*1 through DAKOTA, CORP. v. NORTH QUILL COMMISSIONER, its TAX HEITKAMP 22, 1992 26, 1992 Argued January May No. 91-194. Decided *2 Stevens, J., opinion delivered the for a unanimous respect Court with I, II, III, to Parts and opinion and the respect; the Court with to Part IV, Rehnquist, in J., which Blackmun, O’Connor, C. and Souter, and JJ., joined. Scalia, J., opinion filed an concurring in part and concurring Kennedy judgment, Thomas, in which JJ., joined, post, p. 319. White, J., opinion filed concurring part an dissenting part, post, p. 321. Gaggini
John E. the cause for With argued petitioner. Harnack, briefs were Don S. A. Hanson, Richard him on the Nancy Peters, James H. T Owens, P. William Pearce. Spaeth, Nicholas J. Attorney General North Dakota, the cause for argued With him on the respondent. brief Loveland, were Laurie J. Wirtz, Robert W. General, Solicitor Friedman, and Alan H. General, Assistant Attorney Special Assistant General.* Attorney urging
* Briefs of amici curiae reversal for the were filed State of New Arnold, Hampshire Attorney et al. John Hampshire, P General of New Judd, General, Attorney and Harold T. Senior Assistant Charles M. Ob III, erly Attorney Delaware, McKernan, Jr., General of and John R. Gov *3 Maine; by ernor of for the American Bankers Association et al. John J. III, Crotty, Salinger; Gill Michael F. and Frank M. for the American by Council for the et al. Timothy May; Blind David C. Todd and J. for Inc., Co., by Maryann Gall, Arizona Mail Order et Timothy Dyk, al. B. B. Meehan, Julian, Michael J. G. Bradford, George Frank David J. S. Isaac son, Eisenstein, Smith; Martin I. and A Top Industries, Stuart for Carrot Inc., by Blumstein; et al. Charles A. Trost and James F. for the Clarendon Maines; by Foundation Ronald D. for the Coalition for Small Direct Mar by Leighton Peterson; keters Richard J. and Dan M. for Direct Mar keting by George Isaacson, Eisenstein, Association S. Martin I. and Rob Levering; ert J. for the National by Association of Manufacturers et al. Ennis, Jr., Amundson, Ogden, Bruce J. David W. S. Kamp; Jan and John Magazine America, Inc., for of by Minton, Publishers et al. Eli D. James Cregan, Volner, R. Stephen Owen, Jr.; Ian D. F. and for the Tax Exec Institute, Inc., by Timothy utives McCormally. J. urging
Briefs of amici curiae affirmance were filed for the State of by Blumenthal, Connecticut et al. Richard Attorney of General Connecti- cut, Hartman, Burson, and Paul J. Charles W. Attorney of General Tennessee, Lungren, Attorney California, Daniel E. General of Winston Bryant, Attorney Arkansas, Butterworth, General of Robert A Attorney Florida, Bowers, General of Attorney Michael J. Georgia, General of Larry Hawk, Attorney Echo Idaho, Burris, General Attorney of Roland W. Illinois, Campbell, General of Attorney Iowa, Bonnie J. General of Fred- Cowan, eric Attorney J. Kentucky, Guste, Jr., General of William J. At- torney Louisiana, Curran, General of Joseph Jr., J. Attorney General of Maryland, Harshbarger, Attorney Scott Massachusetts, General of Frank Kelley, Attorney J. Moore, Michigan, General of Attorney Mike General Mississippi, Papa, of Attorney Nevada, Frankie Sue Del General of Robert opinion delivered the of the Court.
Justice
Stevens
This case, like
Department
National
Hess, Inc.
Ill.,
Revenue
In this case, Court of North Dakota declined to follow Bellas Hess because “the tremendous eco- social, nomic, legal commercial, past innovations” of the quarter-century have holding “obsolete].” rendered its N. W. 2d Having granted 203, 208 certiorari, 502 U. S. 808, we must Supreme either reverse Abrams, Attorney Fisher, York, General of Lee New Attorney General of Ohio, Loving, Susan B. Attorney Oklahoma, Preate, Ernest D. General Jr., Attorney General of Pennsylvania, Medlock, T. Travis Attorney Gen- eral of Carolina, South Dan Morales, Attorney General of Texas, Paul *4 Dam, Van Attorney Jeffrey Amestoy, Utah, General of L. Attorney Gen- eral Vermont, Mary Terry, Sue Attorney Virginia, General of Ken Eikenberry, Attorney Palumbo, Washington, General of J. Mario Attor- ney General West Virginia, and Payton; John for State of New Jersey by Robert J. Tufo, Del Darrow, Attorney General, Sarah T. Deputy Attorney General, Joseph L. Wannotti, Attorney Assistant General, Rich- Taranto, ard G. Klein; and Joel I. for the State of New Mexico by Tom Udall, Attorney General, and Katz, Frank D. Special Assistant Attorney General; City for the of New York by Sherwood, O. Peter F. X. Edward Hart, Stanley Buchsbaum; and for the International Council of Shopping Centers, Inc., by et al. Rothfeld; Charles for the Multistate Tax Commis- by sion Flug James F. Lobel; and Martin for the National Governors’ Ruda; by Association et al. Richard for Policy and the Tax Proj- Research by Marie ect Rita Cain. agree or overrule Bellas Hess. While we with much of the reasoning, state court’s we take the former course. Quill is corporation a Delaware with offices and ware I Georgia. houses in and None of its em Illinois, California, ployees ownership Dakota, work or and its reside North tangible insignificant property in that is either or State equipment supplies; nonexistent.1 sells office Quill flyers, through catalogs solicits business advertise periodicals, telephone ments in national Its an calls. million, nual national exceed of which sales almost $200 $1 million are made to about customers in North 3,000 Dakota. largest supplies It is the sixth vendor of office in the State. It delivers all of its merchandise to its North Dakota custom by ers mail or common carrier from out-of-state locations. corollary imposes
As a tax, to its sales North Dakota a use storage, upon property purchased consump- tax use, for or requires every tion within the Dakota State. North “re- maintaining place tailer a of business in” the to collect State the tax from the consumer and remit it to the State. N. D. 1991). §57-40.2-07 (Supp. Cent. Code In North Da- statutory kota amended the definition of the term “retailer” “every person engages regular system- to include who or court, In argued Quill the trial the State gave that because its custom 90-day guarantee, ers an unconditional it retained title to the merchandise 90-day during period delivery. held, however, after The trial court passed purchaser title to the when the merchandise was received. App. Supreme See to Pet. for Cert. A40-A41. The State Court assumed purposes for ruling of its decision that that was correct. 470 N. W. 2d 203, 217, n. 13 The Supreme Quill Court also noted computer program licensed software to some of its North Dakota cus tomers Quill’s that enabled them to check prices current inventories and Id., place directly. and to orders explain, Quill’s at 216-217. we shall As analysis interests in the licensed software does not affect our of the due process issue and comprise does not required the “substantial nexus” the Commerce Clause. See n. infra. *5 atic solicitation of a th[e] §57- consumer market in state.”
