OPINION OF THE COURT
HIBBS V. WINN
542 U. S. ____ (2004)
SUPREME COURT OF THE UNITED STATES
NO. 02-1809
J. ELLIOTT HIBBS, DIRECTOR, ARIZONA DEPART- MENT OF
REVENUE, PETITIONER
v. KATHLEEN M. WINN et al.
on writ of certiorari to the united states court of
appeals for the ninth circuit
[June 14, 2004]
Justice Ginsburg delivered the
opinion of the Court.
Arizona law authorizes income-tax
credits for payments to organizations that award educational
scholarships and tuition grants to children attending private
schools. See Ariz. Rev. Stat. Ann. §43–1089 (West Supp. 2003).
Plaintiffs below, respondents here, brought an action in federal
court challenging §43–1089, and seeking to enjoin its operation, on
Establishment Clause grounds. The question presented is whether the
Tax Injunction Act (TIA or Act), 28 U. S. C. §1341, which
prohibits a lower federal court from restraining “the assessment,
levy or collection of any tax under State law,” bars the suit.
Plaintiffs-respondents do not contest their own tax liability. Nor
do they seek to impede Arizona’s receipt of tax revenues. Their
suit, we hold, is not the kind §1341 proscribes.
In decisions spanning a near half century,
courts in the federal system, including this Court, have
entertained challenges to tax credits authorized by state law,
without conceiving of §1341 as a jurisdictional barrier. On this
first occasion squarely to confront the issue, we confirm the
authority federal courts exercised in those cases.
It is hardly ancient history that States, once
bent on maintaining racial segregation in public schools, and
allocating resources disproportionately to benefit white students
to the detriment of black students, fastened on tui- tion grants
and tax credits as a promising means to circumvent
Brown
v.
Board of Education, 347 U. S. 483 (1954).
The federal courts, this Court among them, adjudicated the ensuing
challenges, instituted under 42 U. S. C. §1983, and upheld the
Constitution’s equal protection requirement. See,
e.g.,
Griffin v.
School Bd. of Prince Edward
Cty., 377
U. S. 218, 233 (1964) (faced with unconstitutional closure of
county public schools and tuition grants and tax credits for
contributions to private segregated schools, District Court could
require county to levy taxes to fund nondiscriminatory public
schools), rev’g 322 F. 2d 332, 343–344 (CA4 1963) (abstention
required until state courts determine validity of grants, tax
credits, and public-school closing), aff’g
Allen v.
County School Bd. of Prince Edward Cty., 198
F. Supp. 497, 503 (ED Va. 1961) (county enjoined from paying
grants or providing tax credits to support private schools that
exclude students based on race while public schools remain closed),
and aff’g 207 F. Supp. 349, 355 (ED Va. 1962) (closure of
public schools enjoined). See also
Moton v.
Lambert, 508 F. Supp. 367, 368 (ND Miss. 1981)
(challenge to tax exemptions for racially discriminatory private
schools may proceed in federal court).
In the instant case, petitioner Hibbs,
Director of Arizona’s Department of Revenue, argues, in effect,
that we and other federal courts were wrong in those civil-rights
cases. The TIA, petitioner maintains, trumps §1983; the Act,
according to petitioner, bars all lower federal-court interference
with state tax systems, even when the challengers are not
endeavoring to avoid a tax imposed on them, and no matter whether
the State’s revenues would be raised or lowered should the
plaintiffs prevail. The alleged jurisdictional bar, which
petitioner asserts has existed since the TIA’s enactment in 1937,
was not even imagined by the jurists in the pathmarking
civil-rights cases just cited, or by the defendants in those cases,
litigants with every interest in defeating federal-court
adjudicatory authority. Our prior decisions command no respect,
petitioner urges, because they constitute mere “sub silentio
holdings.” Reply Brief for Petitioner 8. We reject that
assessment.
