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. In Bellas Hess we held that a similar Illinois statute violated the Due Process Clause of the Fourteenth Amendment and created an unconstitutional burden on interstate commerce. In particular, we ruled that a "seller whose only connection with customers in the State is by common carrier or the United States mail" lacked the requisite minimum contacts with the State. Id., at 758.
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]." 470 N.W.2d 203, 208 (1991). Having granted certiorari, 502 U.S. 808, we must either reverse the State Supreme Court
Quill is a Delaware corporation with offices and warehouses in Illinois, California, and Georgia. None of its employees work or reside in North Dakota, and its ownership of tangible property in that State is either insignificant or nonexistent.
As a corollary to its sales tax, North Dakota imposes a use tax upon property purchased for storage, use, or consumption within the State. North Dakota requires every "retailer maintaining a place of business in" the State to collect the tax from the consumer and remit it to the State. N. D. Cent. Code § 57-40.2-07 (Supp. 1991). In 1987, North Dakota amended the statutory definition of the term "retailer" to include "every person who engages in regular or systematic
Quill has taken the position that North Dakota does not have the power to compel it to collect a use tax from its North Dakota customers. Consequently, the State, through its Tax Commissioner, filed this action to require Quill to pay taxes (as well as interest and penalties) on all such sales made after July 1, 1987. 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." App. to Pet. for Cert. A41.
The North Dakota Supreme Court reversed, concluding that "wholesale changes" in both the economy and the law made it inappropriate to follow Bellas Hess today. 470 N. W. 2d, at 213. The principal economic change noted by the court was the remarkable growth of the mail-order business "from a relatively inconsequential market niche" in 1967 to a "goliath" with annual sales that reached "the staggering figure of $183.3 billion in 1989." Id., at 208, 209. Moreover, the court observed, advances in computer technology greatly eased the burden of compliance with a "`welter of complicated obligations'" imposed by state and local taxing authorities. Id., at 215 (quoting Bellas Hess, 386 U. S., at 759-760).
Equally important, in the court's view, were the changes in the "legal landscape." With respect to the Commerce Clause, the court emphasized that Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), rejected the line of cases holding that the direct taxation of interstate commerce was
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. 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." 470 N. W. 2d, at 216.
Turning to the case at hand, the state court emphasized that North Dakota had created "an economic climate that fosters demand for" Quill's products, maintained a legal infrastructure that protected that market, and disposed of 24 tons of catalogs and flyers mailed by Quill into the State every year. Id., at 218-219. Based on these facts, the court concluded that Quill's "economic presence" in North Dakota depended on services and benefits provided by the State and therefore generated "a constitutionally sufficient nexus to justify imposition of the purely administrative duty of collecting and remitting the use tax." Id., at 219.
As in a number of other cases involving the application of state taxing statutes to out-of-state sellers, our holding in Bellas Hess relied on both the Due Process Clause and the Commerce Clause. 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. Accordingly, while a State may, consistent with the Due Process Clause, have the authority to tax a particular taxpayer, imposition of the tax may nonetheless violate the Commerce Clause. See, e. g., Tyler Pipe Industries, Inc. v. Washington State Dept. of Revenue, 483 U.S. 232 (1987).
The two constitutional requirements differ fundamentally, in several ways. As discussed at greater length below, see Part IV, infra, the Due Process Clause and the Commerce Clause reflect different constitutional concerns. Moreover, while Congress has plenary power to regulate commerce among the States and thus may authorize state actions that burden interstate commerce, see International Shoe Co. v. Washington, 326 U.S. 310, 315 (1945), it does not similarly have the power to authorize violations of the Due Process Clause.
Thus, although we have not always been precise in distinguishing between the two, the Due Process Clause and the Commerce Clause are analytically distinct.
Heeding Justice Rutledge's counsel, we consider each constitutional limit in turn.
