Legal Document

514 U.S. 175115 S.Ct. 1331131 L.Ed.2d 261 OKLAHOMA TAX COMMISSION, Petitioner,v.JEFFERSON LINES, INC. No. 93-1677. Supreme Court of the United States Argued Nov. 28, 1994. Decided April 3, 1995. Syllabus * Respondent Jefferson Lines, Inc., a common carrier, did not collect or remit to Oklahoma state sales tax on bus tickets sold in for interstate travel originating there, although it so intrastate travel. After filed bankruptcy, petitioner, Tax Commission, proof claims uncollected taxes, but Bankruptcy found that was inconsistent with Commerce Clause imposed an undue burden commerce and presented danger multiple taxation. The District affirmed. Appeals also affirmed, holding fairly apportioned. Rejecting Commission's position ticket sale is wholly local transaction justifying State's ticket's full value, court reasoned such indistinguishable from New York's unapportioned busline's gross receipts struck down by this Central Greyhound Inc. v. Mealey, 334 653, 68 1260, 92 L.Ed. 1633. Held: Oklahoma's transportation services consistent Clause. Pp. __. (a) Under Complete Auto Transit, Brady, 430 274, 97 1076, 51 326, valid if applied activity substantial nexus State, apportioned, does discriminate against commerce, related provided State. here clearly has Oklahoma, State where purchased service originates. (b) purpose second prong Auto's test ensure each taxes only its fair share transaction. A properly apportioned must be both internally externally consistent. Internal consistency looks whether tax's identical application every would place at disadvantage as compared commerce. There no failure case, were impose Oklahoma's—i.e., within there—no subject more than one tax. External consistency, other hand, economic justification claim upon value taxed, discover reaches beyond portion attributable taxing (c) Where taxation income business issue, apportionment disputes have often focused slicing taxable pie among several which taxpayer's activities contributed income. When examining goods, however, most readily viewed discrete event facilitated laws amenities sale, itself reveal extent affects buyer taxed. Thus, been consistently approved without any division base different measurable charge purchase, regardless outside jurisdiction might preceded occur future. Therefore, consistent, conventional long held well. (d) can ordinarily treated just tangible goods located solely delivery. Sales performance justify transaction's entire hands seller. Even contributes performed, seller's receipts. See, e.g., Western Live Stock Bureau Revenue, 303 250, 58 546, 82 823. In performed partially double be. comprises agreement, payment, delivery some No site same combination these combined events are commonly understood suffice sale. Greyhound, supra, distinguished. (e) offers convincing reasons reconsider could fail external lack further apportionment. It raised spectre successive closely indicate potential unfairness sale's amount. Nor fact feasibly apportion basis mileage, York required do sufficient reason conclude exceeds share. (f) meets remaining two prongs test. argument made discriminates out-of-state enterprises, there merit activity, American Trucking Associations, Scheiner, 483 266, 107 2829, 226, presence falls takes inside measured purchased. ____-____. 15 F.3d 90 (CA 8 1994), reversed remanded. SOUTER, J., delivered opinion Court, REHNQUIST, C.J., STEVENS, KENNEDY, GINSBURG, JJ., joined. SCALIA, concurring judgment, THOMAS, BREYER, dissenting opinion, O'CONNOR, Stanley P. Johnston, City, OK, petitioner. Steven D. DeRuyter, Minneapolis, MN, respondent. Justice SOUTER Court. 1 This case raises question price another Clause, Const., Art. I, § 8, cl. 3. We hold is. 2 certain services, including hire. Okla.Stat., Tit. 68, 1354(1)(C) (Supp.1988).1 buyers pay collected remitted sellers. 1361. 3 Minnesota corporation carrier 1988 1990. had States, all originated terminated 4 bankruptcy protection October 27, 1989, Jefferson.2 cited objecting claims, argued imposes permitting percentage purchase travel, even though derives through States. presents taxation, claimed, because travels while providing will able their own passengers use roads. 5 agreed Jefferson, Eighth Circuit. re (1994). under established constitutionality See Com- plete 279, 1079, 326 (1977). compelled our decision 1633 (1948), unconstitutional receipts3 company rejected sold, reasoning Greyhound. F.3d, 92-93. granted certiorari, 512 ----, 114 2672, 129 808 (1994), now reverse. II 6 Despite express grant Congress power "regulate . States," we language contain further, negative command, known dormant prohibiting when failed legislate subject. Quill Corp North Dakota, 504 298, 309, 112 1904, 119 91 (1992); Northwestern Portland Cement Co. Minnesota, 358 450, 458, 79 357, 362, 421 (1959); H.P. Hood & Sons, Du Mond, 336 525, 534-535, 69 657, 663-664, 93 865 (1949); cf. Gibbons Ogden, 22 (9 Wheat.) 