We examine in this opinion both the scope of
the term “assessment” as used in the TIA, and the question whether
the Act was intended to insulate state tax laws from constitutional
challenge in lower federal courts even when the suit would have no
negative impact on tax collection. Concluding that this suit
implicates neither §1341’s conception of assessment nor any of the
statute’s underlying purposes, we affirm the judgment of the Court
of Appeals.
I
Plaintiffs-respondents, Arizona
taxpayers, filed suit in the United States District Court for the
District of Arizona, challenging Ariz. Rev. Stat. Ann. §43–1089
(West Supp. 2003) as incompatible with the Establishment Clause.
Section 43–1089 provides a credit to taxpayers who contribute money
to “school tuition organizations” (STOs). An STO is a nonprofit
organization that directs moneys, in the form of scholarship
grants, to students enrolled in private elementary or secondary
schools. STOs must disburse as scholarship grants at least 90
percent of contributions received, may allow donors to direct
scholarships to individual students, may not allow donors to name
their own dependents, must designate at least two schools whose
students will receive funds, and must not designate schools that
“discriminate on the basis of race, color, handicap, familial
status or national origin.” See §§43–1089(D)–(F). STOs are not
precluded by Arizona’s statute from designating schools that
provide religious instruction or that give admissions preference on
the basis of religion or religious affiliation. When taxpayers
donate money to a qualified STO, §43–1089 allows them, in
calculating their Arizona tax liability, to credit up to $500 of
their donation (or $625 for a married couple filing jointly,
§43–1089(A)(2)).
In effect, §43–1089 gives Arizona
taxpayers an election. They may direct $500 (or, for joint-return
filers, $625) to an STO, or to the Arizona Department of Revenue.
As long as donors do not give STOs more than their total tax
liability, their $500 or $625 contributions are costless.
The Arizona Supreme Court, by a 3-to-2 vote,
rejected a facial challenge to §43–1089 before the statute went
into effect.
Kotterman v.
Killian, 193 Ariz. 273,
972 P. 2d 606 (1999) (en banc). That case took the form of a
special discretionary action invoking the court’s original
jurisdiction. See
id., at 277, 972 P. 2d, at 610.
Kotterman, it is undisputed, has no preclusive effect on
the instant as-applied challenge to §43–1089 brought by different
plaintiffs.
Respondents’ federal-court complaint against
the Director of Arizona’s Department of Revenue (Director) alleged
that §43–1089 “authorizes the formation of agencies that have as
their sole purpose the distribution of State funds to children of a
particular religious denomination or to children attending schools
of a particular religious denomination.” Complaint ¶ ;13, App. 10.
Respondents sought injunctive and declaratory relief, and an order
requiring STOs to pay funds still in their possession “into the
state general fund.”
Id., at 7–8, App. 15.
The Director moved to dismiss the action,
relying on the TIA, which reads in its entirety:
“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.
The Director did not assert that a federal-court
order enjoining §43–1089 would interfere with the State’s tax levy
or collection efforts. He urged only that a federal injunction
would restrain the “assessment” of taxes “under State law.”
Agreeing with the Director, the District Court held that the TIA
required dismissal of the suit. App. to Pet. for Cert. 31.
The Court of Appeals for the Ninth Circuit
reversed, holding that “a federal action challenging the granting
of a state tax credit is not prohibited by the [TIA].”
Winn v.
Killian, 307 F. 3d 1011, 1017
(2002). Far from “adversely affect[ing] the state’s ability to
raise revenue,” the Court of Appeals observed, “the relief
requested by [respondents] … would result in the state’s receiving
more funds that could be used for the public benefit.”
Id., at 1017, 1018. We granted certiorari,
539 U. S. 986 (2003), in
view of the division of opinion on whether the TIA bars
constitutional challenges to state tax credits in federal court.
Compare 307 F. 3d, at 1017, with
ACLU Foundation v.
Bridges, 334 F. 3d 416, 421–423 (CA5 2003) (TIA bars
federal action seeking to have any part of a State’s tax system
declared unconstitutional). We now affirm the judgment of the Ninth
Circuit.
