The incidence of state and local sales taxes falls upon
appellant national bank as purchaser, and not upon vendors, and
therefore the national bank is exempt from the taxes under former
12 U.S.C. § 548 (1964 ed.), which was in effect at the time here
pertinent.
49 Cal. App. 3d
778, 123 Cal. Rptr. 160, reversed.
PER CURIAM.
The judgment is reversed. We are not bound by the California
court's contrary conclusion and hold that the incidence of the
state and local sales taxes falls upon the national bank as
purchaser, and not upon the vendors. The national bank is therefore
exempt from the taxes under former 12 U.S.C. § 548 (1964 ed.),
which was in effect at the time here pertinent.
First
Agricultural Nat. Bank v. Tax Comm'n, 392 U.
S. 339,
392 U. S.
346-348 (1968).
Reversed.
MR. JUSTICE STEVENS, with whom MR. JUSTICE REHNQUIST joins,
dissenting.
Appellants contend that California may not impose its sales tax
on the sale of printed forms and other tangibles to
Crocker-Citizens National Bank because the legal incidence of the
tax falls upon a federal instrumentality. The California Court of
Appeal, applying a construction of the California statute that has
been consistently followed for over 40 years, held that the legal
incidence of the tax falls upon the vendor, rather than the
purchaser. [
Footnote 1]
Page 425 U. S. 269
Since the case involves a federal claim of immunity from state
taxation, we are not bound by the California court's determination
of where the incidence of the tax falls. [
Footnote 2] On the other hand, we are not free simply
to disregard the state court's determination. [
Footnote 3] More narrowly, I believe we must
accept the state court's interpretation of the meaning of a state
statute insofar as it defines the legal obligations of the vendor,
the purchaser, and the tax collector independently of any claim of
federal immunity.
In this case, we have the benefit of completely consistent
construction by the California courts since the statute was enacted
in 1933. Both in cases involving a federal claim of immunity
[
Footnote 4] and also in cases
which involved no question of federal law, [
Footnote 5] the California courts
Page 425 U. S. 270
have unambiguously held that the statute imposes no legal
obligation on a purchaser either to pay the tax himself or to
reimburse his vendor.
That consistent, nondiscriminatory construction of California
law avoids appellants' reliance on
First Agricultural Nat. Bank
v. Tax Comm'n, 392 U. S. 339. In
that case, we held that "a sales tax which,
by its terms,
must be passed on to the purchaser imposes the legal incidence of
the tax upon the purchaser."
Id. at
392 U. S. 347
(emphasis added). [
Footnote 6]
This is not a case in which the state statute, either by its own
terms or as construed by the
Page 425 U. S. 271
state courts, imposes any legal obligation on the purchaser.
[
Footnote 7]
It is true that the bank expressly agreed to assume the economic
burden imposed by the tax, and, furthermore, that the statutory
scheme contemplates that, as a practical matter, the vendor will
pass that burden on to his customers. As I understand our cases,
however, these facts do not provide a sufficient basis for
concluding that the legal incidence of the tax falls upon the
purchaser. [
Footnote 8]
Deciding where the legal incidence of a state tax falls is not
the most intriguing task that judges are called
Page 425 U. S. 272
upon to perform. Such work is facilitated, however, when the
controlling standards are expressed in simple language. I had
thought two rather clear rules controlled this case. First, the
location of the economic impact of a tax does not identify the
place where its legal incidence falls. Second, it is only if the
State imposes a legal obligation on the purchaser either to pay the
tax or to reimburse the vendor for a tax payment, that the legal
incidence is on the purchaser. The Court's disposition of this
appeal apparently is not predicated on either of those rules.
However, I am persuaded that they require us to affirm the judgment
of the California Court of Appeal.
[
Footnote 1]
49 Cal. App. 3d
778, 123 Cal. Rptr. 160 (1975).
[
Footnote 2]
See Society for Savings v. Bowers, 349 U.
S. 143,
349 U. S.
151.
[
Footnote 3]
As we said in
American Oil Co. v. Neill, 380 U.
S. 451,
380 U. S.
455-456:
"When a state court has. made its own definitive determination
as to the operating incidence [of a tax], our task is simplified.
