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Article
Determining the Boundaries of a Post-Bellas Hess World
National Tax Journal (1991)
  • Richard Pomp, University of Connecticut School of Law
Abstract
Under the 1967 Bellas Hess decision, out-of-state vendors are not required to collect either the sales or use tax of the consumer’s state (market state) if their only contact is through mail advertising. While a consumer is legally required to pay a use tax on mail-order purchases, compliance is rare. Therefore, consumers have a tax incentive to shop out-of-state. And vendor states often do not impose their sales tax on goods shipped out-of-state.

This article discusses the changes that would result if Bellas Hess were overturned. Specifically, the article explains that vendor states would impose a tax on interstate sales knowing that market states would provide a credit against sales taxes paid to other states. This would shift tax revenue from market states to vendor states. The article next discusses the constitutionality of a state’s potential retaliatory refusal to grant a credit against sales taxes paid to other states. In such a situation, the Supreme Court would have to decide whether a vendor or market state has the priority to tax a sale. Any federal legislation overturning Bellas Hess would have to take the shift to vendor sales taxes into account.
Publication Date
1991
Citation Information
Richard D. Pomp, Determining the Boundaries of a Post-Bellas Hess World, 44 Nat'l Tax J. 237 (1991).