40.2-01(6). regulations “regular sys- turn define or tematic solicitation” to mean or three more advertisements period. within a 12-month § N. D. Admin. Code 81-04.1-01- 03.1 Thus, since companies 1987,mail-order that en- gage in such subject solicitation have been to the tax even if they property maintain no personnel or in North Dakota. position Quill has taken the that North Dakota not does power have the compel it to collect a use tax from its North Dakota Consequently, customers. through State, its Tax Commissioner, filed require this action to pay Quill to (as taxes well as penalties) interest and on all such sales July made after 1, 1987. The trial court ruled in Quill’s finding favor, indistinguishable case from Bellas Hess; specifically, it found that because the State had not shown that spent it had tax revenues for the benefit of the mail- order business, there was no “nexus to allow the state to define retailer in the manner it App. chose.” to Pet. for Cert. A41.
The Supreme North Dakota concluding reversed, changes” “wholesale economy both the and the law made inappropriate to follow today. Bellas Hess N. W. 2d, at principal 213. The economic change by noted the court was growth the remarkable of the mail-order busi- ness relatively “from inconsequential market niche” in “goliath” to a with annual sales that staggering reached “the figure of $183.3 billion in 1989.” Id., at 208,209. Moreover, the court observed, computer advances in technology greatly eased the compliance burden with a compli- “‘welter of ” obligations’ cated imposed local author- ities. Id., at (quoting 759-760). Bellas Hess, S., 386 U.
Equally important, in the court’s changes view, were “legal in the landscape.” respect With to the Commerce emphasized Clause, court Auto Transit, Brady, Inc. v. rejected U. S. 274 the line of cases holding that the direct taxation of interstate commerce was
impermissible adopted and rational instead a “consistent and practical on] inquiry [that effect of focused method of Corp. challenged [the] Mobil Oil v. Commissioner tax.” of subsequent This and Vt., Taxes rulings, maintained, indicated that Commerce the court physical-presence longer the sort of no mandated Clause suggested Hess. nexus in Bellas Similarly, respect Clause, Due Process to the following cases Bellas Dakota court observed that North require phys- “minimum contacts” to had not construed Hess prerequisite legiti- presence to the within a as a ical State power. court then con- The state mate exercise state requirement of a ‘minimal that “the Due Process cluded encompassed is within the connection’ to establish nexus inquiry under the test” and that the relevant Auto protec- provided some “the state has latter test was whether expect opportunities, can benefit for which it a re- tion, or 2d, 470 W. at 216. turn.” N. emphasized
Turning court hand, to the case at the state economic climate that that Dakota had created “an North legal products, maintained a in- fosters demand for” Quill’s protected disposed and of 24 market, frastructure that flyers catalogs into the tons of mailed State Quill every year. Id., facts, at 218-219. Based on these presence” “economic North Quill’s court concluded provided by depended on and benefits Dakota services generated constitutionally and therefore “a sufficient duty justify imposition purely of the administrative nexus to collecting remitting Id., the use tax.” 219.2 that, suggested The court also in view of the fact that the “touchstone “very object” of Due Process is fundamental fairness” and that the of the against protection of interstate business discrimina Commerce Clause Quill tory practices, exempt from this burden local it would ironic advantage thereby enjoy significant competitive it to over allow 2d, local retailers. 470 N. W. at 214-215. As in
II
a number of other
involving
application
cases
taxing
statutes to
holding
sellers,
out-of-state
our
Bellas Hess relied on both the Due Process Clause and the
Although
Commerce Clause.
the “two
closely
claims are
re
lated,”
Hess,
S., at 756,
pose
the Clauses
dis
tinct
*7
powers
limits on the
of the
Accordingly,
States.
may,
while a State
with
consistent
the Due Process Clause,
authority
have
particular
to tax a
taxpayer, imposition
may
of the tax
nonetheless violate the Commerce Clause.
g., Tyler Pipe
See, e.
Washington
Industries, Inc. v.
Dept.
Revenue,
Thus, always have not precise been in distin- guishing between the two, the Due Process Clause and Commerce analytically Clause are distinct.
“ process’ ‘Due conceptions ‘commerce clause’ are always sharply not separable dealing in with these problems. they ... To some overlap. extent If there is process a want of due sustain the tax, that fact any alone imposes burden the tax on the commerce among the states becomes though ‘undue.’ But, over- lapping, conceptions the two are not identical. There may be more than sufficient factual connections, with legal economic and effects, between the transaction and state to against sustain the tax process as due burdening may its ef- objections. fall because of Yet it although upon the two notions And, the commerce. fect clarity separated, always of consideration and be cannot ap- promoted if the two issues are would of decision tentatively presented, they at least proached, are where intermingled they separate distinct, not were as if Department Harvester Co. v. International ones.” (1944)(Rutledge, Treasury, concur- J., 340, 353 322 U. S. dissenting part). part ring Rutledge’s consider each consti- Heeding counsel, we Justice limit turn. tutional
Ill
“requires
some
link,
definite
some
Process Clause
The Due
prop-
person,
and the
a state
connection, between
minimum
erty
Miller Brothers Co.
tax,”
it seeks to
transaction
or
(1954), and that the “in-
Maryland,
340, 344-345
purposes must be ration-
for tax
to the State
come attributed
taxing State,’”
ally
to ‘values connected
related
(citation
(1978)
Mfg.
267, 273
Bair, 437 U. S.
Co.v.
Moorman
*8
omitted).
primarily
the first
we are concerned
Here,
requirements.
Hess, we had held
Prior to Bellas
of these
variety
requirement
of circum-
in a
was satisfied
that that
example,
presence
involving
the
For
use taxes.
stances
local re-
personnel
the maintenance of
in the
or
sales
State3
power
justified
of that
the exercise
in the
tail stores
State4
“plainly accorded
local activities were
the seller’s
because
protection
of the
State.”
and services
power
of that
The furthest extension
Hess,
S., at 757.
386 U.
Scripto,
recognized
Carson, S.
Inc. v.
U.
was
(1960),
despite
upheld
the fact
a use tax
in which
Court
by
performed
was
in-state solicitation
that all of the seller’s
some
independent
cases all involved
contractors. These
presence
physical
and in Bellas Hess
State,
within the
sort of
(1939).
Mfg.
Gallagher,
Co.
v.
Our
jurisprudence
due
has evolved substantially
years
in the 25
since Bellas
particularly
Hess,
in the area of
judicial jurisdiction. Building on the seminal case of Inter-
national Shoe
Washington,
Co. v.
