Village Publishing Corp. v. North Carolina Department of Revenue

1985-06-10

Headline: North Carolina newspaper tax dispute dismissed, leaving a delivery-based sales-tax exemption in place and affecting which newspapers pay tax based on how they are sold.

Holding: The Court summarily dismissed the appeal as presenting no substantial federal question, leaving North Carolina’s tax scheme and delivery-based newspaper exemption intact for now.

Real World Impact:

Leaves North Carolina's newsvendor exemption in effect for now.
Some newspapers remain fully exempt if sold by street vendors or paperboys.
Supreme Court declines immediate review of press-related tax distinctions.

Topics: newspaper taxation, sales tax exemptions, press freedom, delivery-based tax rules

Summary

Background

A publishing company challenged North Carolina’s Sales and Use Tax Act after state rules exempted newspapers sold by street vendors and carriers who deliver door-to-door. Under the law, publishers who give away newspapers must pay tax on the materials they buy. Publishers who sell at retail generally avoid tax on production inputs but must pay tax on the final sale. Newspapers sold through street vendors, however, escape both the publisher’s purchase tax and the retail sales tax.

Reasoning

The North Carolina Supreme Court upheld the tax scheme, saying the exemption served a practical purpose: it is hard to require street vendors and many paperboys (often children) to collect sales tax. That court applied a basic “rational basis” test and found this administrative difficulty sufficient to justify the exemption. The United States Supreme Court summarily dismissed the appeal as presenting no substantial federal question, so it did not grant full review or set aside the state court’s ruling.

Real world impact

Because the Supreme Court dismissed the appeal, North Carolina’s delivery-based exemption remains in force for now. The decision means some newspapers keep a full tax exemption when sold by street vendors while other papers must pay tax on purchases or retail sales. The dismissal also leaves unresolved whether distinctions among different members of the press require closer judicial scrutiny nationwide.

Dissents or concurrances

Justice White, joined by Justice Brennan, dissented from the dismissal. He argued that an earlier decision suggested taxes that single out parts of the press deserve heavier review and that this case warranted full briefing and oral argument.