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D has imposed a business and occupation tax on 'the act or privilege of engaging in business activities' in the State. Currently, in part, it taxes those in the State of D who sell goods to out-of-state purchasers. In the first case 71 commercial enterprises filed 53 separate actions for refunds of taxes paid to D. In the second case, P sought a refund of taxes paid during the years 1976 through 1980 for its wholesaling activities in D. The State Supreme Court concluded that the tax was not facially discriminatory and rejected Ps' arguments that the decision invalidating West Virginia's exemption for local wholesaler-manufacturers, Armco Inc. v. Hardesty, 467 U.S. 638 (1984), required that the tax be invalidated. The state court expressed the view that the West Virginia wholesale tax imposed on out-of-state manufacturers in Armco could not be justified as a compensating tax because of the substantial difference between the State's tax rates on manufacturing activities and because West Virginia did not provide for a reduction in its manufacturing tax when the manufactured goods were sold out of State but did reduce the tax when the goods were partly manufactured out of State. The Washington Supreme Court concluded that the requirement that a tax must have ''what might be called internal consistency -- that is the [tax] must be such that, if applied by every jurisdiction,' there would be no impermissible interference with free trade,' Armco, 467 U.S., at 644, was not dispositive because it merely relieved the taxpayer of the burden of proving that a tax already demonstrated to be facially discriminatory had resulted in multiple taxations. The Washington Supreme Court also rejected Ps' arguments that the tax is not fairly apportioned to reflect the amount of business conducted in the State and is not fairly related to the services rendered by D. Ps appealed and the Supreme Court granted certiorari.

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