We give this finding great weight in determining the natural effect
of a statute, and, if it is consistent with the statute's
reasonable interpretation, it will be deemed conclusive."
[
Footnote 4]
The very question which confronts us here arose in
Western
Lithograph Co. v. State Board of Equalization, 11 Cal. 2d
156, 78 P.2d 731 (1938); in that case, the plaintiff-vendor
claimed not to be liable for taxes measured by sales made to the
Bank of America National Trust and Savings Association. The Supreme
Court of California affirmed the denial of a refund, holding that
the incidence of the tax was on the retailer, not on the
consumer.
[
Footnote 5]
In
National Ice & Cold Storage Co. of California v.
Pacific Fruit Express Co., 11 Cal. 2d
283, 79 P.2d 380 (1938), the court held that the vendor could
not add sales tax reimbursement to the price paid by a vendee under
a preexisting contract, even though the court was required, in
order to reach this result, to hold unconstitutional a section of
the taxing statute which expressly allowed such a result. The court
reasoned that, while it was not beyond the power of the legislature
to impose a tax on the consumer, it had not done so, and it was
beyond the power of the legislature to require the vendee to pay
the vendor's debt.
That this left the California sales tax reimbursement as a
matter of contract between vendor and vendee is affirmed by the
later holdings of the lower California courts in
Clary v.
Basalt Rock Co., 99 Cal. App. 2d
458, 222 P.2d 24 (1950), which held that there was no venue
against the vendee in a particular county because it could not be
found that any tax obligation arose against the vendee when a sale
was made, and
Livingston Rock & Gravel Co. v.
DeSalvo, 136 Cal. App.
2d 156, 288 P.2d 317 (1955), where the vendor under a
lease-sale overlooked providing for sales tax reimbursement.
Although the vendor had been held liable for payment to the State,
the court held that the vendor could not collect the tax from the
vendee.
[
Footnote 6]
We have recently explained "the controlling significance" of
First Agricultural Bank in this way:
"But the controlling significance of
First Agricultural
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."
United States v. Mississippi Tax Comm'n, 421 U.
S. 599,
421 U. S. 608.
In this case, unlike
First Agricultural Bank, the State
does not
require that its sales tax be passed on to the
purchaser.
[
Footnote 7]
Appellants have placed great stress on the wording of § 6052 of
the California Revenue and Taxation Code (1970), which
provides:
"§ 6052 Collection by retailer from consumer. The tax hereby
imposed shall be collected by the retailer from the consumer in so
far as it can be done."
On its face, this provision could reasonably be read to require
that the tax be paid by the consumer. However, in the face of the
state courts' consistent interpretation of the state statute as not
requiring that result, we are not free to place our own
interpretation on the statute.
[
Footnote 8]
In
Gurley v. Rhoden, 421 U. S. 200,
421 U. S.
204-205, we explained:
"The economic burden of taxes incident to the sale of
merchandise is traditionally passed on to the purchasers of the
merchandise. Therefore, the decision as to where the legal
incidence of either tax falls is not determined by the fact that
petitioner, by increasing his pump prices in the amounts of the
taxes, shifted the economic burden of the taxes from himself to the
purchaser-consumer. The Court has laid to rest doubts on that score
raised by such decisions as
Panhandle Oil Co. v. Mississippi ex
rel. Knox, 277 U. S. 218 (1928);
Indian
Motorcycle Co. v. United States, 283 U. S.
570 (1931); and
Kern-Limerick, Inc. v.
Scurlock, 347 U. S. 110 (1954), at least
under taxing schemes, as here, where neither statute required
petitioner to pass the tax on to the purchaser-consumer.
See
Alabama v. King & Boozer, 314 U. S. 1
(1941);
Lash's Products Co. v. United States, 278 U. S.
175 (1929);
Wheeler Lumber Co. v. United
States, 281 U. S. 572 (1930);
First
Agricultural Nat. Bank v. Tax Comm'n, 392 U. S.
339 (1968);
American Oil Co. v. Neill,
380 U. S.
451 (1965)."
Comments
Be the first to comment
Leave a Comment