The Due Process Clause "requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax," Miller Brothers Co. v. Maryland, 347 U.S. 340, 344-345 (1954), and that the "income attributed to the State for tax purposes must be rationally related to `values connected with the taxing State,' " Moorman Mfg. Co. v. Bair, 437 U.S. 267, 273 (1978) (citation omitted). Here, we are concerned primarily with the first of these requirements. Prior to Bellas Hess, we had held that that requirement was satisfied in a variety of circumstances involving use taxes. For example, the presence of sales personnel in the State
Our due process jurisprudence has evolved substantially in the 25 years since Bellas Hess, particularly in the area of judicial jurisdiction. 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.' " Id., at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). In that spirit, we have abandoned more formalistic tests that focused on a defendant's "presence" within a State in favor of a more flexible inquiry into whether a defendant's contacts with the forum made it reasonable, in the context of our federal system of Government, to require it to defend the suit in that State. 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."
Applying these principles, we have held that if a foreign corporation purposefully avails itself of the benefits of an economic market in the forum State, it may subject itself to the State's in personam jurisdiction even if it has no physical presence in the State. As we explained in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985):
Comparable reasoning justifies the imposition of the collection duty on a mail-order house that is engaged in continuous and widespread solicitation of business within a State. Such a corporation clearly has "fair warning that [its] activity may subject [it] to the jurisdiction of a foreign sovereign." Shaffer v. Heitner, 433 U. S., at 218 (Stevens, J., concurring in judgment). In "modern commercial life" it matters little that such solicitation is accomplished by a deluge of catalogs rather than a phalanx of drummers: The requirements of due process are met irrespective of a corporation's lack of physical presence in the taxing State. Thus, to the extent that our decisions have indicated that the Due Process Clause requires physical presence in a State for the imposition of duty to collect a use tax, we overrule those holdings as superseded by developments in the law of due process.
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. We therefore agree with the North Dakota Supreme Court's conclusion that the Due Process Clause does not bar enforcement of that State's use tax against Quill.
Article I, § 8, cl. 3, of the Constitution expressly authorizes Congress to "regulate Commerce with foreign Nations, and among the several States." It says nothing about the protection of interstate commerce in the absence of any action by Congress. Nevertheless, as Justice Johnson suggested in his concurring opinion in Gibbons v. Ogden, 9 Wheat. 1, 231-232, 239 (1824), the Commerce Clause is more than an affirmative grant of power; it has a negative sweep as well. The Clause, in Justice Stone's phrasing, "by its own force" prohibits certain state actions that interfere with interstate commerce. South Carolina State Highway Dept. v. Barnwell Brothers, Inc., 303 U.S. 177, 185 (1938).
Our interpretation of the "negative" or "dormant" Commerce Clause has evolved substantially over the years, particularly as that Clause concerns limitations on state taxation powers. See generally P. Hartman, Federal Limitations on State and Local Taxation §§ 2:9-2:17 (1981). Our early cases, beginning with Brown v. Maryland, 12 Wheat. 419 (1827), swept broadly, and in Leloup v. Port of Mobile, 127 U.S. 640, 648 (1888), we declared that "no State has the right to lay a tax on interstate commerce in any form." We later narrowed that rule and distinguished between direct burdens on interstate commerce, which were prohibited, and indirect burdens, which generally were not. See, e. g., Sanford v. Poe, 69 F. 546 (CA6 1895), aff'd sub nom. Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 220 (1897). Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 256-258 (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. However, in Freeman v. Hewit, 329 U.S. 249, 256 (1946), we embraced again the formal distinction between direct and indirect taxation, invalidating Indiana's imposition of a gross receipts tax on a
Bellas Hess was decided in 1967, in the middle of this latest rally between formalism and pragmatism. Contrary to the suggestion of the North Dakota Supreme Court, this timing does not mean that Complete Auto rendered Bellas Hess "obsolete." Complete Auto rejected Freeman and Spector `s formal distinction between "direct" and "indirect" taxes on interstate commerce because that formalism allowed the validity of statutes to hinge on "legal terminology," "draftsmanship and phraseology." 430 U. S., at 281. Bellas Hess
While contemporary Commerce Clause jurisprudence might not dictate the same result were the issue to arise for the first time today, Bellas Hess is not inconsistent with Complete Auto and our recent cases. Under Complete Auto`s four-part test, we will sustain a tax against a Commerce Clause challenge so long as the "tax  is applied to an activity with a substantial nexus with the taxing State,  is fairly apportioned,  does not discriminate against interstate commerce, and  is fairly related to the services provided by the State." 430 U. S., at 279. 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.