(1945),
“Jurisdiction in these may circumstances not be merely avoided because the defendant physi- did not pres- Although territorial cally forum State. enter the potential defendant’s frequently a will enhance ence the reinforce reasonable with a State affiliation inescapable of foreseeability fact it is there, suit an of amount of a life that substantial commercial modern solely by and wire communi- mail is transacted business obviating the need for thus lines, cations across state business is physical presence in which within a State long efforts actor’s are as a commercial So conducted. of another ‘purposefully residents toward directed’ consistently rejected notion that have State, we personal juris- physical defeat contacts can an absence of original). (emphasis in Id., at diction there.” imposition reasoning justifies of collec- Comparable engaged in continuous duty is house that on a mail-order tion widespread a Such of business solicitation within State. may activity warning [its] clearly corporation has “fair that a sovereign.” foreign jurisdiction subject [it] of a to the Shaf- concurring in J., at 218 Heitner, S., (Stevens, fer it matters little judgment). “modern commercial life” In catalogs deluge accomplished by of is such solicitation requirements of due phalanx drummers: The than a rather physi- corporation’s irrespective lack of process of a are met the extent that presence Thus, to State. in the cal Due Process Clause indicated that decisions have our imposition presence requires physical for the in a State holdings as duty those su- tax, we overrule to collect a use process. by developments perseded law of due purpose- question has no case, Quill In this there residents, that fully Dakota its at North directed activities sufficient for magnitude is more than contacts those purposes, is related to the process the use tax and that due We there- access to the State. from receives Quill benefits Supreme agree Court’s conclu- Dakota the North fore enforcement does not bar Clause that the Due Process sion against use Quill. that State’s tax
309
HH <J
§ I, 8,
Article
3,
cl. of the
expressly
Constitution
authorizes
Congress
“regulate
foreign
Commerce with
Nations, and
among the several
says nothing
States.”
It
pro
about the
tection of interstate
any
commerce
the absence of
action
by Congress. Nevertheless, as
suggested
Justice Johnson
concurring opinion
in his
Ogden,
in Gibbons v.
Our “negative” of the or “dormant” Com merce Clause has substantially evolved years, over the particularly as that Clause concerns limitations on tax powers. ation generally See P. Hartman, Federal Limita tions §§2:9-2:17 on State and (1981). Local Taxation Our early beginning cases, Maryland, Brown v. 12 Wheat. (1827), swept 419 broadly, Leloup and in v. Port Mobile, 127 (1888), U. 640, S. 648 we declared that “no State has the right lay a tax on any interstate commerce in form.” We later narrowed that distinguished rule and between direct burdens on interstate prohibited, commerce, which were indirect generally burdens, which g., were See, not. e. San (CA6 Poe, 1895), F. 546 aff’d sub nom. ford Adams Express Co. v. Ohio Auditor, S. Western Live Stock v. Bureau Revenue, 303 U. S. (1938), 256-258 subsequent rejected decisions this formal, categorical analysis adopted “multiple-taxation doc trine” that focused not on whether a tax was “direct” or “in direct” but rather on subjected whether a tax interstate commerce to a risk multiple taxation. However, in Free man v. Hewit, U. S. 249, 256 again we embraced the formal distinction between direct and indirect taxation, invalidating imposition gross Indiana’s of a receipts tax on a “im- would application because
particular transaction recently, in Most interstate sales.” on poste] tax a direct *11 Brady, S., 285, 430 U. Transit, Inc. v. Complete Auto “attaching constitu approach as Freeman renounced expressly We difference.” significance to a semantic tional Service, progeny, Spector Motor of Freeman’s one overruled (1951), tax that a held which 602 U. S. O’Connor, 340 Inc. v. unconsti was doing business” privilege interstate of on “the differently denominated recognizing a tutional, while uncon not effect would economic same with the tax Railway Express in Spector, we observed as stitutional. a created 441 Virginia, 434, S. 358 U. Agency, Inc. v. an “disable “magic labels” could or words in which situation emphasized Complete levy.” Auto constitutional otherwise language looking past “the formal importance of set 279, and S., at practical U. effect,” 430 [to] its statute tax validity govern the to four-part continues test that a forth Clause.5 the Commerce under taxes of state lat- of this middle Hess was decided Bellas Contrary to pragmatism. rally and formalism est between Supreme Court, this tim- suggestion Dakota of the North Bellas Hess Complete Auto rendered ing mean not does Spector’s rejected and Freeman Complete Auto “obsolete.” on taxes “indirect” and “direct” between distinction formal the va- allowed formalism because that commerce interstate terminology,” “legal “drafts- hinge lidity on of statutes Bellas Hess 281. S., at phraseology.” manship re certain jurisprudence, “with Clause current Commerce our Under fair share pay its required may be strictions, commerce interstate (1988); see McNamara, S. 486 U. H. Co. D. Holmes taxes.” (1981) Montana, 609, 623-624 U. S. Co. Edison Commonwealth also engaged those to relieve clause of the commerce (“It purpose not the was even burden state tax just share of [the] their from commerce interstate business”) (internal marks quotation doing cost though increases omitted). citation therefore did taxes and such labeling did not on rely any Freeman its progeny. fall with automatically not jurisprudence Commerce Clause While contemporary to arise were the issue the same result not dictate might Hess not inconsistent Bellas time for the first today, Under Complete Auto and our recent cases. a tax Com- we will sustain Auto’s four-part test, against merce Clause challenge so long as the “tax [1] is applied State, the taxing nexus with with a substantial activity an [2] is fairly apportioned, [3] does not discriminate against interstate commerce, and [4] is fairly related to the services Hess con- S., 430 U. at 279. the State.” provided for the proposition these tests and stands cerns the first of *12 are State taxing contacts with that a vendor whose only re- nexus” the “substantial common carrier lacks mail or by Clause. the Commerce by quired Auto down, was handed Complete weeks after
