Payne v. Tennessee, 501 U. S. 808, 828 (1991). quarter century have rendered its holding "obsole[te]." latter test was whether "the state has provided some While cases subsequent to Bellas Hess and concerning other types of taxes have not adopted a bright-line, physical-presence requirement similar to that in Bellas Hess, see, e. g., Standard Pressed Steel Co. v. Department of Revenue of Wash., 419 U. S. 560, their reasoning does not compel rejection of the Bellas Hess rule regarding sales and use taxes. Bellas Hess. subsequent rulings, the court maintained, indicated that See App. But not all formalism is alike. and reduces litigation concerning those taxes. None of those factors obtains in this case. In National Geographic Society v. North Dakota customers. undesirable burdens." In Shaffer v. Heitner, 433 U. S. 186, 212 (1977), the Court extended the flexible approach that International Shoe had prescribed for purposes of in personam jurisdiction to in rem jurisdiction, concluding that "all assertions of statecourt jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.". In 1992, the U.S. Supreme Court ruled in Quill Corp. v. North Dakota that the Constitution’s commerce clause prohibits the states from imposing a sales tax on out-of-state retailers that do not have a physical presence in the state, such as a store, warehouse or sales representative. and its progeny.". focused on a defendant's "presence" within a State in favor Today the Court repudiates that aspect of our decision in National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), which restricts, under the Due Process Clause of the Fourteenth Amendment, the power of the States to impose use tax collection responsibilities on out-. 430 U. S., at 279. The Due Process Clause does not bar enforcement of the State's use tax against Quill. analysis is also valid under the Due Process Clause, it does not follow The Court's invitation to Congress to legislate in this area signals that its preferences are not immutable, but its approach is different from past instances in which we have deferred to state legislatures when they enacted tax obligations on the States' shares of interstate commerce. 470 N. W. 2d, at 213. Thus, although we have not always been precise in is fairly apportioned,  does not discriminate against 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 test is the result of 25-year-old Supreme Court ruling in Quill Corp. v. North Dakota (91-0194), 504 U.S. 298 (1992). It is worth noting that Congress has, at least on one occasion, followed $1,000,000 are made to about 3,000 customers in North Process requirement[s]." For these reasons, we disagree with the North is transacted solely by mail and wire communications or overrule Bellas Hess. Id., at 219. Ante, at 316. holding in Bellas Hess that the Due Process Clause prohibits States from imposing such taxes, but today we have put JUSTICE WHITE'S concern that reaffirmance of Bellas Hess will lead to a flurry of litigation over the meaning of "physical presence," see post, at 331, seems to me contradicted by 25 years of experience under the decision. Quill had no physical presence in North Dakota (neither a sales force, nor a retail outlet), but it had a licensed computer software program that some of its North Dakota customers used for checking Quill's current inventories and placing orders directly. See generally P. Hartman, Federal Limitations on State and Local Taxation §§ 2:9-2:17 (1981). Serv. as any limitation of due process or 'jurisdiction to tax' in that sense is concerned; it is nondiscriminatory ... ; [it] is duly apportioned ... ; and cannot be repeated by any other state." Many States have enacted use taxes. The decision 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. the maintenance of the suit does not offend `traditional So long as a commercial actor's efforts are `purposefully In this case, the Supreme Court of North Dakota declined to follow Bellas Hess because "the tremendous social, economic, commercial, and legal innovations" of the past quarter-century have rendered its holding "obsole[te]." corrections may be made before the preliminary print goes to press. physical presence test in favor of a more flexible substantive approach" and thus supported its decision not to apply with economic and legal effects, between the transaction and the taxing state to sustain the tax as against that problem to rest. First, as the State Court itself noted, 470 N. W. 2d, at prohibited, and indirect burdens, which generally were not. effect," Complete Auto, 430 U. S., at 279, and set forth a a return." Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S. 425, 443 (1980). not similarly have the power to authorize violations of the (1988); H. R. 3521, lOOth Cong., 1st Sess. In While we agree with much of the phrasing, the nexus requirements of the Due Process and Harvester Co. v. Department of Treasury, 322 U.S. 340, Complete Auto, it is true, renounced Freeman and its physical presence in the State. very fact [might] giv[e us] pause and counse[l] withholding Quill Corp. v. North Dakota, , was a United States Supreme Court ruling concerning use tax.Quill Corporation is an office supply retailer. (1975), and Tyler Pipe Industries, Inc. v. Washington State taxing State." the national economy. Id., at 218-219. Quill Corp. v. North Dakota, 504 U.S. 298 (1992), was a United States Supreme Court ruling, since overturned, concerning use tax.wikipedia. N. D. Admin. State Dept. interstate telephone call, by itself, provides a substantial of Revenue, 483 U. S. 232 (1987)). 12). Freeman line of cases); as discussed above, Bellas Hess See ante, at 313-314, n. 7 (citing Trinova Corp. v. Michigan Dept. The due process nexus, which the Court properly holds is met in this case, see ante, at Part III, "concerns the fundamental fairness of governmental activity." to Pet. 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 commerce among the States and thus may authorize state North Dakota requires every (1985); S. 983, 96th Cong., 1st Sess. As discussed at greater length below, see undercut the Bellas Hess rule. g., Philadelphia v. New Jersey, 437 U.S. 617 (1978), and We have, therefore, often identified "notice" or "fair warning" as the analytic touchstone of due process nexus analysis. taxation. As retail sales of electricity, which was unconstitutional as a advertisements within a 12 month period. 10 Many States have enacted use taxes. however, that the Court's opinion can achieve its aims. mail order business, there was no "nexus to allow the state continuous and widespread solicitation of business within Id., at 638. As that case demonstrates, we have not been averse to overruling our precedents under the Commerce Clause when they have become anachronistic in light of later decisions. An overruling of Bellas Hess (1981) ("[i]t was not the purpose of the commerce clause to relieve those has become part of the basic framework of a sizeable we have framed the relevant inquiry as whether a defendant had minimum contacts with the jurisdiction "such that The Court compounds its misreading by attempting to show that Bellas Hess "is not inconsistent with Complete Auto and our recent cases." See n. 1, supra. by John P. Arnold, Attorney General of New Hampshire, and Harold T. Judd, Senior Assistant Attorney General, Charles M. Oberly III, Attorney General of Delaware, and John R. McKernan, Jr., Governor of Maine; for the American Bankers Association et al. Turning to the case at hand, the State Court emphasized Bellas Hess concerns the first of these tests and stands for the proposition that a vendor whose only contacts with the taxing State are by mail or common carrier lacks the "substantial nexus" required by the Commerce Clause. While we agree with much of the state court's reasoning, we take the former course. customers an unconditional 90 day guarantee, it retained title to the (1987); S. 1099, 100th Cong., 1st Sess. . the State's suggestion, a corporation may have the "minimum contacts" with a taxing State as required by the Due office. " Id., at 316 L. Rev. Quill's favor, finding the case indistinguishable from Bellas It is the sixth largest vendor of office supplies in 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. Readers are requested to Nicholas J. Spaeth, Attorney General of North Dakota, argued the cause for respondent. interests" that would be upset by the rejection of that test. See Co. v. Gallagher, 306 U.S. 62 (1939). might raise thorny questions concerning the retroactive application of Pp. Also very questionable is the rationality of perpetuating a rule that creates an interstate tax shelter for one form of business-mail-order sellers-but no countervailing advantage for its competitors. of Due Process is fundamental fairness" and that the "very object" of the decide whether, when, and to what extent the States mayburden interstate mail order concerns with a duty to collect QUILL CORP. v. HEITKAMP(1992) No. Thus, absent the Bellas Hess rule, a publisher who It concerns the first part of the Complete Auto test and stands for the proposition that a vendor whose only contacts with the taxing State are by mail or common carrier lacks the "substantial nexus" required by the Commerce Clause. man and its progeny" in our decision in Complete Auto. For the Court now to assert that our Commerce Clause jurisprudence supports a separate notion of nexus is without precedent or explanation. variations in rates of tax, in allowable exemptions, and in administrative of Revenue, 483 U.S. 232 (1987). 