# California State Board of Equalization v. Sierra Summit Inc

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## Dissenting Opinion

    Blackmun
United States Supreme Court
490 U.S. 844
California State Board of Equalization v. Sierra Summit Inc
No. 88-681 Argued: April 19, 1989. --- Decided: June 12, 1989
Syllabus
In holding that a Bankruptcy Court's injunction against petitioner Board of Equalization's assessment of a state sales tax upon the proceeds of a trustee's liquidation sale of inventory also barred the collection of a use tax from the purchaser's lessees, the Court of Appeals rejected petitioner's argument that it had wrongly decided California State Board of Equalization v. Goggin, 245 F.2d 44 (Goggin II). There, the court had held (1) that a tax on liquidation sales places a burden on the federal function of the bankruptcy court and violates principles of intergovernmental tax immunity, and (2) that 28 U.S.C. § 960-which specifically authorizes the States to impose taxes on a bankruptcy trustee's business operations-sets forth the sole area in which the States can impose a tax of any type and negates by implication their power to tax bankruptcy liquidations.
Held: Neither the doctrine of intergovernmental tax immunity nor § 960 proscribes the imposition of a sales or use tax on a bankruptcy liquidation sale. Pp. 847-854.
(a) Under this Court's recent decisions, the intergovernmental tax immunity doctrine prohibits the States from directly taxing the United States, or an agency or instrumentality so closely related to the Government tha the two cannot realistically be viewed as separate entities insofar as the activity being taxed is concerned, but permits States to tax private parties with whom the United States does business even though the financial burden falls on the Government, as long as the tax does not discriminate against the United States or those with whom it deals. Thus, whatever immunity the bankruptcy estate once enjoyed from a tax on its operations has long since eroded. Such a tax does not discriminate against bankruptcy trustees or those with whom they deal, since a purchaser at a judicial sale is only required to pay the same tax that he would have been bound to pay had he purchased from anyone else. Nor is the bankruptcy trustee so closely connected to the Federal Government that the two cannot be viewed as separate entities. The trustee is the representative of the debtor's estate, not an arm of the Government; and the tax is an administrative expense of the debtor, not of the Government. There is no material distinction between those municipal and state withholding and property taxes on the bankruptcy trustee which have been upheld, see Otte v. United States, 419 U.S. 43, 52-54, 95 S.Ct. 247, 254-255, 42 L.Ed.2d 212; Swarts v. Hammer, 194 U.S. 441, 444, 24 S.Ct. 695, 696, 48 L.Ed. 1060, and the tax on the liquidation sale presented here. Pp. 848-850.
(b) The Goggin II court's reading of § 960 is contrary to this Court's general approach to claims that the States' power to tax has been preempted, to the plain meaning and legislative history of the statutory provision, and to the structure of the Bankruptcy Code. Section 960 is not a clear expression of an exemption from state taxation. Rather, it evinces Congress' intention that a State be permitted to tax a bankruptcy estate notwithstanding any intergovernmental tax immunity objection that might be interposed and that, as a matter of federal law, a business in receivership, or being conducted under court order, should be subject to the same tax liability as the owner had he been in possession of, and operating, the enterprise. Pp. 850-854.
847 F.2d 570 (CA9 1988), vacated and remanded.
STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, O'CONNOR, SCALIA and KENNEDY, JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which BRENNAN and MARSHALL, JJ., joined, post, p. 854.
Robert F. Tyler, Jr., for petitioner.
David Ray Jenkins, Fresno, Cal., for respondent.
Justice STEVENS delivered the opinion of the Court.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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