Opinion ID: 118310
Heading Depth: 1
Heading Rank: 3

Heading: The Tax Injunction Act provides:

Text: The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State. 28 U. S. C. § 1341. This statutory text is to be enforced according to its terms and should be interpreted to advance its purpose of confin[ing] federal-court intervention in state government. Arkansas v. Farm Credit Servs. of Central Ark., 520 U. S. 821, 826-827 (1997). By its terms, the Act bars anticipatory relief, suits to stop (enjoin, suspend or restrain) the collection of taxes. Recognizing that there is little practical difference between an injunction and anticipatory relief in the form of a declaratory judgment, the Court has held that declaratory relief falls within the Act's compass. California v. Grace Brethren Church, 457 U. S. 393, 408 (1982). But a suit to collect a tax is surely not brought to restrain state action, and therefore does not fit the Act's description of suits barred from federal district court adjudication. See Louisiana Land & Exploration Co. v. Pilot Petroleum Corp., 900 F. 2d 816, 818 (CA5 1990) (The Tax Injunction Act does not bar federal court jurisdiction [of a] suit . .. to collect a state tax.). Nevertheless, in Keleher v. New England Telephone & Telegraph Co., 947 F. 2d 547 (CA2 1991), the Court of Appeals concluded: [I]n removing the federal courts' power to `enjoin, suspend or restrain' state and local taxes, [Congress] necessarily intended for federal courts to abstain from hearing tax enforcement actions in which the validity of a state or local tax might reasonably be raised as a defense. Id., at 551. [4] We do not agree that the Act's purpose requires us to disregard the text formulation Congress adopted. Congress modeled the Tax Injunction Act, which passed in 1937, upon previously enacted federal statutes of similar import, measures that parallel state laws barring actions in State courts to enjoin the collection of State and county taxes. S. Rep. No. 1035, 75th Cong., 1st Sess., 1 (1937). The federal statute Congress had in plain view was an 1867 measure depriving courts of jurisdiction over suits brought for the purpose of restraining the assessment or collection of any federal tax. Act of Mar. 2, 1867, ch. 169, § 10, 14 Stat. 475, now codified at 26 U. S. C. § 7421(a) (1994 ed., Supp. III). The 1867 provision, of course, does not bar federal-court adjudication of suits initiated by the United States to collect federal taxes; it precludes only suits brought by taxpayers to restrain the United States from assessing or collecting such taxes. Similarly, the state laws to which Congress referred surely do not preclude the States from enforcing their taxes in court. The Tax Injunction Act was thus shaped by state and federal provisions barring anticipatory actions by taxpayers to stop the tax collector from initiating collection proceedings. It was not the design of these provisions to prohibit taxpayers from defending suits brought by a government to obtain collection of a tax. Congress, it appears, sought particularly to stop out-of-state corporations from using diversity jurisdiction to gain injunctive relief against a state tax in federal court, an advantage unavailable to in-state taxpayers denied anticipatory relief under state law. See S. Rep. No. 1035, supra, at 2. In sum, we hold that the Tax Injunction Act, as indicated by its terms and purpose, does not bar collection suits, nor does it prevent taxpayers from urging defenses in such suits that the tax for which collection is sought is invalid. [5]