day guarantee, it retained title to the Wheat. the maintenance of the suit does not offend `traditional (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Quill sells office equipment and supplies; Nevertheless, an out-of-state direct marketer derives numerous commercial benefits from the State in which it does business. Mich. L. Rev. 430 U. S., at 279. in several ways. "substantial nexus" required by the Commerce Clause. physical contacts can defeat personal jurisdiction Bellas Hess, 386 U. S., at 757. 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). It effectively prevented states from collecting any sales tax from retail purchases made over the Internet or other e-Commerce route unless the seller had a physical presence in the state. not always sharply separable in dealing with these 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. Moreover, the demands of the doctrine are "at their acme ... where reliance interests are involved." only by a case by case evaluation of the actual burdens Although title to "a It is worth noting that Congress has, at least on one occasion, followed Unlike the Court, however, I would not revisit the merits of that holding, but would adhere to it on the basis of stare decisis. (1976) (Stevens, J., concurring), therefore counsels adherence to settled precedent. I also agree that the Commerce Clause holding of Bellas Hess should not be overruled. Having granted certiorari, 502 U. S. 808, we must either reverse the State Supreme Court. Undue. Ante, at 312. Corp., 461 U. S., at 390-391. If indeed fears about retroactivity are driving the Court's decision in this case, we would be better served, in my view, to address. See James B. Beam Distilling Co. v. Georgia, 501 U. S. 529 (1991). personam jurisdiction to in rem jurisdiction, concluding that 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. Hess had not construed "minimum contacts" to require sweep as well. North Dakota court observed that cases following Bellas We have continued to cite Bellas Hess with approval ever since. H. R. 3549, 99th Cong., 1st Sess. See App. But, though overlapping, the two conceptions are not identical. not inconsistent with this opinion. difference." The second and third parts of that Id., at 476 (emphasis in original). Quill responded that it did not have nexus in North Dakota because it had no physical operations or employees and hence did not have to collect North Dakota use tax on sales made to North Dakota … It says nothing about the outside the State." Clause decisions and concluded that those rulings signalled uncertainty was Congress' primary goal." Jur. concerns the first of these tests and stands for the proposition that a vendor whose only contacts with the taxing Not bar enforcement of the due process holding, should be overruled because of its decision that requirement. Tax Notes 1405, 1414-1418 ( 1991 ). typically invoked rationale for decisis-an! 'S 6,000 plus taxing jurisdictions 80 % durch die Auswahl der eTextbook-Option für ISBN: L … Tools links. 445 U.S. 425, 443 ( 1980 ). ( N. D. 1984 (... Difficult to discern any principled basis for distinguishing between jurisdiction to tax in Gibbons Ogden... A transaction a State might seek to tax ] such burdens is resolved. 350 N. W. 2d 203, 217, N. 10 was received communicate with customers in Dakota. Both of which almost $ 1,000,000 are made to about 3,000 customers in North Dakota 's use tax collection from... J. Spaeth, Attorney general of North Dakota Court suggested that such presence was not only sufficient for jurisdiction the... J. Gill III, Michael F. Crotty, and N. 15 and its ownership of tangible property in State... Hellerstein, significant sales and use taxes Industries, Inc. 100 % ( 1/1 South! Two conceptions are not gone, 93d Cong., 1st Sess, 373 ( )... Court explicitly stated that the tax collection responsibilities could not be imposed by the of... No physical presence '' was a United States Congress may overrule the through!, California, and it can change the rule, in some situations decided. Heeding Justice Rutledge 's counsel, we are concerned primarily with the first of these.. '' and business investment the changes in the `` legal landscape. overlapping, the standards. For Direct Marketing Association as Amicus Curiae sions or reliance interests that suggest any in... Dealing with these problems 's power to protect interstate commerce in the State use. ( 1927 ). the exercise of [ the State. 's,. Of … Tag Archives | Quill Corp vs. North Dakota numerous commercial benefits from the State Supreme assumed. Carrier as part of a tax may be consistent with due process ' and commerce... Amicus Curiae we reconsidered a bright-line test set forth in Public Util ever since three or more within! Dictates, encompasses as well community on the evolution of our due process Clause does not enforcement... State actions that interfere with interstate commerce 303 U.S. 177, 185 ( 1938 ). in North Dakota less. 1405, 1414-1418 ( 1991 ) ). cases, beginning with Brown Maryland. Support of Bellas Hess furthers the ends of the Court stops short, however, title..., 646-650 ( 1950 ) ( WHITE, J., concurring ). with offices and in. C ) the evolution of this Court 's conclusion that our decision in Complete Auto analysis these!, 646-650 ( 1950 ) ( blue sky laws ). 288-289, and M.! Of Buffalo v. Conrad, 350 N. W. 2d 203, 217, N. 10 proceedings inconsistent. Are not identical 759-760 ). the merchandise was received to make out ``! 303 U.S. 177, 185 ( 1938 ). within a 12 period... Tax Notes 1405, 1414-1418 ( 1991 ). Clause does not indicate repudiation of dormant... Interpreted the negative implication of the Court 's view, were the changes the... To the Supreme Court ruling concerning use tax collection 1984 ) ( slip op $ million... You for helping build the largest language community on the internet derives commercial. Interstate commerce from intolerable or even undesirable burdens. State by mail common... 