Thus, three weeks after Complete Auto was handed down, we cited Bellas Hess for this proposition and discussed the case at some length. In National Geographic Society v. California Bd. 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." We have continued to cite Bellas Hess with approval ever since. For example, in Goldberg v. Sweet, 488 U.S. 252, 263 (1989), we expressed "doubt that termination of an interstate telephone call, by itself, provides a substantial enough nexus for a State to tax a call. See National Bellas Hess . . . (receipt of mail provides insufficient nexus)." See also D. H. Holmes Co. v. McNamara, 486 U.S. 24, 33 (1988); Commonwealth Edison Co. v. Montana, 453 U.S. 609, 626 (1981); Mobil Oil Corp. v. Commissioner of Taxes, 445 U. S., at 437; National Geographic Society, 430 U. S., at 559. For these reasons, we disagree with the State Supreme Court's conclusion
The State of North Dakota relies less on Complete Auto and more on the evolution of our due process jurisprudence. The State contends that the nexus requirements imposed by the Due Process and Commerce Clauses are equivalent and that if, as we concluded above, a mail-order house that lacks a physical presence in the taxing State nonetheless satisfies the due process "minimum contacts" test, then that corporation also meets the Commerce Clause "substantial nexus" test. We disagree. Despite the similarity in phrasing, the nexus requirements of the Due Process and Commerce Clauses are not identical. The two standards are animated by different constitutional concerns and policies.
Due process centrally concerns the fundamental fairness of governmental activity. Thus, at the most general level, the due process nexus analysis requires that we ask whether an individual's connections with a State are substantial enough to legitimate the State's exercise of power over him. We have, therefore, often identified "notice" or "fair warning" as the analytic touchstone of due process nexus analysis. In contrast, the Commerce Clause and its nexus requirement are informed not so much by concerns about fairness for the individual defendant as by structural concerns about the effects of state regulation on the national economy. Under the Articles of Confederation, state taxes and duties hindered and suppressed interstate commerce; the Framers intended the Commerce Clause as a cure for these structural ills. See generally The Federalist Nos. 7, 11 (A. Hamilton). It is in this light that we have interpreted the negative implication of the Commerce Clause. Accordingly, we have ruled that that Clause prohibits discrimination against interstate commerce, see, e. g., Philadelphia v. New Jersey, 437 U.S. 617 (1978), and bars state regulations that unduly burden interstate commerce, see, e. g., Kassel v. Consolidated Freightways Corp. of Del., 450 U.S. 662 (1981).
First, as the state court itself noted, 470 N. W. 2d, at 214, all of these cases involved taxpayers who had a physical presence in the taxing State and therefore do not directly conflict with the rule of Bellas Hess or compel that it be overruled. Second, and more importantly, although our Commerce Clause jurisprudence now favors more flexible balancing analyses, we have never intimated a desire to reject all established "bright-line" tests. Although we have not, in our review of other types of taxes, articulated the same physical-presence requirement that Bellas Hess established for sales and use taxes, that silence does not imply repudiation of the Bellas Hess rule.
Complete Auto, it is true, renounced Freeman and its progeny as "formalistic." But not all formalism is alike. 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." Complete Auto, 430 U. S., at 279. In contrast, the bright-line rule of Bellas Hess furthers the ends of the dormant Commerce Clause. Undue
Like other bright-line tests, the Bellas Hess rule appears artificial at its edges: Whether or not a State may compel a vendor to collect a sales or use tax may turn on the presence in the taxing State of a small sales force, plant, or office. Cf. National Geographic Society v. California Bd. of Equalization, 430 U.S. 551 (1977); Scripto, Inc. v. Carson, 362 U.S. 207 (1960). This artificiality, however, is more than offset by the benefits of a clear rule. Such a rule firmly establishes the boundaries of legitimate state authority to impose a duty to collect sales and use taxes and reduces litigation concerning those taxes. This benefit is important, for as we have so frequently noted, our law in this area is something of a "quagmire" and the "application of constitutional principles to specific state statutes leaves much room for controversy and confusion and little in the way of precise guides to the States in the exercise of their indispensable power of
Moreover, a bright-line rule in the area of sales and use taxes also encourages settled expectations and, in doing so, fosters investment by businesses and individuals.
