## Facts

- Quill Corporation, a Delaware mail-order seller of office supplies, operated offices and warehouses outside North Dakota and had no employees or physical facilities in North Dakota.
- Quill solicited North Dakota customers through catalogs, flyers, national advertisements, and telephone calls and shipped goods into the state by mail or common carrier from out-of-state locations.
- Quill made nearly $1 million in annual sales to roughly 3,000 North Dakota customers.
- North Dakota imposed a use tax on goods used in the state and required certain retailers to collect and remit the tax.
- In 1987, North Dakota expanded its definition of taxable “retailer” to include out-of-state sellers that engaged in “regular or systematic solicitation” of the state’s consumer market, even without in-state property or personnel.
- North Dakota sought to require Quill to collect and remit the use tax; Quill refused, arguing constitutional limits barred the obligation.

## Issues

1. Whether requiring an out-of-state seller with no physical presence in North Dakota to collect use tax violates the Due Process Clause of the Fourteenth Amendment.
2. Whether, under the dormant Commerce Clause, a state may compel a seller with no physical presence to collect and remit use tax.

## Decision

- The Supreme Court reversed the North Dakota Supreme Court.
- The Court held that Quill’s deliberate, continuous solicitation and sales into North Dakota satisfied due process “minimum contacts,” and any contrary due-process implication of a physical-presence requirement was rejected.
- The Court held that, under the dormant Commerce Clause, North Dakota could not require Quill to collect use tax because Quill lacked the “substantial nexus” needed for such an obligation.
- The Court reaffirmed a bright-line physical-presence rule for sales and use tax collection duties under the Commerce Clause, relying on administrability and stare decisis.
- The Court stated that Congress could authorize different rules for state taxation of interstate mail-order (and similar) sellers.

## Legal Principles

- Due process nexus for state taxing authority turns on purposeful direction of activity toward the forum and fairness, not physical presence.
- The Due Process Clause and dormant Commerce Clause impose distinct limits; commerce-clause nexus is informed by structural concerns about national economic effects, not only fairness to the defendant.
- Under dormant Commerce Clause analysis of state sales/use tax collection duties, “substantial nexus” required physical presence in the taxing state (as a categorical rule at the time).
- Stare decisis and the need for a clear, administrable rule supported retaining the commerce-clause physical-presence requirement absent congressional action.
- Congress may change the default commerce-clause rule by statute and determine when states may impose multi-state tax collection burdens on remote sellers.

## Conclusion

The Court held that North Dakota could constitutionally assert due-process jurisdiction to impose tax-collection duties based on Quill’s targeted, substantial commercial contacts, but the dormant Commerce Clause barred compelling collection absent the seller’s physical presence, leaving any broader authorization to Congress.


Quill Corp. v. North Dakota, 504 U.S. 298 (1992)