Miller Brothers Co. v. Maryland
Headline: Court limits states’ power to force out-of-state stores to collect use taxes, reversing Maryland’s attempt to make a Delaware furniture seller collect tax on purchases carried or delivered into Maryland.
Holding:
- Out-of-state stores with only incidental sales and deliveries need not collect a state's use tax.
- Maryland residents remain responsible for paying use tax on goods brought into Maryland.
- States may still require collection when a seller actively solicits or operates within the state.
Summary
Background
A Delaware merchandising company sold furniture only at its Wilmington store. Maryland residents sometimes bought there, taking items home, having them shipped by common carrier to Maryland, or receiving deliveries from the company’s own truck. Maryland’s law imposed a use tax on its residents and required vendors to collect it. The State seized the company’s truck and Maryland courts held the seller liable for collecting use tax on those sales.
Reasoning
The Court asked whether the company’s contacts with Maryland — general advertising in Delaware papers that reached across the border, occasional mailings to former customers, shipments by common carrier, and some deliveries by the company’s trucks — gave Maryland power to make the seller collect residents’ use taxes. The Court said no. It explained that the Fourteenth Amendment’s protection that limits state power requires a definite link, or minimum connection, between the state and the person or transaction taxed. Incidental advertising and occasional deliveries did not create that link. The Court distinguished cases where a seller actively solicited local sales or maintained agents in the state, and it reversed the Maryland judgment.
Real world impact
The decision means many out-of-state retailers who only sell in another state and make occasional deliveries or use common carriers will not be forced to collect that state’s use tax. Maryland residents still owe the tax when they bring goods into the State. The ruling leaves open that active solicitation or a business presence in a State could justify a collection duty.
Dissents or concurrances
Four Justices dissented, arguing the company’s regular advertising and deliveries made collection a minimal burden and states need such rules to protect revenue and local merchants.
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