Thus, three and discussed the Hess for this we cited Bellas proposition Society v. National Geographic some In length. case at (1977), 430 U. S. Bd. Equalization, of California Hess’ “sharp of Bellas vitality continuing we affirmed the physical [a sellers . . between mail-order distinction . do no more those who and ... in the State taxing] presence mail or in the State by with customers than communicate interstate business.” of a general carrier as part common Hess with approval ever to cite have continued We Sweet, 488 U. S. 252, 263 Goldberg in v. For example, since. an interstate of “doubt that termination we expressed nexus enough a substantial call, itself, by provides telephone Hess National Bellas . . . to tax a call. See for a State nexus).” also D. H. See mail insufficient provides of (receipt Common- (1988); McNamara, 486 U. S. 24, 33 Holmes Co. Montana, (1981); Edison Co. wealth Taxes, 437; S., 445 U. v. Commissioner Corp. Mobil Oil these at 559. For S., 430 U. Society, National Geographic conclu- Court’s Supreme with the State reasons, disagree the Bellas undercut Auto decision sion that our Hess rule. Complete Auto less on Dakota relies of North
The State jurisprudence. process our due the evolution more on and by imposed requirements the nexus that contends The State equivalent and are Clauses and Commerce Due Process that lacks a mail-order house above, concluded if, as we satisfies nonetheless presence physical corpora- then that test, process contacts” “minimum the due nexus” “substantial Clause the Commerce also meets tion phrasing, similarity Despite disagree. test. We Commerce Due Process requirements of the nexus are animated The two standards identical. not Clauses are policies. by concerns constitutional different fairness centrally fundamental process concerns the Due general level, activity. most Thus, at the governmental requires whether analysis we ask process nexus the due are substantial with a State connections an individual’s power him. over exercise of legitimate enough the State’s “fair warn- or “notice” identified therefore, often have, We analysis. process nexus analytic of due ing” touchstone as the requirement its nexus Clause contrast, the Commerce In by for the about fairness concerns not so much are informed the ef- concerns about structural defendant as individual economy. Under regulation the national on fects hin- and duties taxes Confederation, state *13 of the Articles in- the commerce; Framers suppressed interstate dered and structural for these as a cure Clause Commerce tended the Hamilton). (A. 11 7, generally Federalist Nos. The ills. See impli- negative interpreted light have that we It is in this Accordingly, ruled we have Clause. cation of the Commerce against interstate prohibits discrimination that that Clause Jersey, Philadelphia 437 U. S. g., Newv. see, e. commerce, unduly regulations burden and bars g., v. Consolidated e. Kassel see, commerce, interstate (1981). Corp. Freightways Del., 450 U. S. of The Auto analysis reflects these about concerns the national The economy. second and third of that parts which analysis, require fair apportionment non- discrimination, prohibit taxes that an unfair pass share tax burden onto interstate commerce. The first and fourth prongs, which a require substantial nexus and a relationship between the tax and state-provided services, limit the reach of state taxing so authority as to ensure that state taxation does not unduly burden interstate commerce.6 Thus, “substantial nexus” requirement not, like due process’ “minimum contacts” a requirement, for proxy notice, but rather' a means for limiting state burdens on interstate commerce. Accordingly, to the contrary State’s a suggestion, corporation may have “minimum contacts” with a taxing State as required the Due by Process Clause, and yet lack the “substantial nexus” with that State as required by Commerce Clause.7 6North Dakota’s use tax illustrates well how a might state tax unduly burden interstate commerce. On face, its North Dakota imposes law a duty collection every on vendor who advertises the State three times in single year. a Thus, absent the Hess rule, publisher who in cluded a subscription card in three magazine, issues of its a vendor whose radio advertisements were heard in North Dakota occasions, on three a corporation whose telephone sales made force calls State, three into the all subject would be to the duty. collection What significant, is more simi lar obligations might imposed 6,000-plus the Nation’s taxing jurisdic tions. Hess, See National Bellas Department Inc. Ill., Revenue (1967) 753, 386 U. S. 769-760 (noting “many that the variations in rates of tax, in exemptions, allowable and in administrative and record-keeping
requirements could entangle [a mail-order house] in a virtual welter of complicated (footnotes obligations”) omitted); Shaviro, see also An Eco nomic and Political Look at Taxation, Federalism Mich. L. Rev. (1992). 925-926 7We have sometimes stated that “Complete test, Auto while respon sive to dictates, Commerce Clause encompasses as well . . . process due requirement^].” Corp. Michigan Trinova Dept. Treasury, Although such might comments suggest every tax that passes contemporary Commerce analysis Clause is also valid under the Due Clause, Process it does not follow that the converse is as well
314 Supreme our recent reviewed Commerce
The State rulings signaled that those and concluded Clause decisions stringent of constrictions a a “retreat from the formalistic physical presence flexible substantive in favor of a more test apply supported approach” not to its decision and thus (citing Pressed at 214 Standard Steel 2d, Hess. 470 N. W. Department Wash., Revenue U. S. Co.v. of of Washington Dept. Tyler Pipe Industries, Inc. v. State (1987)). Although agree with we Revenue, cases, evolution of our the state court’s assessment of the indicates that that this evolution do not share its conclusion longer ruling Hess is of Bellas no the Commerce Clause good law. noted, 2d, court itself N. W.
First, as the state physical taxpayers who had a cases involved all of these presence directly and therefore do not in the compel that it be with rule of Bellas Hess or conflict although importantly, our more Second, and overruled. jurisprudence more flexible now favors Commerce Clause balancing analyses, to re- we have never intimated desire Although “bright-line” ject we have tests. all established types taxes, articulated the review of other not, our requirement physical-presence Hess estab- that Bellas same imply that silence does not taxes, lished for sales and use repudiation of the Bellas Hess rule.
Complete
Freeman and its
Auto,
true,
it is
renounced
progeny
But not all formalism is alike.
as “formalistic.”
“privilege
Spector’s
between taxes on the
formal distinction
purpose
doing
served no
and all other taxes
business”
“only
jurisprudence, but stood
within our Commerce Clause
unwary
trap
Auto, as a
for the
draftsman.”
bright-line rule of Bellas Hess
contrast,
In
S., at 279.
Undue
furthers the ends of the dormant Commerce Clause.
yet unduly burden
process
may
A tax
be consistent
due
true:
Industries,
Washing
g., Tyler Pipe
Inc.
e.
See,
commerce.
interstate
Revenue,
Dept.
ton State
Like
bright-line
other
tests, the Bellas
appears
Hess rule
edges:
artificial at its
Whether or
may
not a State
compel a
vendor to collect a sales or
may
use tax
presence
turn on the
in the
State of a
plant,
small sales force,
or office. Cf.
Geographic
National
Society v.
Equaliza
Bd.