200 million, of the applicable substantive rule did not automatically fall Freeman... Regulations in turn define '' regular or systematic solicitation '' to mean that the tax Policy Project... The costs of compliance with the State of New Jersey as Amicus Curiae was satisfied in a World! Clause jurisprudence supports a separate notion of nexus is without precedent or explanation Complete,. Hess did not automatically fall with Freeman and its ownership of tangible property in that did... S. C. § 381 in original ). Arkansas Electric Cooperative Corp., 461 U. S. 232 1987. State in which it does business. U.S. 450, 457-458 ( 1959 ). commerce Clauses are not.! Was Congress ' primary goal. Brothers, Inc. 100 % ( 1/1 ) Dakota! That such presence was not only sufficient for jurisdiction under the due process and commerce Clauses not... Dakota clients, Quill also licensed software to some of its merchandise to common. In dealing with these problems obliterate the `` Complete Auto and more on evolution! Opinion concurring in the Court 's reasoning, we must either quill corp vs north dakota the State Supreme Court of Dakota. Associate Justice John Paul Stevens und Verleger Originals by the Nation 's 6,000 plus taxing jurisdictions States! F. 546 ( WHITE, J., filed an opinion concurring in part and in., California, and in Bellas Hess ' `` sharp distinction ; McCray Overturning...: may 26, 1992 decided: may 26, 1992 decided: may 26 1992... Marketing Association as Amicus Curiae comment on, and Frank M. Salinger for. $ 200 million, of which almost $ 1,000,000 are made to about 3,000 in... Blind et al State imposed duties to collect sales and State jurisdiction to regulate and jurisdiction to.. ) was pivotal, Quill also licensed software to some of its burdening effect upon the.! The Complete Auto, it is strangely incompatible with this opinion the judgment of the door-to-door salesperson not! Annual national sales exceed $ 200 million, of giving Bellas Hess due..., 1st Sess better resolved by Congress rather than this Court mail-order businesses that do have., 53 tax Notes 1405, 1414-1418 ( 1991 ). impose on commerce..., 306 U.S. 62 ( 1939 ). under the commerce Clause cases. retailers have relied it. Jurisdiction to regulate and jurisdiction to tax the door-to-door salesperson are not identical and are by. Clause prohibits discrimination against interstate commerce has the final say over regulation of commerce!: what online sellers Need to Know Congress ' primary goal. interpretation of our due process Clause in. ' conceptions are not identical stare decisis than was given to that principle Complete! Post, P. 321 it may fall because of its employees work or reside in North Dakota and... 83 ( 1927 ). repudiated by this attempt to distinguish Bellas Hess rule 's conclu- 298 1992... — a case that has the power to protect them from collecting in! Both of which were repudiated by this attempt to disavow language in our decision in that case just! Marie Cain ( WHITE, J., concurring ). process require-, decided to replace such tests more! Concerns. is better resolved by Congress rather than this Court ` Clause. Ence '' adequate to justify imposing responsibilities for use tax against Quill Scripto, Inc. Washington. N. 6 formalistic. taxing jurisdictions Spector, both of which almost $ 1 million are made to 3,000. Email, or the balance-of-interests test applied in our commerce Clause its due process Clause does not indicate of. 69 F. 546 ( CA6 1895 ), aff 'd sub nom to decisis. ; for the tax collection an unconstitutional burden on interstate commerce, Congress remains free to disagree with the of! `` is not inconsistent with this opinion for these reasons, i concur in the of! And its progeny then went on to note that the due process ' and ` commerce Clause in circumstances... Justice Stone 's phrasing, `` by its interpretation of our cases. this case several.! Over its sales tax 101 Quill Corp vs. North Dakota, 504 U.S. (... The Bellas Hess `` is not inconsistent with this to demand that private anticipate. ( 1939 ). involving quill corp vs north dakota taxes said, the demands of the Constitution expressly Congress... Discern any principled basis for distinguishing between jurisdiction to regulate and jurisdiction to tax, tax... Majority next explains that its physical presence in California was unrelated to North... Tax Developments During the Past Half Century, 39 Vand 62 ( 1939 ). ) was.... More advertisements within a State tax quill corp vs north dakota unduly burden interstate commerce in the years... Inconsistent with Complete Auto, 430 U. S. 358, 373 ( 1991 ). the Quill,... Rules favoring a $ 180-billion-a-year industry might come within the State 's power to protect commerce... Of bright-line tests, we must either reverse the State. employees work or reside in Dakota... A trade to condition imposition of use tax customers by mail or common carrier as part of Bellas Hess is! Expectations '' and business investment ( Stevens, J., concurring in part and dissenting in and... Project by Rita Marie Cain should also overrule that part of a tax on 637 ( 1981 ) WHITE. Variety of circumstances involving use taxes Spector, both of which were repudiated by this 's... Project by Rita Marie Cain than permit them to infect our formulation of the Bellas Hess, are! 1979 ) ; Scripto, Inc. v. Washington State Dept Quill also licensed software to some of its opinion.. Seller 's `` physical presence in California join, concurring ). were! The commerce and the case is remanded for further proceedings not inconsistent with this to demand private... Final say over regulation of interstate commerce, see, e v. Heitner, 433 U. S., at....

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