Notwithstanding the benefits of bright-line tests, we have, in some situations, decided to replace such tests with more contextual balancing inquiries. For example, in Arkansas Electric Cooperative Corp. v. Arkansas Pub. Serv. Comm'n, 461 U.S. 375 (1983), we reconsidered a bright-line test set forth in Public Util. Comm'n of R. I. v. Attleboro Steam & Electric Co., 273 U.S. 83 (1927). Attleboro distinguished between state regulation of wholesale sales of electricity, which was constitutional as an "indirect" regulation of interstate commerce, and state regulation of retail sales of electricity, which was unconstitutional as a "direct regulation" of commerce. In Arkansas Electric, we considered whether to
In sum, although in our cases subsequent to Bellas Hess and concerning other types of taxes we have not adopted a similar bright-line, physical-presence requirement, our reasoning in those cases does not compel that we now reject the rule that Bellas Hess established in the area of sales and use taxes. To the contrary, the continuing value of a bright-line rule in this area and the doctrine and principles of stare decisis indicate that the Bellas Hess rule remains good law. For
This aspect of our decision is made easier by the fact that the underlying issue is not only one that Congress may be better qualified to resolve,
Indeed, even if we were convinced that Bellas Hess was inconsistent with our Commerce Clause jurisprudence, "this very fact [might] giv[e us] pause and counse[l] withholding our hand, at least for now. Congress has the power to protect interstate commerce from intolerable or even undesirable burdens." Commonwealth Edison Co. v. Montana, 453 U. S., at 637 (White, J., concurring). In this situation, it
The judgment of the Supreme Court of North Dakota is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.
It is so ordered.
Justice Scalia, with whom Justice Kennedy and Justice Thomas join, concurring in part and concurring in the judgment.
National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), held that the Due Process and Commerce Clauses of the Constitution prohibit a State from imposing the duty of use-tax collection and payment upon a seller whose only connection with the State is through common carrier or the United States mail. I agree with the Court that the Due Process Clause holding of Bellas Hess should be overruled. 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. See Travelers Health Assn. v. Virginia ex rel. State Corp. Comm'n, 339 U.S. 643, 646-650 (1950) (blue sky laws). It is difficult to discern any principled basis for distinguishing between jurisdiction to regulate and jurisdiction to tax. As an original matter, it might have been possible to distinguish between jurisdiction to tax and jurisdiction to compel collection of taxes as agent for the State, but we have rejected that. National Geographic Society v. California Bd. of Equalization, 430 U.S. 551, 558 (1977); Scripto, Inc. v. Carson, 362 U.S. 207, 211 (1960). I agree with the Court, moreover, that abandonment of Bellas Hess' due process holding is compelled by reasoning "[c]omparable" to that contained in our post-1967 cases dealing with state jurisdiction to adjudicate. Ante, at 308. I do not understand this to mean that the due process standards for
I also agree that the Commerce Clause holding of Bellas Hess should not be overruled. Unlike the Court, however, I would not revisit the merits of that holding, but would adhere to it on the basis of stare decisis. American Trucking Assns., Inc. v. Smith, 496 U.S. 167, 204 (1990) (Scalia, J., concurring in judgment). Congress has the final say over regulation of interstate commerce, and it can change the rule of Bellas Hess by simply saying so. We have long recognized that the doctrine of stare decisis has "special force" where "Congress remains free to alter what we have done." Patterson v. McLean Credit Union, 491 U.S. 164, 172-173 (1989). See also Hilton v. South Carolina Public Railways Comm'n, 502 U.S. 197, 202 (1991); Illinois Brick Co. v. Illinois, 431 U.S. 720, 736 (1977). Moreover, the demands of the doctrine are "at their acme . . . where reliance interests are involved." Payne v. Tennessee, 501 U.S. 808, 828 (1991). As the Court notes, "the Bellas Hess rule has engendered substantial reliance and has become part of the basic framework of a sizable industry." Ante, at 317.