California
tion,
(1977);
taxation.” Northwestern Minnesota, 450, 457-458 in the of sales and use
Moreover, rule area a bright-line and, so, settled expectations doing taxes also encourages Indeed, and individuals.9 investment businesses fosters the mail-order dramatic industry’s it is not unlikely to the is due century part over the last growth quarter taxation created in from bright-line exemption *16 Hess. tests, have, the benefits bright-line
Notwithstanding to such tests with more situations, in some decided replace Arkansas in For example, contextual balancing inquiries. Corp. Cooperative Comm’n, Arkansas Pub. Serv. Electric we reconsidered a test set (1983), bright-line 375 461 U. S. R. I. Attleboro Steam & forth in Public Util. Comm’n Attleboro Co., Electric 83 be- distinguished of wholesale sales of which electricity, tween state regulation of interstate constitutional as an “indirect” regulation was of retail sales state commerce, regulation electricity, of com- as a “direct regulation” which was unconstitutional Electric, In Arkansas whether to we considered merce. 9 has, occasion, noting Congress at least on one followed It is worth regulation response taxation. In to this approach a similar in its Co. v. Min in Northwestern States Portland Cement Court’s indication nesota, (1959), that, long taxpayer has an U. S. 452 so as the State, “net income from the interstate adequate nexus with taxation,” may subjected operations foreign corporation to state of a § 86-272, C. 381. That stat Congress enacted Pub. L. codified at U. S. any person may impose not a net income tax on provides
ute that a State “only person’s [involve] if business activities within such State [approved] filled . . . outside [and] orders outside the State solicitation of Heublein, Tax Inc. v. South Carolina the State.” Ibid. As we noted attempted § Comm’n, enacting 381, “Congress S. would allay that ‘mere solicitation’ apprehension of businessmen designed to define subject taxation. . . . Section 381 was them to state Clarity clearly power tax]. the exercise of State’s [the a lower limit for uncertainty goal.” (Empha Congress’ primary was that would remove supplied.) sis
“follow the mechanical test set out in Attleboro, or the applied balance-of-interests test in our Commerce Clause S., cases.” 461 U. at 390-391. We first observed that “the principle of stare decisis us, counsels here as elsewhere, not lightly specific guidance to set aside of the sort we find in deciding reject Id., Attleboro.” at 391. In the Attleboro analysis, we were influenced the fact that the “mechanical rarely test” was “anachronistic,” that the had relied strong on test, and that we could “see no reliance inter upset by rejection ests” that would be of that test. 461 S.,U. at 391-392. None of those factors obtains in this case. First, the Attleboro rule was “anachronistic” because it re lied on formal distinctions between “direct” and “indirect” (and regulation regulatory counterparts on the of our Free cases); man line of as discussed above, Bellas Hess turned logic on a different and thus remained sound after the Court repudiated analogous an distinction in Auto. Sec ond, unlike the Attleboro rule, we have, our decisions, fre quently years, relied on the Bellas Hess rule in the last 26 supra, see at 311, and we have never intimated in our review *17 of sales or Finally, use taxes that Bellas Hess was unsound. again unlike the rule, Attleboro the Bellas Hess rule has en gendered part substantial reliance and has become of the industry. basic framework of a sizable The “interest in sta bility orderly development undergirds and of the law” that Runyon the McCrary, decisis, doctrine of stare see (1976) concurring), 160, 190-191 U. S. J., therefore (Stevens, precedent. counsels adherence to settled although In subsequent sum, in our cases to Bellas Hess concerning types adopted other of taxes we have not bright-line, physical-presence requirement, similar our rea- soning compel reject in those cases does not that we now the rule that Bellas Hess established the area of sales and use contrary, continuing bright-line taxes. To the the value of a rule principles in this area and the doctrine and of stare deci- sis indicate good that the Bellas Hess rule remains law. For Supreme Dakota disagree the North with reasons, we
these the to come renounce time has the conclusion that Court’s bright-line Hess. test of Bellas that the fact easier aspect made is of our decision
This Congress may only underlying that one issue not Congress has that qualified one resolve,10but also better evaluate how we power No matter to resolve. ultimate commerce, impose interstate on taxes that use the burdens disagree our conclusions. Congress free to remains Benjamin, Insurance Co. See Prudential (1946). Congress years has considered
Indeed, recent Its rule.11 Bellas Hess legislation that would “overrule” may, course, direction in this to take not action decision holding Hess by respect in Bellas for our been dictated have imposing prohibits from States Process that the Due Clause problem Ac- today put to rest. have taxes, but such when, and whether, Congress cordingly, free to decide is now may interstate mail-order burden extent States what duty taxes. use to collect with a concerns was Bellas Hess convinced even if we were Indeed, jurisprudence, “this Clause with our inconsistent Commerce withholding counse[l] giv[e pause us] [might] very fact pro- power Congress has at least for now. our hand, unde- or even from intolerable interstate commerce tect Montana, v.Co. Edison Commonwealth sirable burdens.” concurring). situation, In this J., S., at 637 463 U. (White, Direct to Brief for App. 3 taxes. See Many have use enacted States Bellas Hess overruling of Curiae. An Amicus as Marketing Association concerning application retroactive thorny questions might raise liability mail- unanticipated for might trigger substantial those taxes resolved burdens is better of such precise The allocation order houses. than Court. by Congress rather this *18 (1989); 480, 101st Cong., S. 2230, 101st Cong., 1st Sess. g., e. See, H. R. (1988); 3621, H. 100th R. (1989); 2368, Cong., 2d S. Sess. 100th 1st Sess. 3549, (1987); R.H. (1987); 1099, Cong., 1st Sess. 100th S. Cong., 1st Sess. (1979); 282, 93d S. (1985); 983, 1st Sess. Cong., S. 96th Cong., 1st Sess. 99th (1973). Cong., 1st Sess. may part be that “the better of both wisdom and valor is to respect judgment of the other branches of Govern- ment.” Id., at 638. judgment
The Supreme of the Court of North Dakota is reversed, and the case is remanded for proceedings further not opinion. inconsistent with this
It is so ordered. Kennedy Justice Scalia, with whom Justice Justice Thomas join, concurring part and concurring in the judgment. National Hess, Department Inc. v. Revenue
Ill.,
320 (or pre- legislative jurisdiction
adjudicative and those for necessarily that jurisdiction identical; and on scriptive) are opinion. join Com- III of the Court’s I, II, Parts basis I Industry Superior Cal., pare Co. v. Metal Asahi v. Cty., American Oil Co. 102 480 U. S. Solano (1965). 451 Neill, 380 U. S. holding of Bellas agree the Commerce Clause
I also that Court, however, overruled. Unlike should not be Hess holding, ad but would merits of that I not revisit the would Trucking American of stare decisis. here to it on the basis (1990) (Scalia, J., Smith, 167, 496 U. S. Assns., Inc. v. say Congress concurring judgment). final over has the change rule regulation and it can commerce, interstate long recog simply saying have so. We Hess of Bellas “special force” decisis has of stare nized that the doctrine “Congress have done.” what we remains free to alter where 172-173 164, S. Union, 491 U. McLean Credit Patterson v. (1989). Railways Public also Hilton v. South Carolina See (1991); Illi Brick Co. v. Illinois Comm’n, U. S. (1977). the demands of Moreover, 720, 736 nois, 431 U. S. reliance interests acme where are “at their . . . the doctrine Payne 808, 828 Tennessee, 501 U. S. are involved.” engendered rule has “the Bellas Hess notes, As the Court part frame of the basic and has become substantial reliance industry.” Ante, at 317. work of a sizable may dis- that we view I do not share Justice White’s regard unrea- it has become reliance interests because these rely upon Post, Even Bellas Hess. 331-332. sonable to (I argument assuming do not consider the sake of for point) areas are inconsistent later decisions in related that principles upon rested, we have which Bellas Hess with the carefully acknowledged distin- but instead that, have never g., guished e. D. H. Holmes Co. See, the case on its facts. (1988); Geographic National McNamara, important
Society, supra, me at 559. It seems to thing, ability to the same retain our what comes and, — public we maintain ability confidence in our —sometimes adopt principles new for the resolution of new issues without abandoning holdings clear past of principles that those *20 contradict. We doing seemed to be that in this area. Hav ing affirmatively suggested “physical that presence” the rule could be reconciled jurisprudence, with our new ought not visit hardship upon economic those who took us at our recently word. We have told “[i]f prece lower courts that a dent of this Court has application direct yet ap in case, a pears to rest rejected on reasons in some other line of deci [they] sions, should follow the directly case which controls, leaving to this prerogative Court the overruling of its own Rodriguez decisions.” Quijas de v. Shearson/American Express, Inc., 490 U. S. strangely It is in compatible with this private to demand parties antici pate overrulings. our my It is view, in short, that reliance upon square, a holding unabandoned Supreme of the Court always justifiable is (though reliance may reliance alone not always carry day). Finally, “physical presence” rule established in Bellas Hess is not “unworkable,” Patterson, supra, at 173;to contrary, may whatever else be the sub pros stantive and cons of “bright-line” the rule, the regime that it establishes, see ante, at unqualifiedly in its favor. Justice White’s concern that reaffirmance of Bellas Hess will flurry lead to litigation a of meaning over of “physical presence,” post, see at 331, seems to me contra years dicted experience of under the decision. For these reasons, I judgment concur in the of the Court join Parts I, II, opinion. and III of its Justice White, concurring in part and dissenting part. Today repudiates Court aspect of our decision National Bellas Department Hess, Inc. v. Revenue Ill., of U. S. 753 which restricts, under the Due Process Clause of the Fourteenth power Amendment, the of the impose States to use tax responsibilities collection on out- “physical not that do have of-state mail-order businesses stops presence” short, The however, the State. Court giving justly complete Bellas Hess the burial deserves. my part In view, the should also overrule that holding justifies Bellas Hess which its under the Commerce respectfully therefore, Part I, Clause. dissent from IV.
