Source: http://www.chanrobles.com/usa/us_supremecourt/395/169/case.php
Timestamp: 2019-10-17 07:34:51
Document Index: 674915975

Matched Legal Cases: ['§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514', '§ 514']

SULLIVAN V. UNITED STATES, 395 U. S. 169 (1969) - US SUPREME COURT DECISIONS ON-LINE
US Supreme Court Decisions On-Line> Volume 395 > SULLIVAN V. UNITED STATES, 395 U. S. 169 (1969)
SULLIVAN V. UNITED STATES, 395 U. S. 169 (1969)
Subscribe to Cases that cite 395 U. S. 169
398 F.2d 672, reversed. chanroblesvirtualawlibrary
The issue raised by this appeal is whether § 514 of the Soldiers' and Sailors' Civil Relief Act [Footnote 1] prohibits Connecticut from imposing its sales and use taxes on servicemen stationed there who are residents or domiciliaries of other States. The United States instituted this action in federal court against the appropriate Connecticut officials on behalf of the aggrieved servicemen. [Footnote 2] chanroblesvirtualawlibrary
The District Court entered a declaratory judgment that the federal statute prevents collection of the sales and use taxes from such servicemen, [Footnote 3] and the Court of Appeals affirmed. [Footnote 4] We noted probable jurisdiction of this appeal. [Footnote 5]
The sales and use taxes imposed by the Connecticut Education, Welfare and Public Health Tax Act [Footnote 6] are typical of those enacted by the vast majority of States. [Footnote 7] A tax of 3 1/2% is levied on the gross receipts from sales of tangible personal property at retail within the State. [Footnote 8] Although the retailer is liable for payment of the tax, he is required to pass it on to purchasers by adding it to the original sales price of all items sold. [Footnote 9] The use tax is imposed at the same rate on "the storage, use or other consumption" in the State of tangible personal chanroblesvirtualawlibrary
property purchased from any retailer. [Footnote 10] The use tax provisions designed to reach the use or consumption in the State of property purchased outside it [Footnote 11] -- exempt all transactions which are subject to the sales tax. [Footnote 12] And while the consumer is liable directly to the State for the use tax, he can discharge his liability by paying it to the retailer if the retailer is "engaged in business" within the State, and therefore required to collect the use tax. [Footnote 13] The use tax is also imposed upon purchasers of motor vehicles, boats, or airplanes from nonretailers. [Footnote 14] The amount of any tax under the Act is reduced by whatever sales or use tax has already been collected "by any other state or political subdivision thereof." [Footnote 15] Finally, the Act commands that all proceeds of the sales and use taxes "shall be allocated to and expended for public health, welfare and education purposes only." [Footnote 16]
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 chanroblesvirtualawlibrary
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.
As enacted in 1942, [Footnote 19] § 514 of the Soldiers' and Sailors' Civil Relief Act provided that, for purposes of any state "taxation in respect of any person, or of his [personal] [Footnote 20] property, income, or gross income," he shall not be chanroblesvirtualawlibrary
deemed to have lost his residence or domicile in his home State or acquired a residence in any other State "solely by reason of being absent [from home] in compliance with military or naval orders." Clarifying language was added in 1944 to provide that, for purposes of taxation in respect of personal property, the "personal property shall not be deemed to be located or present in or to have a situs for taxation in such State." Also in 1944, Congress enacted a special subsection for automobiles: servicemen are exempt from "licenses, fees, or excises imposed in respect of motor vehicles or the use thereof" if they have paid such levies in their home States. Finally, in 1962, [Footnote 21] Congress added the provision that § 514 applies to property in any tax jurisdiction other than the serviceman's home State, "regardless of where the owner may be serving" in compliance with military orders. [Footnote 22] chanroblesvirtualawlibrary
We think it clear from the face of § 514 that state taxation of sales to servicemen is not proscribed. A tax on the privilege of selling or buying property has long been recognized as distinct from a tax on the property itself. [Footnote 23] And while § 514 refers to taxes "in respect of," rather than "on," personal property, we think it an overly strained construction to say that taxation of the sales transaction is the same as taxation "in respect of" the personal property transferred. Nor does it matter to the imposition of the sales tax that the property "shall not be deemed to be located or present in or to have a situs for taxation" in Connecticut. The incidence of the sales tax is not the property itself or its presence within the State. Rather, it is the transfer of title for consideration, [Footnote 24] chanroblesvirtualawlibrary
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."
