United States: Is DILWORTH Still Good Law Or Just A Bump In The Road In The Development Of The Commerce Clause; The CARE COMPUTER Case

[Prepared for 10th Annual ABA/IPT "Advanced Sales/Use Tax & Advanced Property Tax" Seminars March 20-23, 2001]

THE CARE COMPUTER CASE.

Arizona Department of Revenue v. Care Computer Systems, Inc., 4 P.3d 469 Ariz. 197 414 P.3d 469 (App. 2000), review denied (February 15, 2001).

The Issue. The issue present by the Care Computer case is whether Arizona may impose its transaction privilege (sales) tax [not the use tax] on Care Computer’s interstate mail-order sales. Or, stated another way, did Care Computer have sufficient nexus with Arizona for the imposition of the state’s transaction privilege tax.

I. FACTUAL BACKGROUND.

The Arizona Department of Revenue audited Care Computer Systems and imposed Arizona’s transaction privilege tax on Care Computer’s gross receipts from its interstate mail-order sales to Arizona customers. Care is a mail-order company located in Bellevue, Washington, that licenses and sells computer software to nursing homes throughout the United States. Care has never had any physical location or facility of any kind in Arizona. It has no Arizona sales or service office, warehouse, storage, product inventory, advertising or other business address. It has no employees, independent contractors, sales representatives or other agents based or residing in Arizona. In short, it had no regular presence of any kind in Arizona.

Care’s Sales Take Place in Washington, Not In Arizona. Care’s Arizona customers would send their orders to Care’s Washington headquarters by fax or mail. Before the goods were shipped, all contracts had to be approved by a corporate officer at Care’s Washington headquarters. Goods were shipped from Care’s Bellevue headquarters to Arizona customers by mail or common carrier. Under Care’s standard sales contract, the goods were shipped F.O.B. Washington (i.e., title passed when the goods were delivered to the carrier or post office in Washington).

While Care’s Arizona transactions were conducted solely by mail order and fax, Care employed a salesman who lived in Irvine, California and worked out of Care’s Brea, California office. Care’s salesman, Gary Trabant, had as his primary territory southern California and also Arizona. His sales efforts were primarily limited to southern California because of the state’s large population base and the number of nursing homes. Mr. Trabant traveled to Arizona irregularly and only on seven occasions, averaging once per year, through the audit period of January 1985 through November 1991. He made his trips by airplane, returning home the same day in most cases and never staying longer than overnight. Mr. Trabant did not have authority to accept or approve any orders and the few that he did receive he forwarded to Care’s Washington headquarters for approval and acceptance.

Occasionally other Care personnel visited Arizona nursing home customers to conduct software training sessions, which lasted one or two days. The training reps were sent from Care’s headquarters or another service office outside Arizona and returned immediately after the training was completed. Care had training representatives in Arizona averaging 21 days per year. Care engaged in some 180 transactions with Arizona nursing homes during the 5-year audit period, with 65% of those transactions being with a single customer. Of those 180 transactions, 178 involved sales of software with the other two transactions being short-term, trial-basis leases of a personal computer and software programs.

Arizona Regulations Dealing With Out-of-State Vendors. As additional background, Arizona regulations provide guidance as to when a transaction is subject to the sales tax and when a transaction is subject to the use tax. A.A.C. R15-5-2307 captioned "When a Transaction is Subject to the Sales Tax" provides that "sales made by vendors maintaining a place of business within Arizona are subject to the sales tax." In turn, A.A.C. R15-5-2308, captioned "When a Transaction is Subject to the Use Tax" lays out the corollary rule that "purchases made from vendors not maintaining a place of business in this state to Arizona customers are subject to the Use Tax." It was undisputed that Care Computer did not maintain a place of business within Arizona: it had no office, inventory, resident sales person, etc.

Assessment and Appeal. The Arizona Department of Revenue imposed the state’s transaction privilege tax on Care with respect to all of its mail-order sales to Arizona customers. The Department did not impose the state’s use tax collection obligation. Care filed a protest and the Arizona State Board of Tax Appeals agreed with Care that the state lacked the required nexus to impose its transaction privilege tax on those mail-order sales. The Department appealed to the Arizona Tax Court, which upheld the Board’s decision. The Department then appealed to the Court of Appeals, which held that Care’s interstate, mail-order sales were subject to Arizona’s transaction privilege tax. The Arizona Supreme Court denied review on February 15, 2001.