M majority goes opinion, In Part IV of its to some lengths justify physical-presence require- the Bellas Hess jurisprudence. ment under our I am un- Commerce Clause persuaded by interpretation of our its cases. In Bellas majority placed great weight on Hess, the the interstate quality stating of the that “it sales, mail-order is difficult to exclusively conceive commercial transactions more inter- *21 in character than the mail-order transactions here in- correctly majority Id., at As the observes, volved.” 759. prohibiting taxing “exclusively the idea of States from inter- juris- important part state” had been transactions an our prudence many intermittently ranging decades, for from Freight Tax, 232, such cases as 15 279 Case Wall. (1873), (1946), through Hewit, 249, Freeman v. 329 U. S. 256 Spector Service, O’Connor, 602 Motor Inc. v. though recognizes But that Bellas de- Hess was upheaval jurispru- cided amidst an in our Commerce Clause began proper in dence, State, which we to hold that “a with may drafting, exclusively long tax interstate commerce so as any by the tax does create not effect forbidden the Com- Complete Brady, Clause,” Transit, merce Auto Inc. (1977), majority entirely wrong 274, U. S. draws period conclusion from this of ferment. attempts paint
The Court to Bellas Hess in a different hue Spector rely” from Freeman and because the former “did not labeling on taxes that had “direct” and “indirect” effects on interstate ante, commerce. See at 310. Thus, the Court automatically concludes, Bellas Hess “did not fall with Free- progeny” man and its Complete in our decision in Auto. ante, See unpersuaded by 311. I am attempt this distinguish Spector, Bellas Hess from Freeman and both of repudiated by which were Complete this Court. See Auto, supra, at 288-289, and n. 15. What we disavowed in Com- plete just was Auto not the “formal distinction between ‘di- rect’ and ‘indirect’ taxes on interstate commerce,” ante, at underlying but also the whole notion the Bellas Hess physical-presence rule—that “interstate commerce is im- mune Complete from state supra, taxation,” Auto, at 288. compounds misreading
The its attempting to show that Bellas Hess “is not inconsistent Complete Auto and our recent Ante, cases.” at 311. This will be news rightly commentators, who have criticized Bellas Hess.1 majority displays Indeed, the audacity no small amount of claiming that our decision in Geographic Society National Equalization, Bd. S. California which was rendered several weeks after Auto, continuing vitality reaffirmed of Bellas Hess. See ante, at 311. just
Our decision in opposite. that case did National Geographic held that the Geographic Society National was liable responsibilities for use tax collection in California. Society The conducted an out-of-state mail-order business similar the one at issue here and in Hess, and addition, maintained two small offices California so- licited Geographic advertisements for Magazine. National *22 Society argued The physical presence that its in California was unrelated to its sales, mail-order and thus that the Bel- 1See, g., Hartman, e. P. Federal Limitations on State and Local Taxation § (1981); 10.8 Hartman, Collection of Tax on Use Out-of-State Mail-Order Sales, 993, 1006-1015 39 Vand. L. Rev. (1986); Hellerstein, Significant Sales Developments Use Tax During Past Half Century, the 39 Vand. L. 961, Rev. (1986); 984-985 McCray, Overturning Bellas Hess: Due Process Considerations, 1985 265, B. Y. U. 288-290; L. Rev. Rothfeld, Mail Order Sales and State Tax, Jurisdiction to 1405, (1991). 53 Tax Notes 1414-1418
324 compelled the tax collection us to hold that
las Hess rule expressly imposed. responsibilities We re- not be could requir- “requisite jected holding nexus for the view, Society] pay [the ing the to collect seller an out-of-state duty use tax to collect the not whether the use tax is relates State, the but sim- carried on within to the seller’s activities ply link, ‘some definite some whether the facts demonstrate and) (the person... the connection, minimum between State omitted). (citation 561 S., it seeks to tax.’” 430 U. at any By decoupling nexus from of a transactional notion repudi- Geographic inquiry, in Court fact the the National majority. Hess of the Bellas free trade rationale ated the Geographic on a due Court relied Instead, the National analysis process-type that examined contacts minimum the seller and whether a link existed between wholly apart transaction that was seller’s in-state from the notwithstanding, being see to Bellas Hess taxed. Citations adopting the rather than S., 559, it is clear that Geographic was Hess, the National rationale of Bellas agree brushing politely were I to Even instead aside. in Hess’ rule rationale embodied Bellas that the free trade required by against purely our interstate sales was taxes of majority’s prior in I see no basis 1967,therefore, cases underpinning opening premise of Bellas that this substantive by our since disavowed cases.2 Hess has not been subsequent majority’s reliance on Similarly, I am unconvinced ante, In D. H. Holmes have cited Bellas Hess. See at 311. decisions that McNamara, (1988), example, distinguished for Co. v. 486 U. S. “significant presence Bellas Hess on the basis of company’s economic State, Louisiana, and the direct benefits many its connections with the then went on conducting its business.” We it receives from Louisiana analogous more to that presented was much note that situation Equalization, 430 U. S. Geographic Society Bd. National California Edison Co. In Commonwealth S., at 33-34. See 486 U. Montana, cited Bellas Hess not to the Court rather to establish that physical-presence requirement, but revalidate finally, in justify imposition of a state tax. And “nexus” must exist to *23 I I The Court next launches into an uncharted and treacher- foray ous differentiating into between require- the “nexus” ments under the Due Process and Commerce Clauses. As explains: the Court “Despite similarity phrasing, requirements nexus of the Due Process and Commerce Clauses are not identical. The two standards are animated by different constitutional policies.” concerns and Ante, at process 312. The due nexus, which the Court properly holds is met in this case, see ante, at Part III, “concerns the funda- governmental mental fairness of activity.” Ante, at 312. The Commerce requirement, Clause nexus on the other hand, is by “informed not so much concerns about fairness for the individual defendant as structural concerns about the ef- regulation fects of state on the economy.” national Ibid. Citing Complete Auto, the explains Court then that the Commerce Clause requirement nexus is proc- not “like due ess’ ‘minimum requirement, contacts’ proxy for notice, but rather a limiting for means state burdens on interstate com- merce.” Ante, at very 313. This is parts curious, because two and three of Complete Auto require test, which fair apportionment and nondiscrimination in order inter- unduly commerce not appear burdened, now to be- come animating features of requirement, nexus which prong the first of the inquiry. Auto The freely acknowledges that there authority is no for this novel interpretation of our cases and that we have never before found, as we do in this case, sufficient proc- contacts for due purposes ess an but insufficient nexus under the Commerce Clause. See ante, at 313-314, and n. 6.