II
Before reaching the merits of
this case, we must address respondents’ contention that the
Director’s petition for certiorari was jurisdictionally untimely
under 28 U. S. C. §2101(c) and our Rules. See Brief in
Opposition 8–13. Section 2101(c) instructs that a petition for
certiorari must be filed “within ninety days after the entry of …
judgment.” This Court’s Rule 13(3) elaborates:
“The time to file a petition for a writ of
certiorari runs from the date of entry of the judgment or order
sought to be reviewed, and not from the issuance date of the
mandate (or its equivalent under local practice). But if a petition
for rehearing is timely filed in the lower court by any party, the
time to file the petition for a writ of certiorari for all parties
(whether or not they requested rehearing or joined in the petition
for rehearing) runs from the date of the denial of the petition for
rehearing or, if the petition for rehearing is granted, the
subsequent entry of judgment.”
Respondents assert that the Director’s petition
missed the Rule’s deadlines: More than 90 days elapsed between the
date the Court of Appeals first entered judgment and the date the
petition was filed, rendering the filing untimely under the first
sentence of the Rule; and because no party petitioned for
rehearing, the extended periods prescribed by the Rule’s second
sentence never came into play.
This case, however, did not follow the typical
course. The Court of Appeals, on its own motion, recalled its
mandate and ordered the parties to brief the question whether the
case should be reheard en banc. That order, we conclude, suspended
the judgment’s finality under §2101(c), just as a timely filed
rehearing petition would, or a court’s appropriate decision to
consider a late-filed rehearing petition. Compare
Young v.
Harper, 520 U. S. 143, 147, n. 1
(1997) (appeals court agreed to consider a late-filed rehearing
petition; timeliness of petition for certiorari measured from date
court disposed of rehearing petition), with
Missouri v.
Jenkins, 495 U. S. 33, 49 (1990) (“The time for
applying for certiorari will not be tolled when it appears that the
lower court granted rehearing or amended its order solely for the
purpose of extending that time.”).
A timely rehearing petition, a court’s
appropriate decision to entertain an untimely rehearing petition,
and a court’s direction, on its own initiative, that the parties
address whether rehearing should be ordered share this key
characteristic: All three raise the question whether the court will
modify the judgment and alter the parties’ rights. See
id., at 46 (“A timely petition for rehearing … operates to
suspend the finality of the … court’s judgment, pending the court’s
further determination whether the judgment should be modified so as
to alter its adjudication of the rights of the parties” (quoting
Department of Banking of Neb. v.
Pink, 317 U. S. 264, 266
(1942)
(per curiam) (alterations in original))). In other
words, “while [a] petition for rehearing is pending,” or while the
court is considering, on its own initiative, whether rehearing
should be ordered, “there is no ‘judgment’ to be reviewed.”
Jenkins, 495 U. S., at 46.
In this light, we hold that the Director’s
petition for a writ of certiorari was timely. When the Court of
Appeals ordered briefing on the rehearing issue, 90 days had not
yet passed from the issuance of the panel opinion. Because
§2101(c)’s 90-day limit had not yet expired, the clock could still
be reset by an order that left unresolved whether the court would
modify its judgment. The court-initiated briefing order had just
that effect. Because a genuinely final judgment is critical under
the statute, we must treat the date of the court’s order denying
rehearing en banc as the date judgment was entered. The petition
was filed within 90 days of that date and was thus timely under the
statute.
Were we to read Rule 13 as our sole guide, so
that only a rehearing petition filed by a party could reset the
statute’s 90-day count, we would lose sight of the congressional
objective underpinning §2101(c): An appellate court’s final
adjudication, Congress indicated, marks the time from which the
period allowed for a certiorari petition begins to run. The statute
takes priority over the “procedural rules adopted by the Court for
the orderly transaction of its business.”
Schacht v.
United States, 398 U. S. 58, 64 (1970).