II. DEPARTMENT OF REVENUE’S APPELLATE ARGUMENTS.

The Department of Revenue made the following arguments in the Court of Appeals case.

1. Care’s Business Activities in Arizona Provided Sufficient Nexus for the Imposition of Arizona’s Transaction Privilege Tax. The Department of Revenue argued that the something more than "slightest physical presence" test of Quill applied to the Care/Arizona transaction privilege tax situation. In other words, the Department argued that as long as Care had physical presence in Arizona, but something more than "slightest" physical presence, the constitutional substantial nexus standard was met. The Department further relied on, among other cases, Orvis Co., Inc. v. Tax Appeals Tribunal, 654 N.E.2d 954 (N.Y. 1995), cert. denied 516 U.S. 989 (1995), and Brown’s Furniture, Inc. v. Wagner, 665 N.E.2d 795 (Ill. 1996), cert. denied 117 S. Ct. 175 (1996), as to the number of transactions or visits in a state which meet the more than slightest physical presence standard [it should be noted that the Orvis and Brown’s Furniture cases are use tax collection cases and do not involve a transaction privilege or gross receipts tax.]

The Department noted that Quill did not say just how much fiscal presence would satisfy the substantial nexus test but left that decision for the state courts to decide on a case by case basis. The Department argued that in the Orvis case, which involved Orvis Co. and Vermont Information Processing (VIP), addressed the question of what number of contacts with taxing states would be sufficient to satisfy the nexus requirement. Orvis employees visited up to 19 New York wholesale customers on the average of four times a year (76 times per year). VIP marketed computed software and hardware to beverage distributors in New York and its employees visited its New York customers’ locations on 41 occasions over the three year audit period. The New York Court of Appeals held that Orvis’ and VIP’s contacts were sufficient to satisfy the "substantial nexus" requirement of Quill and upheld New York’s imposition of its use tax collection function on Orvis and VIP.

The Department of Revenue also relied on Brown’s Furniture, where Brown’s Furniture during a ten month period in 1989 made 942 deliveries of its merchandise into Illinois (from its furniture business located in Missouri). The Illinois Department of Revenue assessed use tax on Brown’s sales to Illinois residents and the Illinois Supreme Court upheld the assessment on the grounds that the 942 deliveries constituted substantial nexus with Illinois.

The Arizona Department of Revenue argued that Care’s contacts with Arizona (one annual visit by the traveling salesman and 21 days in-state by training personnel) constituted substantial nexus under the Orvis and Brown’s Furniture cases.

2. The Tyler Pipe Standard Was Met. The Department also argued that the Tyler Pipe standard for substantial nexus was met because Care’s in-state activities "are significantly associated with the taxpayer’s ability to establish and maintain a market in this state for the sales." See Tyler Pipe Ind. Inc. v. Washington State Dep’t of Revenue, 483 U.S. 232 (1987). The Department also relied upon the more recent Arizona Court of Appeals case of Arizona Department of Revenue v. O’Connor Cavanagh, Anderson, Killingsworth & Beshears, PA, 192 Ariz. 200 963 P.2d 279 (App. 1997), which adopted the Tyler Pipe standard for Arizona transaction privilege tax. [It should be noted that the out-of-state vendor in both Tyler Pipe and O’Connor Cavanagh had arrangements with an in-state manufacturer’s representative to act as their sales agent, where the in-state representative maintained an office in the state. Care Computer had no similar arrangement.]

The Department argued that under the Tyler Pipe and O’Connor Cavanagh standard "Care had substantial nexus with Arizona through its numerous business transactions, its ownership of lease computers and software, and through the continuous activities of its salesmen and training personnel. Thus, it is clear that Care had a physical presence in Arizona and its activities were significantly associated with its ability to establish and maintain a market in Arizona for sales."

