86 N.Y.2d 165 (1995)
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An out-of-state vendor must have more than a “slightest presence” within a taxing state to be required to collect use taxes from customers in that state, but that presence does not need to be “substantial.”r
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Summary
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This case addresses whether Vermont-based vendors, Orvis and Vermont Information Processing (VIP), had sufficient physical presence in New York to be required to collect New York use taxes on sales to New York customers. The New York Court of Appeals determined that the vendors did have sufficient physical presence, clarifying that while physical presence is required per Quill Corp. v. North Dakota, it need not be a ‘substantial’ presence. The court emphasized that even minimal in-state activities, if demonstrably more than a ‘slightest presence,’ can establish the necessary nexus for imposing use tax collection obligations.
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Facts
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Orvis, a Vermont-based company, sold merchandise through mail-order catalogs and wholesale to New York retailers. Orvis employees visited these New York retailers. VIP, also based in Vermont, marketed computer software and hardware to beverage distributors, including those in New York. VIP employees visited New York customers to resolve issues, provide training, and occasionally install software.
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Procedural History
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The Tax Appeals Tribunal determined that both Orvis and VIP were obligated to collect New York use taxes. The Appellate Division reversed, holding that their activities did not constitute a substantial physical presence as required by Quill Corp. v. North Dakota. The Commissioner of Taxation and Finance appealed to the New York Court of Appeals.
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Issue(s)
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Whether the activities of Orvis and VIP in New York State constituted sufficient physical presence to impose the obligation to collect compensating use taxes on their taxable retail sales to New York customers, as required by the Commerce Clause of the U.S. Constitution.
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Holding
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Yes, because the physical presence requirement, while necessary, does not demand a “substantial” presence; the activities of both Orvis and VIP exceeded the “slightest presence” threshold and thus established a sufficient nexus with New York to justify the use tax collection obligation.
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Court’s Reasoning
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The court reviewed the Supreme Court’s Commerce Clause jurisprudence, focusing on Quill Corp. v. North Dakota, which reaffirmed the physical presence requirement established in National Bellas Hess v. Department of Revenue. The court clarified that Quill did not increase the threshold of in-state physical presence to “substantial amounts.” Instead, the court emphasized that while some physical presence is required, it need not be substantial. The court stated that the physical presence “must be demonstrably more than a ‘slightest presence’ and may be manifested by the presence in the taxing State of the vendor’s property or the conduct of economic activities in the taxing State performed by the vendor’s personnel or on its behalf.”r
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For Orvis, the court found that the visits by sales personnel to New York retailers to solicit wholesale business constituted more than a “slightest presence.” The court noted that Orvis’ treasurer had described their operations in New York as “Some salesmen who reside in Vermont travel into New York to call on non-Orvis owned stores.”r
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For VIP, the court determined that the company’s trouble-shooting visits to New York customers, and its assurances to prospective customers that it would make such visits, enhanced sales and contributed significantly to its ability to maintain a market in New York. The court quoted that VIP’s activities in New York were “definite and of greater significance than merely a slightest presence.” Citing Standard Steel Co. v. Washington Revenue Dept., the court reasoned that the in-state presence “made possible the realization and continuance of valuable contractual relations.”r
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Judge Bellacosa dissented, arguing that the minimal activities in New York by Orvis and VIP did not satisfy the “substantial nexus” requirement imposed by the Commerce Clause, emphasizing the need for a bright-line rule to guide interstate commerce. He argued that imposing taxes based on such fleeting contacts contradicted the principles of the Commerce Clause, and that the activities did not amount to the