Source: https://supreme.justia.com/cases/federal/us/421/599/
Timestamp: 2020-06-04 08:11:22
Document Index: 79691605

Matched Legal Cases: ['§ 8', '§ 105', '§ 107', '§ 105', '§ 105', '§ 107', '§ 105', '§ 107', '§ 107', '§ 548', '§ 105', '§ 105', '§ 8', '§ 261']

United States v. Tax Comm'n of Mississippi :: 421 U.S. 599 (1975) :: Justia US Supreme Court Center
Justia › US Law › US Case Law › US Supreme Court › Volume 421 › United States v. Tax Comm'n of Mississippi
Held: Viewing the markup as a sales tax, the legal incidence of the tax rests upon instrumentalities of the United States as the purchasers, First Agricultural Nat. Bank v. Tax Comm'n, 392 U. S. 339, and hence the markup is unconstitutional as a tax imposed upon the United States and its instrumentalities, McCulloch v. Maryland, 4 Wheat. 316. Pp. 421 U. S. 604-614.
(b) The Twenty-first Amendment did not abolish federal immunity with respect to taxes on the sales of liquor to the concurrent
BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, MARSHALL, BLACKMUN, and POWELL, JJ., joined. DOUGLAS and REHNQUIST, JJ., filed a dissenting statement, post, p. 421 U. S. 615.
Regulation 25 of the Mississippi State Tax Commission requires out-of-state liquor distillers and suppliers to collect from military installations within Mississippi, and remit to the Commission, a tax in the form of a wholesale markup of 17% to 20% on liquor sold to the installations. [Footnote 1] The United States has four military installations
The controversy between the United States and the Tax Commission over Regulation 25 is here for the second
time. Shortly after adoption of the Regulation, the United States asserted before the Commission that the markup was unconstitutional as a tax upon federal instrumentalities, and proposed an escrow account for the amount of the tax pending a judicial determination of its legality. The Commission refused, and advised out-of-state distillers by letter that the markup "must be invoiced to the Military and collected directly from the Military . . . " or the distillers would face criminal prosecution and delistment of their authority to sell liquor in Mississippi. The United States thereupon paid the markup under protest and brought this action in the District Court for the Southern District of Mississippi. The complaint sought a declaratory judgment that Regulation 25 imposed an unconstitutional tax on federal instrumentalities, an injunction against its enforcement, and a refund of the sums paid under protest. [Footnote 3] The Tax Commission moved for summary judgment. A three-judge District Court granted the Commission's motion. 340 F. Supp. 903 (1972). The District Court concluded that, despite Art. I, § 8, cl. 17, of the Constitution, [Footnote 4] the Twenty-first Amendment permitted the Tax Commission to apply the markup to out-of-state purchases destined for nonappropriated fund activities on the two installations, Keesler and the Naval Construction Battalion Center, over which the United States exercises
There were, however, other issues addressed to Regulation 25 that had not been reached by the District Court. We therefore remanded the case for that court's initial consideration and determination of the issues. In respect to the two exclusively federal enclaves, the Tax Commission argued that the markup might properly be viewed as a sales tax, and that the United States had consented to the imposition of such a "tax" under the Buck Act of 1940, now 4 U.S.C. §§ 105-110. Section 105(a) provides that no person may be relieved of any sales or use tax levied by a State on the ground that the sale or use occurred in whole or part within a federal area. But § 107(a) provides that § 105(a) "shall not be deemed to authorize the levy or collection of any tax on or from the United States or any instrumentality thereof. . . ." We directed that, upon remand, the District Court address and determine the questions whether the markup should be treated as a tax on sales occurring within a federal area within the meaning of § 105(a), and, if so, whether the exception contained in § 107(a) nevertheless preserves the federal immunity with respect to transactions with nonappropriated fund activities on the two exclusively federal enclaves. 412 U.S. at 412 U. S. 378-379.