III. CARE COMPUTER’S ARGUMENTS.

Care Computer argued that it did not have the required substantial nexus with Arizona for imposition of the transaction privilege tax on its mail-order sales into Arizona. It made the following points:

1. Different Nexus Standard for Transaction Privilege Taxes. Care set the stage by arguing that transaction privilege taxes require a higher showing of nexus than does use tax collection. See General Trading Co. v. State Tax Commission, 322 U.S. 335 (1944) (presence of traveling salesmen in state was sufficient nexus for use tax duty collection to be imposed) and McCleod v. J. E. Dilworth Co., 322 U.S. 327 (1944) (presence of a traveling salesman was not sufficient nexus for the imposition of the sales tax in an interstate sale transaction). See also Norton Co. v. Illinois Department of Revenue, 340 U.S. 534 (1951) (Illinois transaction privilege tax on Norton’s sales made through its Illinois branch office was upheld; the Court distinguished the nexus requirement in transaction privilege tax cases from sales and use tax cases). See City of Phoenix v. West Publishing Co., 148 Ariz. 31, 712 P.2d 944 (App. 1985) (in which the Arizona Court of Appeals specifically noted that Arizona’s transaction privilege tax should be "viewed more carefully and critically than are use taxes, which merely inflict the administrative burden of collection upon the vendor" as opposed to a transaction privilege tax which is imposed on the vendor.)

Care argued that the use tax nexus threshold was physical presence, but something more than "slightest physical presence." On the other hand, the nexus threshold for transaction privilege or gross receipts tax is higher being the Tyler Pipe standard: The taxpayer’s in-state activities "are significantly associated with the taxpayer’s ability to establish and maintain a market in the state for the sales." There is a significant difference between mere physical presence and "maintaining a market" in the state. Establishing these differing nexus standards was critical in order to distinguish the Quill line of cases the Department relied on.

2. The Quill Line of Cases Do Not Apply Because They Involve the Nexus Threshold For Use Tax Collection. Care argued that the Quill line of cases relied on by the Department (Orvis, Brown’s Furniture) were use tax collection cases which set a lower nexus standard than for a transaction privilege tax or gross receipts tax.

3. City of Phoenix v. West Publishing Co. Is Controlling. Care argued that the prior Arizona appellate decision of West Publishing controls. In the West Publishing case, the City of Phoenix attempted to impose its privilege license tax on West’s sales of law books to lawyers and law firms in the Phoenix. West Publishing did not have a business location in Phoenix. It had, though, a sales representative (an employee) that worked out of his home office. The Arizona Court of Appeals held that the presence of the in-state resident salesman was not sufficient nexus for the imposition of the city’s privilege license tax (which is the same as the state’s transaction privilege tax). Care argued that the West Publishing case should control and that the presence of Care’s traveling sales person and training personnel, which were not based in Arizona, as the West resident sales person was, did not provide the requisite nexus.

4. The Dilworth Case Would Preclude Arizona From Imposing Its Transaction Privilege Tax On Care’s Interstate Sales. Care also argued that the U.S. Supreme Court decision in Dilworth should apply to preclude Arizona from imposing its transaction privilege tax on Care’s interstate mail-order sales. The U.S. Supreme Court in Dilworth held that the presence of a traveling salesman in the destination state did not provide sufficient nexus for the destination state to impose its sales tax when the vendor was located in another state. In other words, Dilworth precludes the state from imposing its sales tax on a pure interstate sale transaction. In this regard, it should be noted that Care’s traveling sales person did not have authority to accept any orders and did not accept such orders. Rather, those orders were all accepted and approved at Care’s Washington headquarters, where the offer to purchase and the sales contract made was accepted. Additionally, the F.O.B. point was Bellevue, Washington, so that title passed in Washington and not Arizona. Since the F.O.B. point was in the State of Washington, transfer of possession of the goods could be viewed as being constructively made in Washington, and not Arizona. If Dilworth were applied to the Care situation, Arizona would not be able to assess its transaction privilege tax on Care’s interstate, mail-order sales to Arizona customers.

5. The Department of Revenue’s Own Regulations Require That To Be Subject To the Transaction Privilege Tax, the Out-of-State Vendor Must Maintain a Place of Business In Arizona. Care argued that the Department’s own regulations (A.C.C. R15-5-2307) preclude the Department from imposing its transaction privilege tax on Care because it does not maintain a place of business in the state. The regulations, rather than establishing a constitutional nexus standard, established a bright-line "maintaining a place of business" test. Since Care did not maintain a place of business in Arizona, then under the Department’s own regulations, the state could not impose its transaction privilege tax on Care’s mail-order sales into Arizona.