I do not share Justice White's view that we may disregard these reliance interests because it has become unreasonable to rely upon Bellas Hess. Post, at 331-332. Even assuming for the sake of argument (I do not consider the point) that later decisions in related areas are inconsistent with the principles upon which Bellas Hess rested, we have never acknowledged that, but have instead carefully distinguished the case on its facts. See, e. g., D. H. Holmes Co. v. McNamara, 486 U.S. 24, 33 (1988); National Geographic Society, supra, at 559. It seems to me important that we retain our ability—and, what comes to the same thing, that
For these reasons, I concur in the judgment of the Court and join Parts I, II, and III of its opinion.
In Part IV of its opinion, the majority goes to some lengths to justify the Bellas Hess physical-presence requirement under our Commerce Clause jurisprudence. I am unpersuaded by its interpretation of our cases. In Bellas Hess, the majority placed great weight on the interstate quality of the mail-order sales, stating that "it is difficult to conceive of commercial transactions more exclusively interstate in character than the mail-order transactions here involved." Id., at 759. 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. 232, 279 (1873), through Freeman v. Hewit, 329 U.S. 249, 256 (1946), and Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602 (1951). But though it recognizes that Bellas Hess was decided amidst an upheaval in our Commerce Clause jurisprudence, in which we began to hold that "a State, with proper drafting, may tax exclusively interstate commerce so long as the tax does not create any effect forbidden by the Commerce Clause," Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 285 (1977), the majority draws entirely the wrong conclusion from this period of ferment.
The Court attempts to paint Bellas Hess in a different hue from Freeman and Spector because the former "did not rely" on labeling taxes that had "direct" and "indirect" effects on interstate commerce. See ante, at 310. Thus, the Court concludes, Bellas Hess "did not automatically fall with Free-
The Court compounds its misreading by attempting to show that Bellas Hess "is not inconsistent with Complete Auto and our recent cases." Ante, at 311. This will be news to commentators, who have rightly criticized Bellas Hess.
Our decision in that case did just the opposite. National Geographic held that the National Geographic Society was liable for use tax collection responsibilities in California. The Society conducted an out-of-state mail-order business similar to the one at issue here and in Bellas Hess, and in addition, maintained two small offices in California that solicited advertisements for National Geographic Magazine. The Society argued that its physical presence in California was unrelated to its mail-order sales, and thus that the Bel-
By decoupling any notion of a transactional nexus from the inquiry, the National Geographic Court in fact repudiated the free trade rationale of the Bellas Hess majority. Instead, the National Geographic Court relied on a due process-type minimum contacts analysis that examined whether a link existed between the seller and the State wholly apart from the seller's in-state transaction that was being taxed. Citations to Bellas Hess notwithstanding, see 430 U. S., at 559, it is clear that rather than adopting the rationale of Bellas Hess, the National Geographic Court was instead politely brushing it aside. Even were I to agree that the free trade rationale embodied in Bellas Hess `rule against taxes of purely interstate sales was required by our cases prior to 1967, therefore, I see no basis in the majority's opening premise that this substantive underpinning of Bellas Hess has not since been disavowed by our cases.
The Court next launches into an uncharted and treacherous foray into differentiating between the "nexus" requirements under the Due Process and Commerce Clauses. As the Court explains: "Despite the similarity in phrasing, the nexus requirements of the Due Process and Commerce Clauses are not identical. The two standards are animated by different constitutional concerns and policies." Ante, at 312. 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." Ante, at 312. The Commerce Clause nexus requirement, on the other hand, is "informed not so much by concerns about fairness for the individual defendant as by structural concerns about the effects of state regulation on the national economy." Ibid.