The Buck Act questions are irrelevant to the markup as applied to the two concurrent jurisdiction bases, and, therefore, the United States argued that the markup is a tax upon instrumentalities of the United States that is unconstitutional under McCulloch v. Maryland, 4 Wheat. 316 (1819). We directed that the District Court also address and decide the instrumentality argument on remand. 412 U.S. at 412 U. S. 380-381. [Footnote 5]
On the remand, the District Court held, as to the exclusively federal enclaves, that the markup constituted a "sales or use tax" within the meaning of § 105(a) of the Buck Act, and that the exception in § 107(a) for taxes upon federal instrumentalities was inapplicable because Regulation 25 imposes the legal incidence of the tax upon the distillers, and not upon any federal instrumentality, 378 F. Supp. 558, 570-573 (1974). For the same reason, the District Court held that the tax upon the sales to the two concurrent jurisdiction bases was not an unconstitutional tax upon instrumentalities of the United States. Id. at 569. We again noted probable jurisdiction, 419 U.S. 1104 (1975). We reverse.
The exception in § 107(a) is plainly a congressional preservation of federal immunity from any state tax that
Pursuant to its statutory authority, the Commission
378 F. Supp. at 562-563. See also Standard Oil Co. v. Johnson, 316 U. S. 481 (1942); cf. Paul v. United States, 371 U. S. 245, 371 U. S. 261 (1963). The District Court also correctly held that the markup constitutes a tax on the purchases made by the nonappropriated fund activities from out-of-state suppliers. The markup can only be understood as an "enforced contribution to provide for the support of government," the standard definition of a tax. United States v. La Franca, 282 U. S. 568, 282 U. S. 572 (1931). The District Court held, however, that federal immunity from state taxation extends only to
378 F. Supp. at 566.
We see no difference between this markup and a sales tax which must be collected by the seller and remitted to the State. The Tax Commission would distinguish First Agricultural Nat. Bank on the ground that, because the immunity of the national bank from state taxation in all but a few closely defined areas was conferred by statute, c. 267, 42 Stat. 1499, as amended, 12 U.S.C. § 548, the Court did not decide "the constitutional question of whether today national banks should be considered nontaxable as federal instrumentalities." 392 U.S. at 392 U. S. 341. But the controlling significance of First Agricultural Nat. Bank for our purposes is the test formulated by that decision for the determination where the legal incidence of the tax falls, namely, that, where a State requires that its sales tax be passed on to the purchaser and be collected by the vendor from him, this establishes as a matter of law that the legal incidence of the tax falls upon the purchaser. [Footnote 6] That is plainly the requirement of Regulation 25. Regulation 25 provides that all direct orders by military facilities of alcoholic beverages from distillers "shall bear the usual wholesale
and subject to the penalties provided, including delisting. Plainly that ruling explicitly imposes the legal incidence of the tax upon the military. [Footnote 8]
We hold, therefore, that viewing the markup as a sales tax, the legal incidence of that tax was intended to rest upon instrumentalities of the United States. [Footnote 9] We turn therefore to consideration of the question
The District Court concluded that, under this section "Congress has legislatively acceded to Mississippi's markup on . . . wholesale liquor transactions." 378 F. Supp. at 562.
Section 107(a) of the Buck Act, however, contains a limitation upon the application of § 105(a). It provides that § 105(a) "shall not be deemed t
United States v. County of Allegheny, 322 U. S. 174,
412 U.S. at 412 U. S. 375; see Collin v. Yosemite Park & Curry Co., 304 U. S. 518, 304 U. S. 538 (1938). Cf. James v. Dravo Contracting Co., 302 U. S. 134, 302 U. S. 140 (1937). We reach the same conclusion as to the concurrent jurisdiction bases to which Art. I, § 8, cl. 17, does not apply: "Nothing in the language of the [Twenty-first] Amendment nor in its history leads to [the] extraordinary conclusion" that the Amendment abolished federal immunity with respect to taxes on sales of liquor to the military on bases where the United States and Mississippi exercise
The District Court was also directed on remand to determine the merits of the Government's argument that Regulation 25 was invalid under the Supremacy Clause because it constituted an attempt by the State to interfere with federal procurement regulations and policy, see 32 CFR § 261.4(c) (1974), established by the Secretary of Defense pursuant to authority granted him by Congress. The District Court rejected the argument as without merit. 378 F. Supp. 558, 570-573 (1974). In light of our decision, we have no occasion to determine whether the District Court was correct.
the Regulation does not actually require the passing on of the tax, 378 F. Supp. at 567, is without merit by virtue of First Agricultural Nat. Bank.
Mississippi Tax Commission, et al.