The legislative history of the 1942 enactment and the 1944 and 1962 amendments of § 514 reveals that Congress intended the Act to cover only annually recurring taxes on property -- the familiar ad valorem personal chanroblesvirtualawlibrary
property tax. Thus, the reports advert to the possibility that servicemen ordered to move around the country -- as they were increasingly during World War II -- might have their property taxed by more than one State "within the same calendar year." [Footnote 26] And the reports throughout refer explicitly to "personal property taxes on property." [Footnote 27] The language of these reports is simply irreconcilable with the proposition that Congress thought the Act would apply to a tax which, like the sales or use tax, does not apply annually to all personal property within the State, but is imposed only once and then only when there has been a retail sales transaction. [Footnote 28] chanroblesvirtualawlibrary
The absence of any reference to sales and use taxes in the history of § 514 is particularly illuminative of legislative intent when considered in the light of Congress' full awareness of such state taxes and their relationship to federal interests. Sales and use taxes were prevalent by 1942, [Footnote 29] and Congress had dealt specifically with them only two years earlier. In the 1940 Buck Act, [Footnote 30] Congress provided that the States have "full jurisdiction and power to levy and collect" sales and use taxes in "any Federal area," [Footnote 31] except with respect to the sale or use of property sold by the United States or its instrumentalities through commissaries, ship's stores, and the like. [Footnote 32] If nothing chanroblesvirtualawlibrary
else, this statute illustrates that Congress in 1942 was fully cognizant of state sales and use taxes and identified them by name when it wanted to deal with them. Moreover, it is unlikely that Congress, which had in 1940 expressly authorized sales and use taxation of servicemen everywhere on federal military reservations except post exchanges, would two years later have exempted so many of them from such taxes by means of such imprecise language as that of § 514 of the Soldiers' and Sailors' Civil Relief Act. And since servicemen can apparently purchase all the necessities and many of the luxuries of life tax free at military commissaries, [Footnote 33] Congress may reasonably have considered the occasional sales and use taxes that servicemen might have to pay an insignificant burden as compared with annual ad valorem property taxes, and consequently not deserving of the same exemption. [Footnote 34] chanroblesvirtualawlibrary
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."
We think that, in light of the clear indications of congressional intent discussed above, the most sensible inference to be drawn from this language is that the only taxes on the use of property from which servicemen are exempted are the special registration taxes imposed annually by all States on the use of motor vehicles. Indeed, this interpretation is supported by the structure of § 514 itself. There is no reference to "use" of property in those portions of subsection (1) which set out the basic exemption and in which Congress would naturally have been expected to mention use taxes had it meant to include them. Moreover, subsection (2)(b) does not say that, for purposes of § 514, "taxation" includes "licenses, fees, or excises" on the use of all personal property except those in respect of motor vehicles for which such fees have not been paid at home. Rather, it says that "taxation" includes such levies only on motor vehicles when they have been paid at home. Thus, as we held in California v. Buzard, 382 U. S. 386, subsection (2)(b) does not encompass ordinary revenue-raising chanroblesvirtualawlibrary
excise or use taxes, but is limited to "those taxes which are essential to the functioning of the host State's licensing and registration laws in their application to the motor vehicles of nonresident servicemen." Id. at 382 U. S. 395. The Court held in Buzard that § 514 exempted servicemen from the California tax on automobiles not because it was an excise tax on use covered by subsection (2)(b), but rather because it was not such a tax. [Footnote 37] The so-called "license fee" there in question was an annual tax in the amount of 2% of the assessed market value of the car -- a levy which was indistinguishable from the annually recurring ad valorem taxes that § 514 was designed to cover. [Footnote 38]
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, [Footnote 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 taxation 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 chanroblesvirtualawlibrary
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. chanroblesvirtualawlibrary