1, 209, 23 (1824) (Marshall, C.J.) (dictum). construction serve Clause's preventing retreating into isolation jeopardizing welfare Nation whole, free burdens flow across borders those bear. provision thus " 'reflect[s] central concern Framers immediate calling Constitutional Convention: conviction order succeed, new Union avoid tendencies toward Balkanization plagued relations Colonies later Articles Confederation.' Wardair Canada, Florida Dept. 477 7, 106 2369, 2372-2373, (1986), quoting Hughes 441 322, 325-326, 99 1727, 1730-1731, 60 250 (1979); see Federalist 42 (J. Madison), 7 (A. Hamilton), 11 Hamilton) Cooke ed. 1961). command stated easily object attained, Court's understanding taken turns. early stages, J. Hellerstein W. Hellerstein, Taxation &Par; 4.05-4.08 (2d 1993) (hereinafter Hellerstein); Hartman, supra n. §§ 2:9-2:16, view immune "in form," Leloup Port Mobile, 127 640, 648, 1380, 1384, 32 311 (1888), "even amount should laid [intrastate] commerce," Robbins Shelby County Taxing Dist., 120 489, 497, 592, 596, 30 694 (1887); Cooley Board Wardens Philadelphia ex rel. Society Relief Distressed Pilots, 53 (12 How.) 299, 13 996 (1852); Brown Maryland, 25 419, 678 (1827). gave way time less uncompromising formal approach, according which, example, invalidate levied Jersey Bell Telephone Bd. Taxes Assessments Jersey, 280 338, 50 111, 74 463 (1930); Meyer Wells, Fargo Co., 223 218, 56 445 (1912), "freight carried" Case Freight Tax, (15 Wall.) 232, 278, 21 146 (1873), allow merely formally franchises, Maine Grand Trunk R. 142 217, 12 121, 35 994 (1891), 'in lieu [the taxpayer's] property,' Express 335, 346, 211, 215, 459 (1912).4 generally, Lockhart, Gross Receipts Interstate Transportation Communication, 57 Harv.L.Rev. 40, 43-66 (1943) Lockhart). Dissenting approach 1927, Stone remarked "too mechanical, too uncertain application, remote actualities, value." Di Santo Pennsylvania, 273 34, 44, 47 267, 271, 71 524 (1927) (Stone, dissenting). 1938, old formalism began give Stone's 823 (1938), examined Mexico's franchise tax, receipts, advertisers journal produced taxpayer Mexico circulated Although assessment sustained prior precedent, id., 258, S.Ct., 549-550; Lockhart 66, 122, added dash pragmatism that, brief interlude, since become aspiration quarter law. trouble rejecting "mere formation contract between persons states" insulated Stock, U.S., 253, 547, saw "preparing, printing publishing magazine advertising [as] peculiarly local" therefore operated. Id., 550. "vexed question," today call apportionment: circulation barred advertisements enhanced journal's wide dissemination. 254, 548. rebuffing challenge ground attenuated" light analogous railroad property, 259, 550, "added reason" sustaining tax: 9 "So far appellants' cannot again taxed elsewhere property locally. form substance repeated states manner lay distribution magazine." 260, 550-551. 10 explained "[i]t clause relieve engaged increases cost doing business." Soon after expressly rested invalidation violated prohibition taxation: "The vice statute includes measure, apportionment, derived commerce; exaction character lawful may fullest well they manufactured." J.D. Adams Mfg. Storen, 304 307, 311, 913, 916, 1365 (1938). Gwin, White Prince, Henneford, 305 434, 438-439, 59 325, 327-328, 83 272 (1939). resurgence absolutism proscribed Freeman Hewit, 329 249, 67 265 (1946); Spector Motor Service, O'Connor, 340 602, 508, 95 573 (1951), returned Stock's rule (1959), categorically abandoned latter-day (1977), overruled Freeman. Auto, transporting cars manufactured dealers challenged assessed equally hire resting privilege engaging commercial turned back, explicitly decisions 14 "considered rather practical effect, State." 1079. Since then, applied, somewhat refined, what come four-part Goldberg Sweet, 488 252, 109 582, 102 607 (1989) (tax telephone calls); D.H. Holmes McNamara, 486 24, 108 1619, 100 (1988) (use tax); Container Corp. Franchise Board, 159, 103 2933, 77 545 (1983) (franchise Commonwealth Edison Montana, 453 609, 101 2946, 884 (1981) (severance tax). apply criteria before us today. III A. 16 settled consummated McGoldrick Berwind-White Coal Mining 309 33, 388, 84 565 (1940) (upholding coal shipped seller). So, too, addressing recently originates terminates requisite customer's billed charged address, paid addressee, Goldberg, 263, 589-590. comfortably rules. purchased, there. These facts enough concluding "[t]here 'nexus' aplenty here." Holmes, 1624. Indeed, deny in-state service, argues insufficient borders. point, goes turn. B 17 difficult meaning test, "the [of which] transaction." 