6. Care Does Not Meet the Tyler Pipe Nexus Standard. Care also argued that it did not meet the Tyler Pipe nexus standard because it did not have an in-state manufacturer’s representative, as Tyler Pipe did, which maintained a place of business in the state. In other words, the nexus standard for a transaction privilege tax or a gross receipts tax requires some type of business presence in the state, either through the out-of-state vendor maintaining a branch office in the state or making arrangements with a manufacturer’s representative to represent it in the state, where the manufacturer’s representative maintains its office in the state. The taxpayer in Tyler Pipe had an in-state manufacturer’s representative which maintained an office in Washington through which and by its various contacts it maintained a market in Washington for the taxpayer’s products. Likewise, in the Norton case, the taxpayer maintained a branch office in the State of Illinois. And, in the O’Connor Cavanagh case, the out-of-state vendor, Dunbar Furniture, contracted with a manufacturer’s representative which maintained an office in Scottsdale, Arizona through which it could maintain a market for Dunbar’s products in Arizona. In short, Care argued that nexus requirement for a transaction privilege or gross receipts tax required the in-state presence of either a branch office or a manufacturer’s representative’s or other agent’s office. Care did not have such an office in Arizona and thus it argued its contacts did not satisfy the substantial nexus requirement for a transaction privilege tax.

IV. COURT OF APPEALS DECISION.

The Court of Appeals reversed both the State Board of Tax Appeals and the Arizona Tax Court, concluding that Care Computer’s interstate, mail-order sales were subject to the Arizona transaction privilege tax. The Court reasoned that the presence of Care’s California based sales person in Arizona on an average of once per year and the presence of the training personnel on an average of 21 times per year was sufficient nexus for the imposition of the state’s transaction privilege tax. The important and interesting elements of the Court of Appeals decision follow.

1. The Court of Appeals Held That Care Had Substantial Nexus With Arizona Through the Activities of its Traveling Sales Person and the Training Personnel. The Court used the Tyler Pipe/O’Connor Cavanagh test of the taxpayer’s ability to "establish and maintain" a market in Arizona for the sales. This is despite the fact that Care did not have an in-state manufacturer’s representative, as did the out-of-state vendor in O’Connor Cavanagh and as did Tyler Pipe.

2. The Dilworth Case. The Court of Appeals gave short shrift to the Dilworth case. It mentioned it in an historical reference and then later suggested that Dilworth had been "overruled in 1977 by Complete Auto." The fact of the matter is that the U.S. Supreme Court has never overruled or questioned the vitality of its 1944 decision in McCleod v. Dilworth. Complete Auto set out a four prong test for the taxation of interstate transactions but the first prong still requires "substantial nexus." Dilworth can be squared with Complete Auto in that Dilworth concluded that the presence of an in-state traveling sales person did not provide the required "substantial nexus" for a sales tax. Complete Auto should not be read as overruling Dilworth. Does the Care decision mean that a pure interstate sale, where the vendor is located in one state and the purchaser is located in another state, with the vendor’s only contact with the purchaser’s state being the fleeting presence of a traveling salesman is now subject to the destination state" sales tax. Conversely, may the originating state impose its sales tax on the vendor? The Arizona Court of Appeals Care decision suggests yes.

3. Transaction Privilege Tax and Use Tax Have Same Nexus Standard. The Care appellate court also rejected Care’s argument that a transaction privilege tax or gross receipts tax requires a higher level of nexus with the taxing state than does a use tax. The Arizona court relies on Complete Auto Transit for its conclusion that there is no difference in nexus standards. Does this mean that the Quill "more than slightest physical presence" standard is the nexus standard for sales taxes, transaction privilege taxes and gross receipts taxes? Hasn’t the Arizona Court of Appeals then effectively ignored the U.S. Supreme Court’s Tyler Pipe decision.

