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State taxation falling on interstate commerce can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys. And in determining whether a state tax falls within the confines of the Due Process Clause, the simple but controlling question is whether the state has given anything for which it can ask return. The same principles have been held applicable in determining the power of a state to impose the burdens of collecting use taxes upon interstate sales. Here, too, the Constitution requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.
The Illinois Department of Revenue, acting pursuant to an Illinois statute requiring retailers to collect and pay use taxes, brought an action against the defendant in the Circuit Court of Cook County, Illinois, to recover use taxes and penalties with respect to merchandise which the defendant had sold to Illinois customers. The defendant, a mail-order house, was incorporated in Delaware, had its principal place of business in Missouri, and was licensed to do business only in Delaware and Missouri. It did not maintain any places of business in Illinois; did not have in Illinois any agents or representatives to sell or take orders, to deliver merchandise, to accept payments, or to service merchandise it sold; did not own any tangible property, real or personal, in Illinois; had no telephone listing in Illinois; and did not advertise its merchandise for sale in newspapers, on billboards, or by radio or television in Illinois. Orders for its merchandise were mailed to and accepted at its Missouri plant, and its merchandise was sent to customers either by mail or by common carrier. Its catalogues were mailed to its Illinois customers twice a year, its occasional advertising flyers were mailed to past and potential customers in Illinois, and its sales to Illinois customers amounted to $2,174,744 during the approximately 15 months for which the taxes in issue were assessed. The Circuit Court entered a summary judgment in favor of the Department of Revenue, and the Illinois Supreme Court affirmed, rejecting the defendant's contention that the application of the use tax statute to it violated the due process and commerce clauses of the Federal Constitution.
Was the State prohibited from imposing the duty of use tax collection and payment upon a seller whose only connection with customers in the State was by common carrier or by mail?
The Court held that the nature of the taxpayer's business was purely interstate, and, therefore, was exclusively within Congress' power to regulate under the Commerce Clause. The very purpose of the Commerce Clause was to ensure a national economy free from unjustifiable local entanglements. Under the Constitution, this is a domain where Congress alone has the power of regulation and control. According to the Court, since the defendant did no more than communicate with customers in Illinois by mail or common carrier as part of a general interstate business, the requirement that the defendant collect and pay the use tax violated the due process and commerce clauses.