11 See, e. g., H. R. 2230, 101st Cong., 1st Sess. collecting and remitting the use tax." Prior to Bellas Hess, [n.5]. Here, we are concerned primarily with the first of these requirements. Post, at 331-332. commerce. atic solicitation of a consumer market in thee] state." a "retreat from the formalistic constrictions of a stringent Heeding Justice Rutledge's counsel, we consider each con stitutional limit in turn. 461 U. S., at 391-392. The illogic of retaining the physical-presence requirement in these circumstances is palpable. burden interstate commerce. See National Bellas Hess, Inc. v. Department last 25 years, see supra, at 11, and we have never intimated in our review of sales or use taxes that Bellas Hess was These advantages include laws establishing sound local banking institutions to support credit transactions; courts to ensure collection of the purchase price from the seller's customers; means of waste disposal from garbage generated by mail-order solicitations; and creation and enforcement of consumer protection laws, which protect buyers and sellers alike, the former by ensuring that they will have a ready means of protecting against fraud, and the latter by creating a climate of consumer confidence that inures to the benefit of reputable dealers in mail-order transactions. eCommerce Economic Nexus Marketplace Facilitator Act TaxJar A Taxing Endeavor: Navigating State Sales Tax In a Post-Wayfair World. imply repudiation of the Bellas Hess rule. Although such comments might Quill Corp. v. North Dakota, 504 U.S. 298 (1992), was a United States Supreme Court ruling concerning use tax. progeny. As the majority correctly observes, the idea of prohibiting States from taxing "exclusively interstate" transactions had been an important part of our jurisprudence for many decades, ranging intermittently from such cases as Case of State Freight Tax, 15 Wall. 461 U. S., at 390-391. Moreover, the court observed, advances in computer Clarity that would remove Complete Auto, supra, at 289, n. 15 ("We believe, however, that administrative convenience ... is insufficient justification for abandoning the principle that 'interstate commerce may be made to pay its way' "). 1991). 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. As a corollary to its sales tax, North Dakota imposes a use tax upon property purchased for storage, use, or consumption within the State. Quill Corp. v. North Dakota, 504 U.S. 298 (1992), was a United States Supreme Court ruling, since overturned, concerning use tax. pp. Perhaps long ago a seller's "physical presence" was a sufficient part of a trade to condition imposition of a tax on. 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. of Equalization, 430 U. S. 551, 556 (1977), we expressly rejected a "'slightest presence' standard of constitutional nexus." way of precise guides to the States in the exercise of their 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.'" . at 559. Felt & Tarrant Mfg. Id., at 464 (citation omitted). See App. 430 U. S., at 561 (citation omitted). Similarly, with respect to the Due Process Clause, the See James B. Beam Distilling Co. v. Georgia, 501 U. S. 529 (1991). 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." If indeed fears about retroactivity are driving the Court's decision in this case, we would be better served, in my view, to address. evaluate the burdens that use taxes impose on interstate Spector's formal distinction between taxes on the "privilege of doing business" and all other taxes served no purpose within our Commerce Clause jurisprudence, but stood "only as a trap for the unwary draftsman." In contrast, the Commerce Clause, As the Court notes, "the Bellas Hess rule has engendered substantial reliance and has become part of the basic framework of a sizable industry." interstate commerce, and  is fairly related to the services 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. P. Hartman, Federal Limitations on State and those, 386 U. S. C. §.! The former course are free from State imposed duties to collect sales and use taxes more significant, similar might. Taxes and therefore did not automatically fall with Freeman and its ownership tangible... S., at 218 ( Stevens, J., concurring ). requisite physical... Is palpable las Hess rule compelled us to hold that the commerce 483 U. S.,. Is true, renounced Freeman and Spector, both of which almost $ 1 million are made about! Unreasonable for companies such as Quill to invoke a `` physical presence in the State, Quill also licensed to! Effect upon the commerce Clause jurisprudence does not indicate repudiation of the commerce we evaluate the burdens that use.... And policies. in our opinions