1977 United States Supreme Court case
Complete Auto Transit, Inc. v. Brady Argued January 19, 1977 Full case name Complete Auto Transit, Inc. v. Brady, Chairman, Mississippi Tax Commission Citations 430U.S. 274 (more Case history Prior Certiorari Supreme Court of Mississippi , 330So. 2d 268 (Miss. 1976).Subsequent Rehearing denied,430 U.S. 976 (1977). Holding A privilege tax, when used in conjunction with the "four-prong" test, does not discourage interstate commerce. Court membership Chief Justice Warren E. Burger Associate Justices William J. Brennan Jr. · Potter Stewart Byron White · Thurgood Marshall Harry Blackmun · Lewis F. Powell Jr. William Rehnquist · John P. Stevens Case opinion Majority Blackmun, joined byunanimous Laws applied U.S. Const. art. I, § 8 This case overturned a previous ruling or rulings
Spector Motor Service v. O'Connor
Complete Auto Transit, Inc. v. Brady United States Supreme Court case regarding theCommerce Clause andsales tax .[ 1]
Complete Auto was a Michigan-based auto transporter involved in movingGeneral Motors vehicles from therailhead atJackson, Mississippi to dealerships inMississippi . The vehicles were assembled outside Mississippi.
The Mississippi State Tax Commission levied a tax upon Complete Auto "for the privilege of engaging or continuing in business or doing business"[ 1] [ 2] sales tax "; however, it was a "transaction privilege" orgross receipts tax based on Complete Auto's gross receipts.
Complete Auto paid the taxes of $122,160.59 under protest, and then undertook a refund action in theChancery Court of the First Judicial District of Hinds County. Complete Auto claimed that its transportation was but one part of an interstate movement, and that the taxes assessed and paid were unconstitutional as applied to operations in interstate commerce. The Chancery Court, in an unreported opinion, sustained the assessments.[ 2]
Complete Auto appealed to the Mississippi Supreme Court. The Court unanimously affirmed and concluded:
It will be noted that Taxpayer has a large operation in this State. It is dependent upon the State for police protection and other State services the same as other citizens. It should pay its fair share of taxes so long, but only so long, as the tax does not discriminate against interstate commerce, and there is no danger of interstate commerce being smothered by cumulative taxes of several states. There is no possibility of any other state duplicating the tax involved in this case.[ 2]
Complete Auto argued against theconstitutionality of tax, stating that they were part of aninterstate operation , involved in transporting vehicles from the factories inMichigan to the dealers in Mississippi.[ 1]
The Supreme Court ruled in favor of Mississippi. The ruling established a four-prong test for constitutionality of a tax under the Commerce Clause:[ 3]
Substantial nexus - connection between a state and a potential taxpayer clear enough to impose a tax.[ 3] Nondiscrimination - interstate and intrastate taxes should not favor one over the other.[ 1] Fair apportionment - taxation of only the apportionment of activity that transpires within the taxing jurisdiction.[ 4] Fair relationship to services provided by the state - company enjoys services such as police protection while in a state.[ 1] Even though Complete Auto asserted that it was a part of an interstate operation, the Court agreed with Mississippi that while operating within the state, it was afforded services, such as police protection, provided for by taxation.
Subsequent developments [ edit ] The test enunciated inComplete Auto Transit received significant interpretation inCommonwealth Edison Co. v. Montana ,[ 5]
^a b c d e Complete Auto Transit, Inc. v. Brady , 430 U.S. 274 (1977).This article incorporatespublic domain material from this U.S government document . ^a b c "COMPLETE AUTO TRANSIT, INC., Appellant, v. Charles R. BRADY, Jr., etc" .LII / Legal Information Institute . March 7, 1977. RetrievedMay 12, 2020 .public domain .^a b "Arizona Department of Revenue NEXUS UNIT" . Arizona Department of Revenue. Archived fromthe original on September 28, 2008. RetrievedOctober 1, 2008 .^ "Texas Franchise Tax Throwback Apportionment Provision Violates the Commerce Clause of the United States Constitution" (PDF) . Sutherland Asbill & Brennan LLP. Archived fromthe original (PDF) on July 16, 2011. RetrievedOctober 1, 2008 .^ Raabe, William A.; Whittenburg, Gerald E.; and Sanders, Debra L.Federal Tax Research. 8th ed. Florence, Ky.: Cengage Learning, 2008.ISBN 0-324-65965-2
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This article incorporatespublic domain material from this U.S government document.