Wisconsin Department of Revenue v. William Wrigley, Jr., Co.

1992-06-19

Headline: Federal solicitation protection narrowed; Court allows Wisconsin to tax Wrigley because replacing stale gum, stocking displays, and storing product created taxable in‑state business activity beyond mere solicitation.

Holding:

Real World Impact:

Allows states to tax companies that store product or supply paid display stock in state.
Makes replacing stale product or agency stock checks possible triggers for state taxation.
Clarifies that only truly ancillary solicitation activities remain federally protected.

Topics: state taxation, sales solicitation, retail displays, interstate commerce

Summary

Background

This dispute involved Wrigley, a Chicago-based chewing gum maker, and the Wisconsin Department of Revenue. Wrigley sold through in-state sales representatives who carried samples, display racks, and a stock of gum, replaced stale gum for retailers at no charge, issued “agency stock checks” when they filled racks from their cars, and kept some gum stored in Wisconsin. All orders were approved and shipped from Wrigley’s Chicago office. Wisconsin assessed taxes for 1973–1978 and the case moved through state courts before the Supreme Court reviewed it.

Reasoning

The core question was whether Wrigley’s in-state activities were still just “solicitation of orders” protected by federal law or whether some activities went beyond that protection. The majority said solicitation covers more than asking for an order, but it does not include actions that serve an independent business function apart from seeking purchases. The Court found that replacing stale gum, supplying gum via agency stock checks where retailers were billed, and keeping stored gum were not merely ancillary or de minimis. Those activities created a nontrivial connection with Wisconsin and so were not protected.

Real world impact

Manufacturers and companies that use resident sales forces are affected: routine acts like replacing stale product, stocking paid display goods, or storing product in a State can create taxable in‑state activity. The decision supplies a practical test: if an activity provides independent business value or creates in‑state storage or sales, it may remove federal immunity and permit state taxation.

Dissents or concurrances

Justice O’Connor agreed the storage and agency stock checks were not protected but viewed stale gum replacement differently; Justice Kennedy (joined by the Chief Justice and Justice Blackmun) dissented, arguing for broader protection for customary solicitation practices and would have affirmed the Wisconsin Supreme Court.