Miller Brothers Co. v. Maryland
Encyclopedia
In Miller Brothers Co. v. Maryland, 347 U.S. 340
(1954), the Supreme Court
ruled 5-4 that a mail order reseller was not required to collect sales tax unless it had sufficient contact with the state.
that sold merchandise to consumers. It did not accept phone or mail orders, although it did solicit and advertise via newspaper, mail, or radio in Delaware
. Some of these advertisements would reach Maryland
residents and they would sometimes come to the store, make purchases and then return to Maryland
. These customers would either take their purchases with them or have them delivered by a common carrier
or by a truck owned and operated by Miller Brothers Co.
Maryland
levied a tax on its residents on "the use, storage, or consumption" of articles within the state. Maryland
also required all vendors -- regardless of where they were -- who sold goods to Maryland
residents to collect this use tax. Miller Brothers Co. did not collect this tax and when the Miller Brothers Co. truck crossed in to Maryland to make a delivery, the state of Maryland seized it
The Court of Appeals of Maryland found the law valid and that Miller Brothers Co. was liable for the tax. Miller Brothers Co. appealed.
Maryland's tax here was a use tax
. The 1944 Supreme Court
case of McLeod v. J.E. Dilworth Co. (322 U.S. 327) dealt with whether state A could levy a sales tax
on sales made by a merchant in state B to residents of state A.
held that imposing tax collection duties on Miller Brothers Co. violated the Due Process Clause of the 14th Amendment. The Due Process Clause requires some "definite link, some minimum connection, between a state and the person, property, or transaction it seeks to tax." Residence within the state, the doing of business or the hiring of employees within the state, or the owning of property within the state would all qualify as such a connection.
Here, none of Miller Brothers' activities rose to that level. Maryland
residents had to affirmatively come to the Delaware
store. Miller Brothers' only contact with Maryland
was through "the incidental effects of general advertising
". As a result, "the burden of collecting or paying their tax cannot be shifted to a foreign merchant in the absence of some jurisdictional basis not present here." The residents of Maryland
are, however, still liable for the use tax
. It is only that Miller Brothers Co. was not responsible for collecting it.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1954), the Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
ruled 5-4 that a mail order reseller was not required to collect sales tax unless it had sufficient contact with the state.
Background
Miller Brothers Co. was a store in the state of DelawareDelaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
that sold merchandise to consumers. It did not accept phone or mail orders, although it did solicit and advertise via newspaper, mail, or radio in Delaware
Delaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
. Some of these advertisements would reach Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
residents and they would sometimes come to the store, make purchases and then return to Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
. These customers would either take their purchases with them or have them delivered by a common carrier
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
or by a truck owned and operated by Miller Brothers Co.
Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
levied a tax on its residents on "the use, storage, or consumption" of articles within the state. Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
also required all vendors -- regardless of where they were -- who sold goods to Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
residents to collect this use tax. Miller Brothers Co. did not collect this tax and when the Miller Brothers Co. truck crossed in to Maryland to make a delivery, the state of Maryland seized it
The Court of Appeals of Maryland found the law valid and that Miller Brothers Co. was liable for the tax. Miller Brothers Co. appealed.
Maryland's tax here was a use tax
Use tax
A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state , regardless of where the purchase took place...
. The 1944 Supreme Court
Supreme court
A supreme court is the highest court within the hierarchy of many legal jurisdictions. Other descriptions for such courts include court of last resort, instance court, judgment court, high court, or apex court...
case of McLeod v. J.E. Dilworth Co. (322 U.S. 327) dealt with whether state A could levy a sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
on sales made by a merchant in state B to residents of state A.
Supreme Court ruling
The Supreme CourtSupreme court
A supreme court is the highest court within the hierarchy of many legal jurisdictions. Other descriptions for such courts include court of last resort, instance court, judgment court, high court, or apex court...
held that imposing tax collection duties on Miller Brothers Co. violated the Due Process Clause of the 14th Amendment. The Due Process Clause requires some "definite link, some minimum connection, between a state and the person, property, or transaction it seeks to tax." Residence within the state, the doing of business or the hiring of employees within the state, or the owning of property within the state would all qualify as such a connection.
Here, none of Miller Brothers' activities rose to that level. Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
residents had to affirmatively come to the Delaware
Delaware
Delaware is a U.S. state located on the Atlantic Coast in the Mid-Atlantic region of the United States. It is bordered to the south and west by Maryland, and to the north by Pennsylvania...
store. Miller Brothers' only contact with Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
was through "the incidental effects of general advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
". As a result, "the burden of collecting or paying their tax cannot be shifted to a foreign merchant in the absence of some jurisdictional basis not present here." The residents of Maryland
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
are, however, still liable for the use tax
Use tax
A use tax is a type of excise tax levied in the United States. It is assessed upon otherwise "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state , regardless of where the purchase took place...
. It is only that Miller Brothers Co. was not responsible for collecting it.