State + Local Tax Insights: Spring 2014

Edited by Nicole L. Johnson and Rebecca M. Ulich

WHERE'S WALDEN? FINDING PROTECTION UNDER THE DUE PROCESS CLAUSE

By R. Gregory Roberts and Rebecca M. Ulich

In the aftermath of Quill, and the seemingly low threshold to satisfy the Due Process Clause articulated by the U.S. Supreme Court, many practitioners and taxpayers essentially abandoned the Due Process Clause as a tool to challenge assertions of nexus, preferring instead to focus on the Commerce Clause. However, several recent Supreme Court decisions should cause practitioners and taxpayers to rethink that strategy.

The Court's decisions in Goodyear, J. McIntyre Machinery, Daimler and Walden not only show the Court's renewed emphasis on the Due Process Clause as a limitation on assertions of jurisdiction under state long-arm statutes, but also provide taxpayers with a framework to challenge the ever-increasing assertions of nexus for tax purposes by state legislatures and taxing authorities.¹