Source: http://supreme.nolo.com/us/395/169/case.html
Timestamp: 2019-04-26 14:16:16+00:00

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Sailors' Civil Relief Act. [Footnote 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. [Footnote 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.
a legal act which can be accomplished without the property ever entering the State. [Footnote 25] Had Congress intended to include sales taxes within the coverage of § 514, it surely would not have employed language so poorly suited to that purpose as "taxation in respect of the personal property."
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 § 614 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." [Footnote 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. [Footnote 36] Of course, it is true, as we held in Dameron v. Brodhead, 345 U. S. 322, 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.
fees, or excises imposed in respect to motor vehicles or the use thereof: Provided, That the license, fee, or excise required by the State . . . of which the person is a resident or in which he is domiciled has been paid."
"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. . . ."
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 law [Footnote 40] -- 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 purpose of the proposed legislation is to clarify the intent of section 514 of the Soldiers' and Sailors' Civil Relief Act. . . . When that provision of law was added to the act to relieve persons in service from liability of double taxation by being moved from one State to another under orders, it was intended that it should apply to personal property taxes as well as to income taxes. As presently constituted, it primarily affects taxes in respect to income and other taxes based on residence or domicile, but it does not prevent the State of 'temporary residence' from taxing tangible personal property actually located in such State so long as the tax does not depend on residence or domicile. A few States have taken the position that tangible personal property of military personnel who are only temporarily within their jurisdiction does not acquire a situs for taxation, but it has been held that section 514 of the act, as now written, does not affect the right of a State to assess personal property taxes on property within its jurisdiction. [Footnote 41]"
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 manner 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. 765, 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, 385 U. S. 358; United States v. Arlington County, 326 F.2d 929.
In this Court, the United States has 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 [argument of counsel -- omitted]; Kornhauser v. United States, 276 U. S. 145, 147-151 [argument of counsel -- omitted].
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.
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.
§ 12-408(1). This section also imposes the sales tax on "the privilege of . . . transferring occupancy of any room or rooms in a hotel or lodging house."
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.
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. 70 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. Texas 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 applies 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."
"(2) When used in this section, (a) the term 'personal property' shall include tangible and intangible property (including motor vehicles), and (b) the term 'taxation' shall include but not be limited to licenses, fees, or excises imposed in respect to motor vehicles or the use thereof: Provided, That the license, fee, or excise required by the State, Territory, possession, or District of Columbia of which the person is a resident or in which he is domiciled has been paid."
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." § 1207(2)(a). And see Avco Mfg. Cop. 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).
"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, 300 U. S. 582, 300 U. S. 586. 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.
This conclusion is further buttressed by the close interconnection of sales and use taxes. See generally 3 State Taxation of Interstate Commerce, H.R.Rep. No. 565, 89th Cong., 1st Sess., 607-620 (1965). As a complement to the sales tax and an integral part of a single broad pattern of excise taxes, the use tax is not likely to have been grouped by Congress with taxes "in respect of the personal property."
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.
"No person shall be relieved from liability for payment of, collection of, or accounting for any sales or use tax levied by any State, or by any duly constituted taxing authority therein, having jurisdiction to levy such a tax, on the ground that the sale or use, with respect to which such tax is levied, occurred in whole or in part within a Federal area, and such State or taxing authority shall have full jurisdiction and power to levy and collect any such tax in any Federal area within such State to the same extent and with the same effect as though such area was not a Federal area."
"(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."
"(b) A person shall be deemed to be an authorized purchaser under this section only with respect to purchases which he is permitted to make from commissaries, ship's stores, or voluntary unincorporated organizations of personnel of any branch of the Armed Forces of the United States, under regulations promulgated by the departmental Secretary having jurisdiction over such branch."
"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."
"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.
"We reverse on the authority of our holding today in Buzard that the failure to pay the motor vehicle 'license, fee, or excise' of the home State entitles the host State only to exact motor vehicle taxes qualifying as 'licenses, fees, or excises;' the ad valorem tax, as the Mississippi Supreme Court acknowledged, is not such an exaction."
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 382 U. S. 395, n. 9. California's sales and use taxes were not involved in that case.
See California v. Buzard, 382 U.S. at 382 U. S. 394, n. 8, 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 l.
S.Rep. No. 959, supra, n 27, ante.

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