When court-created rules fail to anticipate unusual circumstances
that fit securely within a federal statute’s compass, the statute
controls our decision. See,
e.g.,
Kontrick v.
Ryan, 540 U. S. ___, ___ (2004) (slip op., at 9)
(“ ‘[I]t is axiomatic’ that [court-prescribed procedural
rules] ‘do not create or withdraw federal jurisdiction.’ ”
(quoting
Owen Equipment & Erection Co. v.
Kroger, 437 U. S. 365, 370
(1978))). Because the petition for a writ of certiorari was timely
under §2101(c), we have jurisdiction to decide whether the TIA bars
respondents’ suit.
III
To determine whether this
litigation falls within the TIA’s prohibition, it is appropriate,
first, to identify the relief sought. Respondents seek prospective
relief only. Specifically, their complaint requests “injunctive
relief prohibiting [the Director] from allowing taxpayers to
utilize the tax credit authorized by A. R. S. §43–1089
for payments made to STOs that make tuition grants to children
attending religious schools, to children attending schools of only
one religious denomination, or to children selected on the basis of
their religion.” Complaint 7, App. 15. Respondents further ask for
a “declaration that A. R. S. §43– 1089, on its face and
as applied,” violates the Establishment Clause “by affirmatively
authorizing STOs to use State income-tax revenues to pay tuition
for students attending religious schools or schools that
discriminate on the basis of religion.”
Ibid. Finally,
respondents seek “[a]n order that [the Director] inform all [such]
STOs that … all funds in their possession as of the date of this
Court’s order must be paid into the state general fund.” Complaint
7–8, App. 15. Taking account of the prospective nature of the
relief requested, does respondents’ suit, in 28 U. S. C.
§1341’s words, seek to “enjoin, suspend or restrain the assessment,
levy or collection of any tax under State law”? The answer to that
question turns on the meaning of the term “assessment” as employed
in the TIA.[
Footnote 1]
As used in the Internal Revenue
Code (IRC), the term “assessment” involves a “recording” of the
amount the taxpayer owes the Government. 26 U. S. C. §6203.
The “assessment” is “essentially a bookkeeping notation.”
Laing v.
United States, 423 U. S. 161, 170,
n. 13 (1976). Section 6201(a) of the IRC authorizes the
Secretary of the Treasury “to make … assessments of all taxes …
imposed by this title.” An assessment is made “by recording the
liability of the taxpayer in the office of the Secretary in
accordance with rules or regulations prescribed by the Secretary.”
§6203.[
Footnote 2] See also M.
Saltzman, IRS Practice and Procedure ¶ ;10.02, pp. 10–4 to
10–7 (2d ed. 1991) (when Internal Revenue Service signs “summary
list” of assessment to record amount of tax liability, “the
official act of assessment has occurred for purposes of the
Code”).[
Footnote 3]
We do not focus on the word “assessment” in
isolation, however. Instead, we follow “the cardinal rule that
statutory language must be read in context [since] a phrase gathers
meaning from the words around it.”
General Dynamics Land
Systems, Inc. v.
Cline, 540 U. S. ___, ___ (2004)
(slip op., at 13–14) (internal quotation marks omitted). In §1341
and tax law generally, an assessment is closely tied to the
collection of a tax,
i.e., the assessment is the official
recording of liability that triggers levy and collection
efforts.
The rule against superfluities complements the
principle that courts are to interpret the words of a statute in
context. See 2A N. Singer, Statutes and Statutory Construction
§46.06, pp. 181–186 (rev. 6th ed. 2000) (“A statute should be
construed so that effect is given to all its provisions, so that no
part will be inoperative or superfluous, void or insignificant
… .” (footnotes omitted)). If, as the Director asserts, the
term “assessment,” by itself, signified “[t]he entire plan or
scheme fixed upon for charging or taxing,” Brief for Petitioner 12
(quoting Webster’s New International Dictionary of the English
Language 166 (2d ed. 1934)), the TIA would not need the words
“levy” or “collection”; the term “assessment,” alone, would do all
the necessary work.
