In the case of Nelson, Chairman of the State Tax Commission, et al. v. Sears, Roebuck & Co., 1940, the U.S Supreme Court ruled in favor of Sears, Roebuck & Co., a mail-order company that had been assessed for taxes by Utah's state tax commission on its gross receipts from sales within Utah. The court held that such taxation was unconstitutional as it violated both due process and commerce clauses under the Fourteenth Amendment to the Constitution. The court reasoned that since all orders were accepted outside Utah and goods were shipped from out-of-state warehouses into Utah via interstate commerce channels (railroads), this constituted an undue burden on interstate commerce which states are not allowed to regulate or interfere with according to federal law.

In the dissenting opinion for Nelson, Chairman of the State Tax Commission, et al. v. Sears, Roebuck & Co., Justice Frankfurter argued that there was no constitutional violation in taxing out-of-state businesses differently than local ones. He believed that states have a right to protect and favor their own economic interests over those of other states as long as it does not interfere with interstate commerce or violate any specific constitutional provisions. In this case, he felt that Utah's tax law did not discriminate against interstate commerce because it applied equally to all corporations doing business within its borders regardless of where they were incorporated or had their principal place of business. Furthermore, he pointed out that Sears could easily avoid paying higher taxes by incorporating itself in Utah instead of Illinois which would make it a domestic corporation under state law.