Source: https://openjurist.org/395/us/169
Timestamp: 2019-04-23 12:28:16+00:00

Document:
F. Michael Ahern for appellants.
Harris Weinstein, Washington, D.C., for appellees.
By stipulation and affidavits in the District Court, the parties offered some examples of the imposition of these taxes on naval personnel stationed in Connecticut but domiciled elsewhere. Lieutenant Schuman, a Nebraska domiciliary, and Commander Carroll, a Michigan domiciliary, bought used motorboats from nonretailers in Connecticut and were assessed a use tax. Schuman paid the tax under protest, and Carroll has refused to pay, each claiming that he is exempt under the Soldiers' and Sailors' Civil Relief Act.17 Lieutenant Commander Shaffer and Commander Foster, who are domiciled in Pennsylvania and Texas respectively, each purchased a new car; the Connecticut retailer collected and paid the sales tax. Foster registered his car in Texas, which also exacted a sales or use tax.18 Finally, Commander Roloff, whose home State is Wisconsin, purchased a used car in Florida and paid that State a 2% sales tax. When he registered the car in Connecticut, he was assessed and paid the use tax, with credit for the Florida sales tax.
It is contended on behalf of the servicemen that, even if § 514 does not encompass sales taxes, at least it prohibits taxation of the use of personal property. Not only are use taxes said to fall literally within the meaning of the phrase 'taxation in respect of the personal property,' but § 514 specifically refers in two places to property 'or the use thereof.' Moreover, it is argued, the sole jurisdictional basis of the use tax is the location of the personal property in Connecticut; yet imposition of a tax with such incidence on a serviceman contravenes the command of § 514 that his personal property 'shall not be deemed to be located or present in or to have a situs for taxation in such State.' While we agree that use taxes are not so clearly excluded by the language of § 514 as are sales taxes, neither do we believe that they are clearly included. And consideration of the purpose and legislative history of § 514 along with its language and other factors has led us to the conclusion that Congress did not intend to free servicemen stationed away from home from the sales or use taxes of the host State.
Section 514 does not relieve servicemen stationed away from home from all taxes of the host State. It was enacted with the much narrower design 'to prevent multiple State taxation of the property.'35 And the substantial risk of double taxation under multi-state ad valorem property taxes does not exist with respect to sales and use taxes. Like Connecticut, nearly every State which levies such taxes provides a credit for sales or use taxes paid on the transaction to another State.36 Of course it is true, as we held in Dameron v. Brodhead, 345 U.S. 322, 73 S.Ct. 721, 97 L.Ed. 1041, that § 514 prevents imposition of ad valorem property taxes even though the serviceman's home State does not tax the property. But the predominant legislative purpose nonetheless remains highly relevant in determining the scope of the exemption, and the absence of any significant risk of double taxation under state sales and use taxes generally is therefore strong evidence of congressional intent not to include them in § 514.
It is thus evident that in subsection (2)(b) Congress was dealing solely with a unique form of state 'tax'—the motor vehicle registration fee. Because such fees are not always clearly classifiable as property taxes,39 servicemen would not be exempted from many of them by subsection (1) of § 514. Since annually recurring license fees raise much the same risk of double taxai on to transitory military personnel as do property taxes, Congress evidently decided in 1944 to extend the exemption of § 514 to include motor vehicle registration fees as well as property taxes. From 1944 to 1962 the only reference in § 514 to 'use' of property was found in subsection (2)(b). And, in view of the narrow purpose of that subsection and the absence for 20 years of any other reference to 'use' in § 514, we cannot believe the repetition of that word in the 1962 amendment—described by Congress as a mere clarification of the existing law40—can be deemed to have added all use taxes to the coverage of the statute. The 1962 amendment merely reflected the prior reference to the 'use' of motor vehicles in subsection (2)(b).
Finally, we find unpersuasive the appellees' contention that, since the Connecticut use tax can be applied only with respect to personal property used within the State, its imposition on servicemen away from home cannot be squared with the declaration of § 514 that 'personal property shall not be deemed to be located or present in or to have a situs for taxation in such State.' That clause is modified by the opening words of the sentence—'(f)or the purposes of taxation in respect of the personal property.' Section 514, therefore, does not in terms relieve servicemen from every state tax which is somehow dependent on the presence of personal property within the State. Rather, it provides only that a State cannot justify imposing the taxes to which § 514 was initially intended to apply—annually recurring ad valorem property taxes—on the ground of the property's presence within the State.
The 1944 amendment, therefore, had only the limited purpose 'to clarify' Congress' original intent to cover 'personal-property taxes on property,' not to expand the exemption in a manne which would include sales or use taxes.
As added by § 17 of the Soldiers' and Sailors' Civil Relief Act Amendments of 1942, 56 Stat. 777, and as amended, 58 Stat. 722, 76 Stat. 768, 50 U.S.C.App. § 574.
Although the issue was raised in the District Court, the appellants no longer dispute the right of the United States to bring this action on behalf of the servicemen in federal court. See Department of Employment v. United States, 385 U.S. 355, 358, 87 S.Ct. 464, 466, 17 L.Ed.2d 414; United States v. Arlington County, 4 Cir., 326 F.2d 929.