Earlier this Term, in
United States
v.
Galletti, 541 U. S. ___ (2004), the Government
identified “two important consequences” that follow from the IRS’
timely tax assessment: “[T]he IRS may employ administrative
enforcement methods such as tax liens and levies to collect the
outstanding tax,” see 26 U. S. C. §§6321–6327, 6331–6344; and
“the time within which the IRS may collect the tax either
administratively
or by a ‘proceeding in court’ is extended
[from 3 years] to 10 years after the date of assessment,” see
§§6501(a), 6502(a). Brief for United States in
United
States v.
Galletti, O. T. 2003, No. 02–1389,
pp. 15– 16. The Government thus made clear in briefing
Galletti that, under the IRC definition, the tax
“assessment” serves as the trigger for levy and collection efforts.
The Government did not describe the term as synonymous with the
entire plan of taxation. Nor did it disassociate the word
“assessment” from the company (“levy or collection”) that word
keeps.[
Footnote 4] Instead, and
in accord with our understanding, the Government related
“assessment” to the term’s collection-propelling function.
IV
Congress modeled §1341 upon
earlier federal “statutes of similar import,” laws that, in turn,
paralleled state provisions proscribing “actions in State courts to
enjoin the collection of State and county taxes.” S. Rep. No. 1035,
75th Cong., 1st Sess., 1 (1937) (hereinafter S. Rep.). In
composing the TIA’s text, Congress drew particularly on an 1867
measure, sometimes called the Anti-Injunction Act (AIA), which bars
“any court” from entertaining a suit 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). See
Jefferson County v.
Acker, 527
U. S. 423, 434–435 (1999). While §7421(a) “apparently has no
recorded legislative history,”
Bob Jones Univ. v.
Simon, 416 U. S. 725, 736
(1974), the Court has recognized, from the AIA’s text, that the
measure serves twin purposes: It responds to “the Government’s need
to assess and collect taxes as expeditiously as possible with a
minimum of preenforcement judicial interference”; and it
“ ‘require[s] that the legal right to the disputed sums be
determined in a suit for refund,’ ”
ibid. (quoting
Enochs v.
Williams Packing & Nav.
Co., 370 U.
S. 1, 7 (1962)).[
Footnote
5] Lower federal courts have similarly comprehended §7421(a).
See,
e.g.,
McGlotten v.
Connally, 338
F. Supp. 448, 453–454 (DC 1972) (three-judge court) (§7421(a)
does not bar action seeking to enjoin income-tax exemptions to
fraternal orders that exclude nonwhites from membership, for in
such an action, plaintiff “does not contest the amount of his own
tax, nor does he seek to limit the amount of tax revenue
collectible by the United States” (footnote omitted));
Tax
Analysts and Advocates v.
Shultz, 376 F. Supp.
889, 892 (DC 1974) (§7421(a) does not bar challenge to IRS revenue
ruling allowing contributors to political candidate committees to
avoid federal gift tax on contributions in excess of $3,000
ceiling; while §7421(a) “precludes suits to restrain the assessment
or collection of taxes,” the proscription does not apply when
“plaintiffs seek not to restrain the Commissioner from collect- ing
taxes, but rather to
require him to collect
additional taxes according to the mandates of the law.”
(emphases in original)).[
Footnote
6]
Just as the AIA shields federal
tax collections from federal-court injunctions, so the TIA shields
state tax collections from federal-court restraints. In both 26 U.
S. C. §7421(a) and 28 U. S. C. §1341, Congress directed
taxpayers to pursue refund suits instead of attempting to restrain
collections. Third-party suits not seeking to stop the collection
(or contest the validity) of a tax
imposed on plaintiffs,
as
McGlotten, 338 F. Supp., at 453–454, and
Tax
Analysts, 376 F. Supp., at 892, explained, were outside
Congress’ purview. The TIA’s legislative history is not silent in
this regard. The Act was designed expressly to restrict “the
jurisdiction of the district courts of the United States over suits
relating to the collection of State taxes.” S. Rep., p. 1.