4. Department of Revenue Does Not Have to Follow Own Regulations. The most frustrating part of the Court’s decision is that it rejected Care’s regulation argument that since it did not maintain a place of business in the state, A.A.C. R15-5-2307 (which provides that "sales made by vendors maintaining a place of business within Arizona are subject to the sales tax"), precludes Arizona from imposing its transaction privilege tax. The court reasoned that because "Arizona’s use tax thus functions primarily as a complement to the retail transaction privilege tax," the Department of Revenue could have imposed a use tax on Care’s Arizona customers pursuant to A.A.C. R15-5-2308 (which provides that "purchases made from vendors not maintaining a place of business in the state to Arizona customers are subject to the use tax"). While the Department of Revenue could have imposed the use tax collection obligation on Care, it did not and rather imposed the transaction privilege tax. There is a rate difference between the Arizona transaction privilege tax and the use tax; the transaction privilege tax (5%) includes the county component, which in Maricopa County is .7%, for a combined total of 5.7%, while the use tax is only 5%. There is incentive then for the Department to make a choice at the time of audit and assess the transaction privilege tax. The Court of Appeals simply reasoned that since the Department could have imposed the use tax under the regulation, it can also impose the transaction privilege tax. The import of this part of the decision is substantial and far reaching for Arizona businesses and taxpayers. The Court of Appeals essentially held that the Arizona Department of Revenue does not have to follow its own regulations. Thus, aren’t businesses and taxpayers put at jeopardy if they rely on the Department’s own regulations when it comes to tax compliance and planning? That is not a result which squares with a fair tax system.

5. Dissent. Judge Noel Fidel, the Presiding Judge of the Arizona Court of Appeals dissented. His dissent was extremely strong in taking issue with the majority’s opinion and quite forcibly and simply stated that the court should hold the Department "to regulations on the books." Pertinent extracts of Judge Fidel’s dissent follows:

V. ARE THERE DIFFERENT NEXUS STANDARDS FOR DIFFERENT TYPES OF TAXES?

1. Use Tax - Quill. The Quill standard for use tax collection is precise in that the out-of-state vendor must have physical presence in the state, but something more than slightest physical presence. This arguably would and should be the lowest nexus threshold because the incidence of the tax is on the purchaser and only a administrative collection duty is placed on the out-of-state vendor. Thus, the mere presence of a traveling salesman in the state would be sufficient nexus. See General Trading Co. v. State Tax Commission, 322 U.S. 335 (1944). See also Norton Co. v. Illinois Department of Revenue, 340 U.S. 534 (1951) (distinguished nexus requirement in transaction privilege tax cases from sales and use tax cases); and City of Phoenix v. West Publishing Co., 148 Ariz. 31, 712 P.2d 944 (App. 1985) (Arizona Court of Appeals specifically noted that Arizona’s transaction privilege tax should be "viewed more carefully and critically than are use taxes, which merely inflict the administrative burden of collection upon the vendor."

2. Sales Tax - Dilworth. Dilworth held that a state may not tax a pure interstate sale where the vendor is in one state and the customer is in another state, and where the only nexus in the taxing state is the presence of a traveling salesman. But, more far ranging, doesn’t Dilworth suggest that a state may impose a sales tax on a sale transaction only when all the indicia of the sale take place within that state’s borders?

3. Transaction Privilege Tax – Tyler Pipe. "The crucial factor governing nexus is whether the activities performed in this state on behalf of the taxpayer are significantly associated with the taxpayer’s ability to establish and maintain a market in the state for the sales." 483 U.S. at 250. Tyler Pipe involved a manufacturer’s representative that was physically present and acted on behalf of the out-of-state taxpayer, and maintained an office in the state. See also Norton Co. v. Illinois Department of Revenue, supra. (Illinois transaction privilege tax imposed where Norton maintained a branch office in the state); Arizona Department of Revenue v. O’Connor Cavanagh, et al., supra. (Arizona Court of Appeals adopted the Tyler Pipe standard and applied it in the situation where the out-of-state vendor had an in-state manufacturer’s representative which maintained an office in Arizona).

If Care Computer is wrong, and there are different nexus standards for use tax, sales tax and transaction privilege tax, under Tyler Pipe, O’Connor Cavanagh and Norton, must not the out-of-state vendor maintain some type of physical office in the state either its own branch office or through an in-state manufacturer’s representative in order to satisfy the higher nexus standard for a transaction privilege tax or gross receipts tax?

VI. DILWORTH HAS NOT BEEN OVERRULED BY THE U.S. SUPREME COURT AND IS STILL GOOD LAW.

The Arizona Court of Appeals stated in its opinion that the Dilworth case was overruled by the U.S. Supreme Court in Complete Auto Transit. The Arizona Court of Appeals reasoned that the Dilworth case was decided in a time when "state taxes on interstate commerce were per se unconstitutional." The Arizona Court then noted that cases so holding were "overruled in 1977 by Complete Auto, which upheld a privilege tax assessment on an interstate business’s gross receipts from the taxing state."