In this Court the United States had presented arguments prepared by officers of the Department of Justice in support of the judgment below. The Solicitor General and the Assistant Attorney General in charge of the Tax Division of the Department of Justice have informed the Court, however, that they have not been persuaded by those arguments, and that they do not believe that § 514 was intended to apply to the ordinary retail sales tax and concomitant use tax now imposed by most of the States. For other examples of such divergence of opinion among representatives of the United States before this Court, see De Laval Steam Turbine Co. v. United States, 284 U.S. 61, 67—68, 52 S.Ct. 78, 76 L.Ed. 168; Kornhauser v. United States, 276 U.S. 145, 147—151, 48 S.Ct. 219, 220, 72 L.Ed. 505.
270 F.Supp. 236. The District Court later amended its judgment to permit Connecticut to continue to collect sales and use taxes from nonresident servicemen, provided that the amounts collected would be refunded if the judgment was ultimately sustained.
393 U.S. 1012, 89 S.Ct. 617, 21 L.Ed.2d 558.
Conn.Gen.Stat.Rev. §§ 12—406 to 12—432a.
See J. Hellerstein, State and Local Taxation Cases and Materials 15 (3d ed. 1969). 35 States have filed briefs in this case in support of the position of Connecticut.
See, e.g., Stetson v. Sullivan, 152 Conn. 649, 652—653, 211 A.2d 685, 686; Avco Mfg. Corp. v. Connelly, 145 Conn. 161, 170 171, 140 A.2d 479, 484; Connecticut Light & Power Co. v. Walsh, 134 Conn. 295, 299—300, 57 A.2d 128, 130—131, 1 A.L.R.2d 453.
Lieutenant Schuman joined the United States as a party plaintiff in the District Court, seeking to represent the class of all servicemen or former servicemen from whom Connecticut had collected or threatened to collect any sales or use tax. The complaint was dismissed as to him for lack of jurisdiction, on the grounds that the requisite jurisdictional amount was not alleged to be in controversy and that the Eleventh Amendment forbids a suit by a private individual against a State in the federal courts. 270 F.Supp. 236, 246—247.
Foster's situation is not entirely clear. His affidavit states that officials of the Connecticut Department of Motor Vehicles informed him that he was required to pay a use tax but the tax actually paid was identified on the dealer's invoice as a sales tax. The latter seems to be correct, since the purchase was from a Connecticut retailer. Taxas officials told Foster he would have to pay a sales tax in order to register the car in that State. The Texas tax collector's receipt does not identify whether the payment was a sales or use tax, however, and under the Texas statutes it appears more likely that it was the latter. Tex.Rev.Civ.Stat., Art. 6.01, provides that the motor vehicle sales tax apl ies only to sales in the State, while the use tax, in the same amount, applies to out-of-state sales of motor vehicles for use in Texas.
The word 'personal' was interpolated by the 1944 amendment. 58 Stat. 722.
'(1) For the purposes of taxation in respect of any person, or of his personal property, income, or gross income, by any State, Territory, possession, or political subdivision of any of the foregoing, or by the District of Columbia, such person shall not be deemed to have lost a residence or domicile in any State, Territory, possession, or political subdivision of any of the foregoing, or in the District of Columbia, solely by reason of being absent therefrom in compliance with military or naval orders, or to have acquired a residence or domicile in, or to have become resident in or a resident of, any other State, Territory, possession, or political subdivision of any of the foregoing, or the District of Columbia, while, and solely by reason of being, so absent. For the purposes of taxation in respect of the personal property, income, or gross income of any such person by any State, Territory, possession, or political subdivision of any of the foregoing, or the District of Columbia, of which such person is not a resident or in which he is not domiciled, compensation for military or naval service shall not be deemed income for services performed within, or from sources within, such State, Territory, possession, political subdivision, or District, and personal property shall not be deemed to be located or present in or to have a situs for taxation in such State, Territory, possession, or political subdivision, or district. Where the owner of personal property is absent from his residence or domicile solely by reason of compliance with military or naval orders, this section applies with respect to personal property, or the use thereof, within any tax jurisdiction other than such place of residence or domicile, regardless of where the owner may be serving in compliance with such orders: Provided, That nothing contained in this section shall prevent taxation by any State, Territory, possession, or political subdivision of any of the foregoing, or the District of Columbia in respect of personal property used in or arising from a trade or business, if it otherwise has jurisdiction. This section shall be effective as of September 8, 1939, except that it shall not require the crediting or refunding of any tax paid prior to October 6, 1942.
See, e.g., N. Jacoby, Retail Sales Taxation 3—4 (1938). And see n. 28, infra.
The Connecticut statute defines a 'sale' generally as '(a)ny transfer of title * * * for a consideration.' § 12 407(2)(a). And see Avco Mfg. Corp. v. Connelly, 145 Conn. 161, 172, 140 A.2d 479, 484—485. The term also includes a transaction in which the right of possession is transferred but the seller retains title as security. § 12—407(2)(f).