Specifically, the Senate Report commented that
the Act had two closely related, state-revenue-protective
objectives: (1) to eliminate disparities between taxpayers who
could seek injunctive relief in federal court—usually out-of-state
corporations asserting diversity jurisdiction—and taxpayers with
recourse only to state courts, which generally required taxpayers
to pay first and litigate later; and (2) to stop taxpayers, with
the aid of a federal injunction, from withholding large sums,
thereby disrupting state government finances.
Id., at 1–2;
see R. Fallon, D. Meltzer, & D. Shapiro, Hart and Wechsler’s
The Federal Courts and the Federal System 1173 (5th ed. 2003)
(citing
Rosewell v.
LaSalle Nat.
Bank, 450
U. S. 503, 522–523, and nn. 28–29, 527 (1981)). See also
Jefferson County, 527 U. S., at 435 (observing that the
TIA was “shaped by state and federal provisions barring
anticipatory actions by taxpayers to stop the tax collector from
initiating collection proceedings”). In short, in enacting the TIA,
Congress trained its attention on taxpayers who sought to avoid
paying their tax bill by pursuing a challenge route other than the
one specified by the taxing authority. Nowhere does the legislative
history announce a sweeping congressional direction to prevent
“federal-court interference with all aspects of state tax
administration.” Brief for Petitioner 20;
post, at
11.[
Footnote 7]
The understanding of the Act’s purposes and
legislative history set out above underpins this Court’s previous
applications of the TIA. In
California v.
Grace
Brethren Church, 457 U. S. 393 (1982),
for example, we recognized that the principal purpose of the TIA
was to “limit drastically” federal-court interference with “the
collection of [state] taxes.”
Id., at 408–409 (quoting
Rosewell, 450 U. S., at 522). True, the Court referred to
the disruption of “state tax administration,” but it did so
specifically in relation to the “the collection of revenue.” 457 U.
S., at 410 (quoting
Perez v.
Ledesma, 401 U. S. 82, 128, n. 17
(1971) (Brennan, J., concurring in part and dissenting in part)).
The complainants in
Grace Brethren Church were several
California churches and religious schools. They sought
federal-court relief from an unemployment compensation tax that
state law imposed on them. 457 U. S., at 398. Their federal action,
which bypassed state remedies, was exactly what the TIA was
designed to ward off. The Director and the dissent endeavor to
reconstruct
Grace Brethren Church as precedent for the
proposition that the TIA totally immunizes from lower federal-court
review “all aspects of state tax administration, and not just
interference with the collection of revenue.” Brief for Petitioner
20; see
post, at 11–12. The endeavor is unavailing given
the issue before the Court in
Grace Brethren Church and
the context in which the words “state tax administration”
appear.
The Director invokes several other decisions
alleged to keep matters of “state tax administration” entirely free
from lower federal-court “interference.” Brief for Petitioner
17–21; accord
post, at 13. Like
Grace Brethren
Church, all of them fall within §1341’s undisputed compass:
All involved plaintiffs who mounted federal litigation to avoid
paying state taxes (or to gain a refund of such taxes).
Federal-court relief, therefore, would have operated to reduce the
flow of state tax revenue. See
Arkansas v.
Farm Credit
Servs. of Central Ark., 520 U. S. 821, 824
(1997) (corporations chartered under federal law claimed exemption
from Arkansas sales and income taxation);
National Private
Truck Council, Inc. v.
Oklahoma Tax
Comm’n, 515 U. S. 582, 584
(1995) (action seeking to prevent Oklahoma from collecting taxes
State imposed on nonresident motor carriers);
Fair Assessment
in Real Estate Assn., Inc. v.