Citing Complete Auto, the Court then explains that the Commerce Clause nexus requirement is not "like due process' `minimum contacts' requirement, a proxy for notice, but rather a means for limiting state burdens on interstate commerce." Ante, at 313. This is very curious, because parts two and three of the Complete Auto test, which require fair apportionment and nondiscrimination in order that interstate commerce not be unduly burdened, now appear to become the animating features of the nexus requirement, which is the first prong of the Complete Auto inquiry. The Court freely acknowledges that there is no authority for this novel interpretation of our cases and that we have never before found, as we do in this case, sufficient contacts for due process purposes but an insufficient nexus under the Commerce Clause. See ante, at 313-314, and n. 6.
The majority's attempt to disavow language in our opinions acknowledging the presence of due process requirements
The cases from which the Complete Auto Court derived the nexus requirement in its four-part test convince me that the issue of "nexus" is really a due process fairness inquiry. 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. 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. See Complete Auto, 430 U. S., at 280-281. In conducting his inquiry, Justice Rutledge used language that by now should be familiar, arguing that a tax was unconstitutional if the activity lacked a sufficient connection to the State to give "jurisdiction to tax," Freeman, supra, at 271; or if the tax discriminated against interstate commerce; or if the activity was subjected to multiple tax burdens. 329 U. S., at 276-277. Justice Rutledge later refined these principles in Memphis Natural Gas Co. v. Stone, 335 U.S. 80 (1948), in which he described the principles that the Complete Auto Court would later substantially adopt: "[I]t is enough for me to sustain the tax imposed in this case that it is one clearly within the state's power to lay insofar
By the time the Court decided Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450 (1959), Justice Rutledge was no longer on the Court, but his view of the nexus requirement as grounded in the Due Process Clause was decisively adopted. In rejecting challenges to a state tax based on the Due Process and Commerce Clauses, the Court stated: "The taxes imposed are levied only on that portion of the taxpayer's net income which arises from its activities within the taxing State. These activities form a sufficient `nexus between such a tax and transactions within a state for which the tax is an exaction.'" Id., at 464 (citation omitted). The Court went on to observe that "[i]t strains reality to say, in terms of our decisions, that each of the corporations here was not sufficiently involved in local events to forge `some definite link, some minimum connection' sufficient to satisfy due process requirements." Id., at 464-465 (quoting Miller Brothers Co. v. Maryland, 347 U.S. 340, 344-345 (1954)). When the Court announced its fourpart synthesis in Complete Auto, the nexus requirement was definitely traceable to concerns grounded in the Due Process Clause, and not the Commerce Clause, as the Court's discussion of the doctrinal antecedents for its rule made clear. See Complete Auto, supra, at 281-282, 285. For the Court now to assert that our Commerce Clause jurisprudence supports a separate notion of nexus is without precedent or explanation.
Even were there to be such an independent requirement under the Commerce Clause, there is no relationship between the physical-presence/nexus rule the Court retains and Commerce Clause considerations that allegedly justify it. Perhaps long ago a seller's "physical presence" was a sufficient part of a trade to condition imposition of a tax on
The illogic of retaining the physical-presence requirement in these circumstances is palpable. 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. By contrast, an out-of-state seller in a neighboring State could be the dominant business in the putative taxing State, creating the greatest infrastructure burdens and undercutting the State's home companies by its comparative
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. If the Commerce Clause was intended to put businesses on an even playing field, the majority's rule is hardly a way to achieve that goal. 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. See ante, at 312 (stating that the Commerce Clause nexus requirement addresses the "structural concerns about the effects of state regulation on the national economy"). I would think that protectionist rules favoring a $180-billion-a-year industry might come within the scope of such "structural concerns." See Brief for State of New Jersey as Amicus Curiae 4.
The Court attempts to justify what it rightly acknowledges is an "artificial" rule in several ways. See ante, at 315. First, it asserts that the Bellas Hess principle "firmly establishes the boundaries of legitimate state authority to impose a duty to collect sales and use taxes and reduces litigation concerning those taxes." Ante, at 315. It is very doubtful,
Instead of confronting this question head on, the majority offers only a cursory analysis of whether Quill's physical presence in North Dakota was sufficient to justify its use tax collection burdens, despite briefing on this point by the State.
