Oklahoma Tax Comm'n v. Jefferson Lines, Inc

In Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. 175, 179-80, 131 L. Ed. 2d 261, 115 S. Ct. 1331 (1995), the Court addressed the question whether an Oklahoma retail sales tax violated the Commerce Clause as applied to the entire proceeds of bus ticket sales for travel from Oklahoma to destinations in other states. The Court held that it did not. Id. at 200. The United States Supreme Court has made it clear that a sales tax that is paid in the taxing state on an interstate transaction need not be apportioned, but that an income, gross receipts, or transaction privilege tax on such a transaction will violate the Commerce Clause in the absence of fair apportionment. See Jefferson Lines, 514 U.S. at 188-91. The Jefferson Lines court observed that, in contrast to the approach it has taken towards the taxation of business income from interstate activities, it has "consistently approved taxation of sales without any division of the tax base among different States, and has instead held such taxes properly measurable by the gross charge for the purchase, regardless of any activity outside the taxing jurisdiction that might have preceded the sale or might occur in the future." Id. at 186. The Jefferson Lines court stated that a sales tax imposed on the buyer for purchases of services can ordinarily be treated as a local state event and that such "sales with at least partial performance in the taxing State justify that State's taxation of the transaction's entire gross receipts in the hands of the seller." Id. at 189.