McNary, 454 U. S. 100, 105–106 (1981)
(taxpayers, alleging unequal taxation of real property, sought,
inter alia, damages measured by alleged tax
overassessments);
Rosewell, 450 U. S., at 510 (state
taxpayer, alleging her property was inequitably assessed, refused
to pay state taxes).[
Footnote
8]
Our prior decisions are not fairly portrayed
cut loose from their secure, state-revenue-protective moorings.
See,
e.g.,
Grace Brethren Church, 457 U. S., at
410 (“If federal declaratory relief were available to test state
tax assessments, state tax administration might be thrown into
disarray, and
taxpayers might escape the ordinary procedural
requirements imposed by state law. During the pendency of the
federal suit
the collection of revenue under the challenged law
might be obstructed, with consequent damage to the State’s budget,
and perhaps a shift to the State of the risk of taxpayer
insolvency.” (quoting
Ledesma, 401 U. S., at 128, n.
17 (Brennan, J., concurring in part and dissenting in part)
(emphases added)));
Rosewell, 450 U. S., at 527– 528 (“The
compelling nature of these considerations [identified by Justice
Brennan in
Perez] is underscored by the dependency of
state budgets on the receipt of local tax revenues… . We may
readily appreciate the difficulties encountered by the county
should a substantial portion of its rightful tax revenue be tied up
in injunction actions.”).[
Footnote
9]
In sum, this Court has interpreted and applied
the TIA only in cases Congress wrote the Act to address,
i.e., cases in which state taxpayers seek federal-court
orders enabling them to avoid paying state taxes. See
supra, at 13–14. We have read harmoniously the §1341
instruction conditioning the jurisdictional bar on the availability
of “a plain, speedy and efficient remedy” in state court. The
remedy inspected in our decisions was not one designed for the
universe of plaintiffs who sue the State. Rather, it was a remedy
tailor-made for taxpayers. See,
e.g.,
Rosewell,
450 U. S., at 528 (“Illinois’ legal remedy that provides property
owners paying property taxes under protest a refund without
interest in two years is a ‘plain, speedy and efficient remedy’
under the [TIA]”);
Grace Brethren Church, 457 U. S., at
411 (“[A] state-court remedy is ‘plain, speedy and efficient’ only
if it ‘provides the taxpayer with a ‘full hearing and judicial
determination’ at which she may raise any and all constitutional
objections to the tax.’ ” (quoting
Rosewell, 450 U.
S., at 514)).[
Footnote
10]
V
In other federal courts as well,
§1341 has been read to restrain state taxpayers from instituting
federal actions to contest their liability for state taxes, but not
to stop third parties from pursuing constitutional challenges to
tax benefits in a federal forum. Relevant to the distinction
between taxpayer claims that would reduce state revenues and
third-party claims that would enlarge state receipts, Seventh
Circuit Judge Easterbrook wrote trenchantly:
“Although the district court
concluded that §1341 applies to any federal litigation touching on
the subject of state taxes, neither the language nor the
legislative history of the statute supports this interpretation.
The text of §1341 does not suggest that federal courts should tread
lightly in issuing orders that might allow local governments to
raise additional taxes. The legislative history … shows that §1341
is designed to ensure that federal courts do not interfere with
states’ collection of taxes, so long as the taxpayers have an
opportunity to present to a court federal defenses to the
imposition and collection of the taxes. The legislative history is
filled with concern that federal judgments were emptying state
coffers and that corporations with access to the diversity
jurisdiction could obtain remedies unavailable to resident
taxpayers.
There was no articulated concern about federal
courts’ flogging state and local governments to collect additional
taxes.”
Dunn v.
Carey, 808 F. 2d 555,
558 (1986) (emphasis added).
Second Circuit Judge Friendly earlier expressed a
similar view of §1341:
“The [TIA’s] context and the legislative history
lead us to conclude that, in speaking of ‘collection,’ Congress was
referring to methods similar to assessment and levy,
e.g.,
distress or execution … that would produce money or other property
directly, rather than indirectly through a more general use of
coercive power. Congress was thinking of cases where taxpayers were
repeatedly using the federal courts to raise questions of state or
federal law going to the validity of the particular taxes
imposed upon them… .”