260-261, 588. principle lineal descendant threatened whenever act overreaching combines possibility taxed: exceeded laying it. 18 For over decade now, threat malapportionment asking "internally consistent" and, so, "externally 261, 589; Corp., 169, 2942. preserved imposition add asks nothing about degree reality reflected simply structure issue intrastate. internal shows matter law attempting take transaction, allowing mercy 439, 327-328. however. If Oklahoma's, is, 19 logical consequences cloning, 262, 169-170, 2942-2943. Here, real (though literally statutes) impermissible overreaching. tidy world turn length. 20 very term "apportionment" tends conjure up allocation percentages, centered around specific formulas value. Moorman Bair, 437 98 2340, 197 (1978), considered Iowa measure corporation's attributing proportion bear total sales.' 270, 2342-2343. could. Corporation, decided California constitutionally compute assignable multijurisdictional enterprise's instate apportioning formula "based, equal parts, [such] business' payroll, 170, 2943. Again, Finally, limited reflecting miles traveled jurisdiction. 663, 1266. reviewing share, set course. completed anticipated instead (1940). Such parties specifically contemplated movement either immediately before, after, transfer ownership. Canada (1986) airplane fuel); Comm'n Utah Pacific Cast Iron Pipe 372 605, 925, (1963) (per curiam ) purchaser's shipment sale). held, "an power" "discriminat[e]" "obstruc[t]" Berwind-White, 58, 398, safeguard risk As put necessary condition imposing occurrence "a consumption." Ibid. So conceived, coal, imagined ever once. Conversely, validly purchaser already obtained title carrier. McLeod J.E. Dilworth 322 327, 64 1023, 88 1304 (1944). seller "was selling" 330, 1025. words, conception operating ownership possession particular place, deriving covering not, course, oblivious stream cases implicit forbid actual succession distinct flows along. truism preclude earned constitutional inherent customer, origin thing severance 53, 396; mined State). treatment say unique, 24 Cf. (1989). decisional developed category dealing supports local. Thus notwithstanding entered lines customers who reside noted, publication. 258-259, 548, 549-550. And items retrieved customers, performing Department Treasury Ind. Ingram-Richardson 313 61 866, 85 1313 (1941). essential first second, least partial On analogy sometimes drawn International Harvester Treasury, 340, 347-348, 1019, 1022-1023, (1944); Norton Revenue Ill., 534, 537, 377, 380, 517 suppose feasible buyer. Cases include falling quite category, relies said control resolution us. 1948, 1633, striking almost half actually carriage neighboring Pennsylvania. fatally flawed proportions various bore total. similarity striking, assumption significance similar mileage here, 92-93, argues. 26 We, think provides wrong answering here. To sure, involve per each. But diverge crucially identity taxpayers consequent opportunities exist taxpayer. rest mathematical administrative feasibility seller-taxpayer exposed Pennsylvania portions entirety. variety income, reflect location earned. presumably arguably levy transaction.5 Instead, heeded Berwind-White's warning "[p]rivilege requiring transportation," "if sustained, wherever occurs. ." 45-46, 2, 391, 2. 27 contrast, State; combination. represented receipt "consumption" commencement resembles "delivery consumption," especially given "use" never goods. seeks discount resemblances arguing until made, caselaw space separate occurs moment delivery, segment state-by-state complete. analysis lose touch payment present trip 28 sum, open turned, control. Before classify standard complicated questions helpfully considered. 29 duplicated precluded, sale? answer no, anything expose assumed case: respect Oklahoma's. up. raise require (a result suffered cases). 31 If, face Texas sustainable, City Dallas, sense producer point Montana customer York. placed confluence structural evil individually, "accidental incident being jurisdictions." 