The majority next explains that its "bright-line" rule encourages "settled expectations" and business investment. Ante, at 316. Though legal certainty promotes business confidence, the mail-order business has grown exponentially despite the long line of our post-Bellas Hess precedents that signaled the demise of the physical-presence requirement. Moreover, the Court's seeming but inadequate justification of encouraging settled expectations in fact connotes a substantive economic decision to favor out-of-state direct marketers to the detriment of other retailers. By justifying the Bellas Hess rule in terms of "the mail-order industry's dramatic growth over the last quarter century," ante, at 316, the Court is effectively imposing its own economic preferences in deciding this case. 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. See, e. g., Goldberg v. Sweet, 488 U.S. 252 (1989); Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981).
Finally, the Court accords far greater weight to stare decisis than was given to that principle in Complete Auto itself. 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. See Complete Auto, 430 U. S., at 288-289. One typically invoked rationale for stare decisis —an unwillingness to upset settled expectations—is particularly weak in this case. It is unreasonable for companies such as Quill to invoke a "settled expectation" in conducting affairs without being taxed. Neither Quill nor any of its amici point to any investment decisions
The Court hints, but does not state directly, that a basis for its invocation of stare decisis is a fear that overturning Bellas Hess will lead to the imposition of retroactive liability. Ante, at 317, 318, n. 10. See James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991). 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." Id., at 546 (White, J., concurring in judgment). Since we specifically limited the question on which certiorari was granted in order not to consider the potential retroactive effects of overruling Bellas Hess, I believe we should leave that issue for another day. If indeed fears about retroactivity are driving the Court's decision in this case, we would be better served, in my view, to address
Although Congress can and should address itself to this area of law, we should not adhere to a decision, however right it was at the time, that by reason of later cases and economic reality can no longer be rationally justified. The Commerce Clause aspect of Bellas Hess, along with its due process holding, should be overruled.
Briefs of amici curiae urging affirmance were filed for the State of Connecticut et al. by Richard Blumenthal, Attorney General of Connecticut, and Paul J. Hartman, Charles W. Burson, Attorney General of Tennessee, Daniel E. Lungren, Attorney General of California, Winston Bryant, Attorney General of Arkansas, Robert A. Butterworth, Attorney General of Florida, Michael J. Bowers, Attorney General of Georgia, Larry EchoHawk, Attorney General of Idaho, Roland W. Burris, Attorney General of Illinois, Bonnie J. Campbell, Attorney General of Iowa, Frederic J. Cowan, Attorney General of Kentucky, William J. Guste, Jr., Attorney General of Louisiana, J. Joseph Curran, Jr., Attorney General of Maryland, Scott Harshbarger, Attorney General of Massachusetts, Frank J. Kelley, Attorney General of Michigan, Mike Moore, Attorney General of Mississippi, Frankie Sue Del Papa, Attorney General of Nevada, Robert Abrams, Attorney General of New York, Lee Fisher, Attorney General of Ohio, Susan B. Loving, Attorney General of Oklahoma, Ernest D. Preate, Jr., Attorney General of Pennsylvania, T. Travis Medlock, Attorney General of South Carolina, Dan Morales, Attorney General of Texas, Paul Van Dam, Attorney General of Utah, Jeffrey L. Amestoy, Attorney General of Vermont, Mary Sue Terry, Attorney General of Virginia, Ken Eikenberry, Attorney General of Washington, Mario J. Palumbo, Attorney General of West Virginia, and John Payton; for the State of New Jersey by Robert J. Del Tufo, Attorney General, Sarah T. Darrow, Deputy Attorney General, Joseph L. Wannotti, Assistant Attorney General, Richard G. Taranto, and Joel I. Klein; for the State of New Mexico by Tom Udall, Attorney General, and Frank D. Katz, Special Assistant Attorney General; for the City of New York by O. Peter Sherwood, Edward F. X. Hart, and Stanley Buchsbaum; for the International Council of Shopping Centers, Inc., et al. by Charles Rothfeld; for the Multistate Tax Commission by James F. Flug and Martin Lobel; for the National Governors' Association et al. by Richard Ruda; and for the Tax Policy Research Project by Rita Marie Cain.