The majority’s attempt language
disavow
opin-
in our
ions acknowledging
presence
process
of due
require-
Corp.
Mobil Oil
v. Commissioner
of Vt.,
Taxes
425, 437
U. S.
the Court cited Bellas Hess
process
for the due
requirements necessary
to sustain a tax.
In my view, these
hardly
citations
signal the continuing
support of Bellas Hess that the majority seems to
persuasive.
find
*24
unpersuasive. See
test is
Complete Auto
also
the
ments in
Michigan Dept.
Corp.
(citing Trinova
313-314, 7
ante,
n.
at
(1991)).
explain
of
Instead
Treasury,
358, 373
498 U. S.
re
nexus
origins
Clause
the Commerce
ing
the doctrinal
breezily
the rule
majority
announces
quirement, the
my
In
ante, at 313-314.
See
other matters.
to
moves on
the Constitution
resting
that
assertion
on the
view, before
require
readily
“nexus”
distinct
inquiry
two
into
mandates
origins of the
prudent
the
to discern
seem
ments, it would
whether
requirement
better to understand
in order
“nexus”
fairness
traditionally
the
has been
concern
the Court’s
other value.
or some
tax
of a State’s
derived
Complete Auto Court
the
from which
cases
The
four-part
me that
convince
requirement
test
in its
the nexus
inquiry.
process
really
fairness
a due
is
of “nexus”
the issue
inquiry
four-part
in Com-
the
explaining
the sources
In
Rutledge’s
heavily on Justice
plete
relied
Auto, the Court
Hewit,
U. S.
concurring
opinion in
separate
Freeman
Complete
majority opinion
(1946),
the
the case whose
comprehensively
process
disavow-
was in the
Auto Court
inquiry into whether
ing.
of the formalistic
Instead
Complete Auto
commerce, the
interstate
was
approach of Justice
adopted
more functionalist
Complete
at S.,
430 U.
Auto,
Rutledge
See
in Freeman.
Rutledge
inquiry,
used
conducting
Justice
his
In
280-281.
arguing
taxa
that
familiar,
be
language
should
that
now
activity
connec-
a sufficient
lacked
if
unconstitutional
was
Freeman,
“jurisdiction
tax,”
give
to
to
tion to the State
against interstate
supra,
tax discriminated
271; or if the
at
multiple
activity
subjected
tax
was
if the
commerce; or
Rutledge later re-
276-277. Justice
S.,
burdens.
Stone,
Memphis
Co.v.
principles
Gas
Natural
in
fined these
(1948),
principles that
he described
which
substantially adopt:
would later
Auto Court
imposed
this case
enough
sustain
tax
“[I]t
for me to
is
lay
power
insofar
clearly
the state’s
one
within
is
any
as
process
limitation of
‘jurisdiction
due
or
tax’
is
sense
nondiscriminatory
it is
concerned;
[it]
duly
;
. . .
apportioned
repeated by
...; any
cannot
other state.”
(footnotes
335 U.
(concurring
S.,
opinion)
at 96-97
omitted).
By the time the Court decided Northwestern States Port-
land Cement Co. v.
Minnesota,
340, 344-345 When the Court announced its four- part synthesis Complete requirement Auto, the nexus was definitely grounded traceable to concerns in the Due Process Clause, and not the Commerce Clause, as the Court’s discus- sion of the doctrinal antecedents for its rule made clear. supra, See Auto, at 281-282, 285. For the Court now assert that our Commerce jurisprudence sup- Clause ports separate a notion precedent of nexus is without or explanation.
Even were there to independent be such an requirement under the Commerce Clause, there is relationship no be- physical-presence/nexus tween the rule the Court retains and Commerce Clause allegedly considerations that justify Perhaps long ago it. a “physical presence” seller’s was a part sufficient of a imposition trade to condition of a tax on presence economy, physical today’s presence. But in such a State very transaction with a frequently to do little has involving money bil- transfers of might to tax. Wire seek place day; purchasers every orders occur lions of dollars ship goods linkup; computer sellers phone, by fax, sellers sundry delivery with- through services by road, and sea air, certainly true that place It is leaving of business. their out gone. salesperson Nev- are not days the door-to-door numerous derives marketer direct ertheless, an out-of-state busi- which does the State benefits from commercial establishing sound advantages include laws These ness. support transactions; credit banking institutions local price purchase from the collection ensure courts to garbage disposal from waste means of customers; seller’s generated en- and creation by solicitations; mail-order buyers protect protection laws, which of consumer forcement they ensuring by will have alike, former and sellers against latter protecting fraud, ready means to the that inures creating confidence a climate consumer To transactions. reputable in mail-order dealers benefit of requirement under nexus time, a for the first create, for due independent established of that Clause Commerce *26 justify attempt an anach- thing; to to process purposes is one presence terms is physical economic ronistic notion quite another.