75; 277, 2346-2347.6 out exposes passage. equivalent consumption generally compensate incapacity reach corresponding paired see, 31, 1623-1624; Boston Exchange Comm'n, 429 318, 331-332, 599, 607-608, (1977); Henneford Silas Mason 300 577, 524, 81 814 (1937), applicable credit paid. comply requirements, scheme differently domestically. Presumably, previously paid, payment. event, 33 True, offered provide elsewhere, rely use-taxing so. consequence based primacy sales, escaped Indeed Columbia forty-four forty-five permit exemption ¶ 18.08, p. 18-48; All Guide 256 summarized provisions force: 34 "These create national system Thereafter, unless rate less, subsequent differential rate." KSS Baldwin, N.J.Tax 273, 285 (1987). followed distinguishable simultaneous reassured disputed 264, 590-591 ("To States' telecommunications pose contained [t]ax [a]ct operates taxation"). unlike schemes posited sake competing purse. 36 b 37 points communication indeed noted "[a]n geographic individual calls produce insurmountable technological barriers," 264-265, 590, agree comparable barriers nonetheless reject idea used possible method used, chosen one, demonstrate "'clear cogent evidence,' 'the attrib uted appropriate transacted led grossly distorted result.' 2942, 2345 (internal quotation marks omitted; citations omitted). That much case. fails show imputes substantially imputed garden-variety perennially move thereafter. (1986); (1940); (1963); 550 "include[s] augmentation [interstate] tax] employed"); 589 "many characteristics [e]ven retail purely triggers States"). greater passed muster again. leave line longstanding precedent simplicity general carve exception subcategory services. accordingly reaching taking service. id, 261-262, 588-589; 2942-2943.7 C 38 "not "fairly demands. 39 "impose direct advantage Assns., 269, 2832-2833, 226 discriminating foreign enterprises businesses, 286, 2841-2842, occurring activity. 40 proffered amicus Lines largely rewriting above, response needs reiteration Brief 40; Amicus Curiae 20-27. additional position, "at 4% rate" relates route entirely Oklahoma" "only percent Oklahoma." 40. making invokes Pennsylvania's flat trucks traveling "plainly discriminatory." 2840. point. 41 using roads discriminated mile exceeding borne differs roads, freedom purchase." 1025, However complementary goals be, buyer's enjoyment facilitates purchases travelers, purchases. 32, 1624; 291, 2844 ("[T]he owed trucker vary directly proxy State"). dividing produces average higher figure trips domestic journey, discrimination travel; relevant benefit conferred bearing 617-619, 2953-2954, (same Only begin duty valued prompts movement. D demands relation benefits 266-267, 591-592; 32-34, 1624-1625; Edison, 621-629, 2955-2960. final during journey Oklahoma. misunderstands import last requirement. 43 requires detailed accounting account nor, indeed, offsetting public costs created taxable, proceeds purposes unrelated event. expenses 'contribute governmental receives "benefit." ' 627, 16, 2958, (emphasis original). terminal catch fire robbery foiled getting his ticket, police protection, along usual usually forgotten advantages maintenance civilized society, justifications ibid. fourth criterion reasonably 626, 629, 2959-2960. What demand satisfied IV 44 contravene judgment reversed, accordingly, remanded proceedings opinion. 45 ordered. 46 whom THOMAS joins, judgment. I conclusion facially ante, 24. seems me certify compliance "negative Clause"—which "negative" negates regulation appear Constitution. Amerada Hess Director, Division Taxation, 490 80, 1617, 1625-1626, 104 (SCALIA, judgment); Tyler Industries, Washington 259-265, 2810, 2823-2824, 2826-2829, 199 (1987) part part). 48 remainder eminently unhelpful, so-called "four-part test" ("The shall Power regulate 8), make immunized sorts nondiscriminatory action—a embrace (as ours ought not) imponderables how "value [is] State," constitutes "fair Ante, 10, (emphases added). Pipe, 2826. look forward day rightful Part useless discarded tools negative-Commerce-Clause jurisprudence. 49 O'CONNOR dissenting. lucid thorough discussion law, am unable join simple reason. Like judges Appeals, believe are, purposes, identical. Both transportation. neither And, find distinguishing features. Hence, violates Constitution forth utilities York—a called '[e]mergency furnishing utility services.' 664, 1266 (Murphy, dissenting) (quoting Law 186-a). "two centum" "gross income," defined "receipts received made" 1266-1267. authorities (in York) cities upstate routes cut 654, 1261-1262. accounted mileage. 660, 1264-1265. 52 Frankfurter wrote "it seeking reach," 661, 1265; "real exacting aspect bears special relation," ibid.; "its nature makes 'a government whose enjoys,' (1946)). "[i]f right appropriately appellant afford denied. mileage—on 57.47% 42.53% without—would unfair revenue portions, not." 662, 1265. 54 essentially lacked describe "external consistency." America Bd., (1983). say, tried significantly "that revenues reflects component taxed." 