S.Rep.No. 1558, 77th Cong., 2d Sess., 11 (1942); H.R.Rep.No. 2198, 77th Cong., 2d Sess., 6 (1942).
S.Rep.No. 959, 78th Cong., 2d Sess., 1 (1944). See also the reference to 'personal property taxes in H.R.Rep.No. 1514, 78th Cong., 2d Sess., 2 (1944). The reports on the 1942 Act talked about 'taxation of the property' and the possibility that 'the personal property * * * may become liable for taxes in several States.' S.Rep.No. 1558, supra, n. 26, at 11; H.R.Rep.No. 2198, supra, n. 26, at 6. At the time of the 1962 Amendment, the reports continued to describe the taxes covered by § 514 as those 'imposed upon property of a serviceman.' S.Rep.No. 2182, 87th Cong., 2d Sess., 1 (1962); H.R.Rep.No. 2126, 87th Cong., 2d Sess., 1 (1962), U.S.Code Cong. & Admin.News 1962, p. 2841.
It has frequently been said that a use tax, like a sales tax, is an excise or privilege tax different in kind from a tax on property. E.g., Monamotor Oil Co. v. Johnson, 292 U.S. 86, 93, 54 S.Ct. 575, 578, 78 L.Ed. 1141; Bowman v. Continental Oil Co., 256 U.S. 642, 649, 41 S.Ct. 606, 608, 65 L.Ed. 1139. As the Connecticut Supreme Court has described the very tax here in question, 'The use tax is not a tax on property but is described in the act as, and in fact is, in the nature of an excise tax upon the privilege of using, storing or consuming property.' Connecticut Light & Power Co. v. Walsh, 134 Conn. 295, 307, 57 A.2d 128, 134. This distinction may sometimes be more formal than actual, cf. Henneford v. Silas Mason Co., 300 U.S. 577, 582, 586, 57 S.Ct. 524, 526, 528, 81 L.Ed. 814. But its long-time general acceptance supports the conclusion that when Congress talked about taxes on, or even 'in respect of,' personal property, it did not thereby include use taxes.
By 1938, more than half the States had adopted sales and use taxes. See 3 State Taxation of Interstate Commerce, supra, n. 28, at 609.
54 Stat. 1059, now 4 U.S.C. §§ 105—110.
'(a) The provisions of sections 105 and 106 of this title shall not be deemed to authorize the levy or collection of any tax on or from the United States or any instrumentality thereof, or the levy or collection of any tax with respect to sale, purchase, storage, or use of tangible personal property sold by the United States or any instrumentality thereof to any authorized purchaser.
'11. Most of the day-to-day purchases of tangible personal property, which includes food, clothing, toilet articles and other personal items, made by servicemen in Connecticut are made from military exchanges, and commissaries operated by the armed services on military installations.
Conversely, the administrative burden which the States would have to shoulder if § 514 applied to sales and use taxes is potentially far greater than that attributable to the exemption from ad valorem property taxes. Whereas property taxation involves only the property owner and the tax officials, sales and use taxation usually requires participation and accounting by the seller as well. And the accounting difficulties which retailers and the States would encounter in determining for thousands of transactions which customers were properly exempt under § 514 are considerably greater than any that Congress can be thought to have envisioned for the exemption from property taxes alone.
S.Rep.No. 1558, supra, n. 26, at 11; H.R.Rep.No. 2198, supra, n. 26, at 6. This purpose was restated in the 1944 reports: 'When the Soldiers' and Sailors' Civil Relief Act of 1940 was amended by the act of October 6, 1942, a provision was written into the act to relieve persons in the service from liability of double taxation by being moved from one State to another under orders.' H.R.Rep.No. 1514, supra, n. 27, at 2. And see S.Rep.No. 959, supra, n. 27, at 1.
See Prentice-Hall State and Local Tax Service, All States Unit, 92,963.
Indeed, the Court in Buzard emphasized that the tax had been adopted by California 'as a substitute for local ad valorem taxation of automobiles.' 382 U.S., at 395, n. 9, 86 S.Ct., at 484. California's sales and use taxes were not involved in that case.
See California v. Buzard, 382 U.S., at 394, n. 8, 86 S.Ct., at 483, 15 L.Ed.2d 436, for the various methods by which States impose registration or license fees on motor vehicles.
'This bill amends the tax immunity provisions of the Soldiers' and Sailors' Civil Relief Act * * * so as to clarify a situation which sometimes results in taxation contrary to the intent of the act. More specifically, the bill provides that where a serviceman is absent from his residence or domicile solely by reason of compliance with military or naval orders, the tax immunity provision of existing law shall apply with respect to his personal property, or the use thereof, within any tax jurisdiction other than his State of residence or domicile, regardless of where such serviceman may be located in compliance with such orders.' (Emphasis supplied.) S.Rep.No. 2182, supra, n. 27, at 1, U.S.Code Cong. & Admin.News 1962, p. 2841.
S.Rep.No. 959, supra, n. 27, at 1.

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