Ill requirement physical-presence retaining illogic the The majority’s palpable. the Under is circumstances in these analysis, Geographic, an out-of- in National our decision subject salesperson would in a State be one state seller sales entire mail-order on its collection to use burdens tax salesperson’s solici- the sales were unrelated if even those neigh- By seller in a contrast, an out-of-state tation efforts. putative boring the could be dominant business greatest burdens creating taxing infrastructure State, compara- companies undercutting home its the State’s price tive advantage selling products free of use taxes, yet not have to collect such taxes if physical it lacks a presence in majority State. The clings to the physical-presence rule not any logical because of relation to any fairness or economic rationale principles related to un- derlying the Commerce simply Clause, but sup- out of the posed of having bright-line convenience a rule. I am less impressed by the convenience of such adherence than the produces. unfairness it Here, give convenience way. should Cf. (“We supra, Auto, n. 15 believe, how- ever, that administrative convenience justi- ... is insufficient fication for abandoning principle that 'interstate com- may merce ”). pay made to way’ its very questionable Also rationality of perpetuating a rule that creates an interstate tax shelter for one form of business—mail-order sellers—but no countervailing ad- vantage competitors. for its If the Commerce Clause was put intended to businesses on an playing even field, the ma- jority’s hardly rule is way a goal. achieve that Indeed, arguably even under majority’s explanation for its “Com- merce Clause requirement, nexus” the unfairness of its rule on retailers other than direct marketers should be taken into account. See ante, at 312 (stating that the Commerce requirement Clause nexus addresses the “structural con- cerns about the effects of regulation on the national economy”). I would protectionist think that favoring rules $180-billion-a-year industry might come scope within the such “structural concerns.” See Brief for State of New Jer- sey as Amicus Curiae 4.
IV The attempts justify rightly what it acknowl- edges is an “artificial” rule ways. in several See ante, at 315. First, it asserts that the Bellas Hess principle “firmly establishes the legitimate boundaries of *27 authority to im- pose duty a to collect sales and use taxes and litigation reduces concerning those taxes.” Ante, at 315. It very is doubtful, opinion
however, that the Court’s can achieve its aims. Cer- tainly “bright-line” our cases now demonstrate two rules for physical-presence mail-order sellers to follow: Under the re- quirement they subjected here, reaffirmed will not be to use they physical presence tax if collection have no in the tax- ing Geographic State; rule, under the National mail-order subject they sellers will tax if to use collection have presence activity some in the State even if that has being no relation to the transaction taxed. See National Geographic, S., at Between 560-562. these narrow requisite “phys- lines lies the issue of what constitutes the presence” justify imposition ical to of use tax collection responsibilities. confronting question majority
Instead of this head on, only cursory analysis physical offers a of whether Quill’s presence justify in North Dakota was sufficient to its use tax despite briefing point by burdens, collection on this Respondent State.3 See Brief for 45-47. North Dakota contends that even should the Court reaffirm the Bellas Hess physical presence rule, Dakota was Quill’s North sufficient justify application of its use tax collection law. con- Quill cedes it owns software sent to its Dakota customers, North suggests property justify but that such is insufficient to a finding my question In view, nexus. actual Quill’s physical presence sufficiently is close to cast doubt on the majority’s propounding truly “bright- confidence that it is surely line” can, rule. Reasonable minds and will, differ showing required “physical pres- over what is to make out a remanding Quill’s ownership Instead of for consideration of whether physical software presence constitutes sufficient under its new Commerce requirement, majority Clause nexus concludes as a matter of law that ante, doing, majority does not. See n. In 8. so rebuffs challenge North setting any Dakota’s without out clear standard for what physical-presence meets the Commerce Clause nexus standard and with affording out opportunity attempt the State an develop on remand to argue Quill’s presence facts or otherwise constitutionally sufficient. *28 adequate
ence” justify imposing to responsibilities for use given tax collection. And the estimated loss in revenue to year States more than billion $3.2 this alone, see Brief for Respondent 9, it vagaries is a sure bet “physical that the presence” will be tested to their fullest in our courts. majority
The
explains
“bright-line”
next
that its
rule en
courages
expectations”
“settled
and business investment.
Though
Ante, at
legal certainty
316.
promotes business
confidence, the
grown
mail-order business has
exponentially
despite
long
post-Bellas
line of
precedents
our
Hess
signaled the
physical-presence
demise of the
requirement.
seeming
Moreover, the
inadequate justification
Court’s
but
encouraging
expectations
settled
in fact connotes a sub
stantive economic decision to favor out-of-state direct mar
to
keters
By
detriment of other
justifying
retailers.
Bellas Hess rule in terms of
industry’s
“the mail-order
dra
growth
matic
quarter
over
century,”
the last
ante, at
effectively
Court is
imposing its
preferences
own economic
deciding
in
this case. The
Congress
Court’s invitation to
legislate
signals
in this
preferences
area
that its
are not im
approach
mutable, but its
past
is different from
in
instances
which we have
legislatures
deferred to state
they
when
en
obligations
acted tax
on the States’ shares of interstate com
g.,
merce.
Goldberg
See, e.
(1989);
Sweet,
Finally, greater weight accords far to stare deci- given sis than was principle to that Complete Auto itself. As that case demonstrates, we have not been averse to over- ruling precedents our under the Commerce Clause when they have become light anachronistic in of later decisions. See Auto, 430 S., at typically 288-289. One in- voked rationale for stare unwillingness upset decisis—an expectations settled particularly weak in this case. isIt —is companies unreasonable for such as toQuill invoke a “settled expectation” in conducting being affairs without taxed. Nei- any ther point nor any Quill of its amici investment deci- any suggest unfairness interests that sions or reliance compliance with costs of overturning And the Hess. computer today’s light software modern rule, Respondent Brief for technology, appear nominal. See to be *29 Jersey To 18. Curiae as Amicus of for New 40; State Brief any I rule, the old developed on reliance Quill the extent because of was unreasonable its reliance that would submit by comply enacted the North law as the to with its failure rewarding companies Legislature. Instead of Dakota duly judgments officials, elected ignoring the studied for challenge way a tax appropriate insist that the we should (or it and pay in this case collect is to as unconstitutional escrow) declaratory for place sue and then it in or remit it comply with a state judgment refusal Quill’s and refund.4 hardly being prior held unconstitutional to its tax statute interests were that its reliance determination merits a reasonable. directly, a basis that not state does hints, but
The Court overturning that fear stare decisis a for its invocation liability. imposition of retroactive lead will Bellas Hess Distilling Co. B. Beam James 318, n. See Ante, at 10. (1991). thought case, in As I Georgia, S. 529 501 U. “sensibly insist groundless can no one because are such fears any judicial retroactivity decisions and all for on automatic concurring system.” J., Id., in the federal (White, question specifically on judgment). limited Since we granted consider not to in order was which certiorari overruling I Hess, be- potential retroactive effects day. indeed If for another leave that issue lieve should driving retroactivity the Court’s decision are fears about my to address view, served, would be better case, we this (1958); States, see v. United U. S. 63 see Flora rule, For federal § Mertens, Taxation 58A.05 of Federal Income Law generally J. First Bank principle. See same appears to North follow Dakota (N. 1984) Am. Jur. Conrad, (citing 72 D. N. 2d 350 W. Buffalo 1087). §2d directly permit them to infect our rather than those concerns applicable substantive rule. formulation of Although Congress itself to this can and should address right decision, however law, area of we should not adhere to later cases and economic time, it was at the reason of reality longer rationally justified. The Commerce can no along process aspect Hess, its due hold- of Bellas Clause ing, should be overruled.