Taking Tax Due Process Seriously: The Give and Take of State Taxation

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Hayes R. Holderness


As the Internet has increased the ease and amount of interstate transactions, the states have struggled to require “remote vendors”—vendors without a physical presence in the taxing state—to collect or pay taxes. The states are attempting to overcome these struggles by lowering Commerce Clause limitations on their jurisdiction to tax, but meaningful limitations on such jurisdiction imposed by the Due Process Clause await the states. The Due Process Clause requires that state actions be fundamentally fair, and to meet this standard a state must provide a person with a benefit and the person must indicate acceptance of that benefit before the state can require the person to collect or pay taxes. These requirements limit the states’ jurisdiction to tax certain remote vendors; thus, the states must take the Due Process Clause seriously if they wish to fully solve their remote vendor issues.

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