589, 55 uncanny resemblance "[t]ransportation carriers") "excise tax" sale" (Supp.1988) 2% large took effort comparative trips. Neither Where, critical difference? Not statutes, slightly. "levie[s]" "upon sales" "[e]mergency services" 'gross income,' 'receipts sale.' linguistic difference, significant. majority recognizes, differences terminology difference. 7-8. instances, sales. seem effect the, inherently interstate, willing labels ("[e]mergency services"; income" tax) sales), why same? sees number persuasive. First, seller, company, whereas says "tax consumer user vendor." 1361(A) (Supp.1988). difference leads characterize former receipts" latter "sales tax." formal, ("the vendor") "each principal officer personally liable" customer. tell) tells "to upshot matter, calculate bill multiplying times sales; bill; pass Second, believes smaller likelihood "by [by] 1265-1266. hint "taxable event" attaches (combined, perhaps, line). ."). suggests opposed ticket) "successive," "double taxation" way, ("no combination"). concede kind envisioned, namely selling tickets. But, depend effects. suggest lends recharacterizing "sale" ignore reality. Because framed price, clear intends passengers—not conduct (like tickets). something transportation; acknowledge creates ingenious constitutionally-based rules footnote 6—designed imposes, likely (unless forced citizens Instead enforcing requirement, once like York, trying credit. difficulties lie complexity inability foresee ways effectively (also) rules, traveler buys still duplicative (and thus, offer Oklahoma)? problem remain, finds support (1989), permitted Illinois originated, terminated, However, careful distinguish "cases [dealing] physical objects identifiable routes, practicable keep track distance 590-591, listed cases, 590-591. said, differed arguably, consumed possibly two—those address addressee. Regardless telephones buses alike different, purport modify nor majority. credited Ultimately, differ assess force analogies. determinative concerning item (say, coal). my view, strong all, product ingredients moved Rather, itself—the essence obvious portion" "interstate activity['s]" "which component." 589. reaffirm principle, transportation, denies having single, self-described taxes." "is classic instance 90, (CA8 1994). right. respectfully dissent. syllabus prepared Reporter Decisions convenience reader. Detroit Lumber 200 321, 337, 282, 287, 499. At section 1354 follows: "There hereby excise four (4%) following (C) carriers, railroads steam electric, motor companies, taxicab pullman car airlines, means hire." recent amendments, presently 41/2 rate. stipulated dispute concerns Jefferson's starting ending App. 5; Tr. Oral Arg. 3-4. Commission seek recover terminating Accordingly, validity follow usage, payable contrast (although entity). Federal Limitations Local 8:1, 10:1 (1981). temporarily adhered distinction upheld Term Railway Receipts, 284, 164 (1873). nice Southern S.S. 122 1118, 1200 (1887). reached 666, 1266-1267, 1267-1268 dissenting), mention fact. Any would, well-understood strictures. Dallas things, inconsistent. journeys alike. chose limit combining Texas, granting 583-584, 527-528, (1937) State); Halliburton Oil Well Cementing Reily, 373 64, 70, 1201, 1204, 202 ("[E]qual similarly situated imported out-of-state"); Maryland Louisiana, 451 725, 759, 2114, 2135, 576 (striking Louisiana's "first use" gas pattern credits exemptions allowed undeniably equality"); 240-248, 2816-2820, Washington's wholesaling exempting in-state, out-of-state, manufacturers); grants extend Associated Industries Mo. Lohman, 511 nn. 1815, 1819, 128 639 (1994); Halliburton, 77, 1207-1208 (Brennan, concurring); Mason, 587, 529; Williams Vermont, 472 14, 21-22, 105 2465, 2470-2471, 86 (1985), equality theme (or "compensating") muster, Exchange, 607-608. substantiated taxes. contrary, upholding occasioned pointed concomitant supporting Itel Containers Int'l Huddleston, 507 113 1095, 1102-1103, (1993); 1623-1624, States"); General Trading Iowa, 1028, 1309 584, 527-528. requirement amply precedent. need in- third party. Darnell Indiana, 390, 120, 267 (1912). BREYER review principles favor dissent's "practical difference," post, 4. rightly counsels adoption distinctions, equivalence alone be) touchstone Our reconciled inevitably equated virtue ultimately "pass[ed] customer" calculated fashion, dismiss extraction, BREYER's illuminates suggestion, 6, disagreement turns differing assessments His strength characterizing travel," "transportation," identifying categorizing uniform governing occasion recognition jurisdictions. latest example brings close conceptual allow.

Classification Label: 7