Scripto, Inc. v. Carson

Background

A Georgia corporation that makes and sells mechanical writing instruments from Atlanta shipped goods to Florida residents and did not collect Florida’s use tax. Florida’s law requires dealers to collect a three percent use tax on goods used in the State. After the company failed to collect the tax, the Florida Comptroller assessed $5,150.66. Florida courts found the company had enough local activity to be a “dealer” under the statute because it used ten Florida-based salesmen or brokers who solicited orders from customers in Florida.

Reasoning

The core question was whether the company’s local solicitation created enough connection for Florida to require tax collection. The Court said yes. It explained that the tax falls on Florida purchasers who use the goods in the State and that the company maintained a continuous flow of sales into Florida through local salesmen, catalogs, samples, and repeat orders. Labeling the salesmen “independent contractors” did not defeat the connection. The Court relied on prior decisions requiring a definite link between the State and the seller and concluded that the seller’s activities in Florida met that minimum connection, so the judgment of the Florida courts was affirmed.

Real world impact

The decision means out-of-state businesses that actively solicit and obtain orders through local representatives can be required to register and collect state use taxes, even without an in-state office. Florida also reimburses dealers for collection duties, which the Court noted. Businesses using similar sales networks should expect comparable obligations in states with similar laws.

Dissents or concurrances

One Justice concurred in the result. Another dissented, arguing that Florida’s requirement denied due process and improperly burdened interstate commerce, and would have reversed the judgment.