Complete Auto Transit set out a four prong test for determining when a state may impose a tax on interstate transactions: (1) the tax is applied to an activity with a substantial nexus with the taxing State, (2) is fairly apportioned, (3) does not discriminate against interstate commerce and (4) fairly related to the services provided by the state. Complete Auto Transit did not suggest in any way that it was overruling Dilworth. Nor, have any other U.S. Supreme Court cases specifically overruled Dilworth.

In fact, Dilworth squares completely with Complete Auto Transit when it comes to the first prong of the Complete Auto test. Dilworth inferentially concluded that the presence of a traveling salesman in the taxing state was not sufficient nexus for the destination state to impose its sales tax. I would suggest that the Complete Auto court had it applied the four prong test to the Dilworth factual situation, would have come to the same conclusion based on the lack of substantial nexus. It could also be suggested that the Dilworth facts would have failed the second prong (no fair apportionment of the tax between the origination and destination state) and the fourth (since all the indicia of the sale took place in the origination state, the Arkansas tax was not fairly related to the services provided by Arkansas).

Can’t Dilworth be looked at from another focus: If a state is to impose its sales tax [not a use tax] or even a transaction privilege tax on a sale transaction, all the indicia of that sale must take place within the taxing state. The order must be accepted in the taxing state, and title and transfer of ownership must pass in the taxing state. In other words, the required nexus for the imposition of a sales tax is that the sale must take place in the taxing state.

Dilworth involved Arkansas attempting to impose its sales tax¹ on sales made by Dilworth, based in Tennessee, to customers in Arkansas. More specifically, Dilworth was a Tennessee corporation with its home office and place of business in Memphis where it sold machinery and mill supplies. Dilworth was not qualified to do business in Arkansas and did not have a sales office, branch plant or any other place of business in Arkansas. Orders for goods went to Tennessee through solicitation in Arkansas by traveling salesmen domiciled in Tennessee, by mail or telephone. No matter how an order is placed, it requires acceptance by the Memphis office, and on approval the goods are shipped from Tennessee. Title passes upon delivery to the carrier in Memphis, and collection of the sales price is not made in Arkansas. As the Dilworth court noted: "In short, we are here concerned with sales made by Tennessee vendors that are consummated in Tennessee for the delivery of goods in Arkansas." 322 U.S. at 1025.

The Dilworth court concluded:

322 U.S. at 1025.

Simply, Dilworth held that a state may not tax a sale transaction if the sale does not take place in the taxing state.

The argument was also made in Dilworth that "Arkansas could have levied a tax of the same amount on the use of these goods in Arkansas by the Arkansas buyers, and that such a use tax would not exceed the limits upon state power derived from the U.S. Constitution." 322 U.S. at 1025. The Dilworth court noted that a "sale tax and a use tax in many instances may bring about the same result. But they are different in conception, are assessments upon different transactions, and … may have to justify themselves on different constitutional grounds." 322 U.S. at 1025-1026. And, as we know, in the companion case of General Trading, the same U.S. Supreme Court upheld the imposition of a use tax with the same facts as Dilworth.

Application of Dilworth to the Care Facts. If Dilworth is applied to the Care facts, shouldn’t the outcome be the same as in Dilworth? The Care facts and the Dilworth facts are virtually identical. Both have their offices outside the taxing state with no offices or the facilities in the taxing states. The only contact was by the way of traveling salesmen that had no power to accept orders. In both cases, the orders had to be approved by the home office, whether in Tennessee or in Washington. Also, in both cases, the goods were then shipped from the home office F.O.B., Tennessee or Washington. Both the Dilworth and Care sales transactions were consummated in Tennessee or Washington for delivery of goods in Arkansas or Arizona. Shouldn’t the outcome in the Care case have been the same as in Dilworth?

What If the Arizona Court of Appeals Is Correct and That Dilworth Is No Longer Good Law? If the Arizona Court of Appeals is correct in that Dilworth is no longer good law, then the entire sales/use tax structure on interstate sales will be thrown into complete disarray, with the following two likely consequences:

1. The origination state would impose its own sales tax.
2. The destination state would also wish to impose its sales tax, or continue to impose its use tax .

The Dilworth – General Trading regime for the sales and use tax treatment of interstate sales has worked well over the years and has prevented the specter of this type of potential, double taxation of interstate sales.