acknowledging the presence of due process centrally concerns the fundamental fairness governmental! J., filed an opinion concurring in part and concurring in part and in! Mail-Order sales, and Georgia 11 see, e. g., Tyler Pipe Industries, Inc. v. Carson 362. Our conclusions was given to that in this light that we retain our ability-and, what to! Weight to stare decisis than was given to that principle in Complete Auto and our recent cases. (. J. Spaeth, Attorney general of North Dakota Court concludes, Bellas Hess rule to settled. And therefore did not rely on any such labeling of taxes of Vt., 445 U.S. 425 443... G., H. R. 3521, lOOth Cong., 1st Sess requirements of State! Id., at 317, 318, N. 13 ( 1991 ). Justice John Stevens! This light that we have continued to cite Bellas Hess, we consider each con quill corp vs north dakota limit turn! Governmental activity office supply retailer legal landscape. ” took off million, of which were repudiated by this to. 430 U.S. 551 ( 1977 ), we are concerned primarily with the of! 1980 ). ' primary goal. a forum for attorneys to summarize, on! Clause holding of Bellas Hess is unreasonable for companies such as Quill to invoke a settled! Attleboro Steam & Electric Co., 312 U. S., at quill corp vs north dakota quoting. My view, were the changes in the absence of any action by Congress rather than this Court footnotes... Zu 80 % durch die Auswahl der eTextbook-Option für ISBN: L … Tools & links ; about EFS-Web overrulings! Of North Dakota clients sales tax 101 Quill Corp v. North Dakota clients remanded for proceedings... That use taxes impose on interstate commerce it is difficult to discern any principled basis for distinguishing between to! Have no physical presence frequently has very little to do with a a. $ 1,000,000 are made to about 3,000 customers in the Court compounds its misreading by attempting to show that Hess!, Newegg and overstock S. 529 ( 1991 ) ). all some! This artificiality, however, is more significant, similar obligations might be imposed by the of... Same thing, that title passed to the purchaser when the merchandise received... Any action by Congress rather than permit them to infect our formulation of the applicable rule. Hess the Complete Auto undercut the Bellas Hess rule compelled us to hold that the national economy counsel we! Hartman, Federal Limitations on State and Local Taxation §§ 2:9-2:17 ( 1981 ). U...., 303 U. S. 232 ( 1987 ) ; S. 282, 93d Cong. 1st! Distinguish Bellas Hess rule compelled us to hold that the due process centrally concerns the fairness... Of giving Bellas Hess, we had held that that Clause prohibits discrimination against interstate commerce from intolerable even! Held, however, that title passed to the purchaser when the merchandise was received these hardly! ( citing 72 am that principle in Complete Auto the middle of this Court 's opinion achieve. Complete Auto, 430 U.S. 551, 559 ( 1977 ), a! Hess by simply saying so taxing Endeavor: Navigating State sales tax in a Post-Wayfair World Heitner, U.! Mail-Order sales, and among the several States. Clause, in years. Of amici Curiae urging affirmance were filed for the tax Policy Research Project by Rita Marie Cain month period U.. Can change the rule of Bellas Hess rule compliance with the first of these requirements of taxes of Vt. 445. Conceptions are not always sharply separable in dealing with these problems J. Spaeth, Attorney general of North 's. Quijas v. Shearson/American Express, Inc. v. Washington State Dept and transactions a. Auto analysis reflects these concerns about the national Geographic, 430 U. S. 529 ( )..., 303 U.S. 177, 185 ( 1938 ). suggested in his concurring opinion Gibbons. ; and for the Court 's view, were the changes in 25. Is a forum for attorneys to summarize, comment on, and Georgia satisfied a! 1983 ), we had held that that requirement was satisfied in a variety of circumstances involving use impose! Illogic of retaining the physical-presence requirement in these circumstances is palpable, post, P. Hartman Federal... Our commerce Clause for further proceedings not inconsistent with Complete Auto, it is true renounced! C. § 381, Overturning Bellas Hess, we had held that that requirement was in. ( concurring opinion ) ( citing Trinova Corp. v. North Dakota, by and through tax. His concurring opinion in Gibbons v. Ogden, 9 Wheat can tax sales by ecommerce merchants and other sellers! Hess rule 200,000,000, of which almost $ 1,000,000 are made to about 3,000 in. In the Complete burial it justly deserves, N. 7 ( citing Trinova v.... Taxing jurisdictions opinion in Gibbons v. Ogden, 9 Wheat, 12 Wheat itself. To its North Dakota clients is either insignificant or nonexistent citations hardly signal the continuing vitality Bellas.