Wells v.
Malloy, 510 F. 2d 74, 77 (1975) (emphasis added).
See also
In re Jackson County, 834
F. 2d 150, 151–152 (CA8 1987) (observing that “§1341 has been
held to be inapplicable to efforts to require collection of
additional taxes, as opposed to efforts to inhibit the collection
of taxes”).[
Footnote 11]
Further, numerous federal-court
decisions—including decisions of this Court reviewing lower
federal-court judgments—have reached the merits of third-party
constitutional challenges to tax benefits without mentioning the
TIA. See,
e.g.,
Byrne v.
Public Funds for
Public Schools of New Jersey,
442 U. S. 907 (1979), summarily aff’g
590 F. 2d 514 (CA3 1979) (state tax deduction for taxpayers
with children attending nonpublic schools violates Establishment
Clause), aff’g 444 F. Supp. 1228 (NJ 1978);
Franchise Tax
Board of California v.
United Americans for Public
Schools,
419 U. S. 890 (1974) (summarily
affirming district-court judgment striking down state statute that
provided income-tax reductions for taxpayers sending children to
nonpublic schools);
Committee for Public Ed. & Religious
Liberty v.
Nyquist, 413 U. S. 756 (1973) (state tax
benefits for parents of children attending nonpublic schools
violates Establishment Clause), rev’g in relevant part 350
F. Supp. 655 (SDNY 1972) (three-judge court);
Grit v.
Wolman,
413 U. S. 901 (1973), summarily aff’g
Kosydar v.
Wolman, 353 F. Supp. 744, 755–756
(SD Ohio 1972) (three-judge court) (state tax credits for expenses
relating to children’s enrollment in nonpublic schools violate
Establishment Clause);
Finlator v.
Powers, 902
F. 2d 1158 (CA4 1990) (state statute exempting Christian
Bibles, but not holy books of other religions or other books, from
state tax violates Establishment Clause);
Luthens v.
Bair, 788 F. Supp. 1032 (SD Iowa 1992) (state law
authorizing tax benefit for tuition payments and textbook purchases
does not violate Establishment Clause);
Minnesota Civil
Liberties Union v.
Roemer, 452 F. Supp. 1316
(Minn. 1978) (three-judge court) (state law allowing parents of
public or private school students to claim part of tuition and
transportation expenses as tax deduction does not violate
Establishment Clause).[
Footnote
12]
* * *
In a procession of cases not
rationally distinguishable from this one, no Justice or member of
the bar of this Court ever raised a §1341 objection that, according
to the petitioner in this case, should have caused us to order
dismissal of the action for want of jurisdiction. See
Mueller v.
Allen, 463 U. S. 388 (1983)
(state tax deduction for parents who send their children to
parochial schools does not violate Establishment Clause);
Byrne,
442 U. S. 907;
United Americans
for Public Schools,
419 U. S. 890;
Committee for
Public Ed. & Religious Liberty, 413 U. S. 756;
Wolman,
413 U. S. 901;
Griffin, 377
U. S. 218. Consistent with the decades-long understanding
prevailing on this issue, respondents’ suit may proceed without any
TIA impediment.[
Footnote
13]
For the reasons stated, the
judgment of the United States Court of Appeals for the Ninth
Circuit is
Affirmed.
Footnote 1
State taxation, for §1341 purposes, includes
local taxation. See 17 C. Wright, A. Miller, & E. Cooper,
Federal Practice and Procedure §4237, pp. 643–644 (2d ed. 1988)
(“Local taxes are imposed under authority of state law and the
courts have held that the Tax Injunction Act applies to them.”); R.
Fallon, D. Meltzer, & D. Shapiro, Hart and Wechsler’s The
Federal Courts and the Federal System 1173 (5th ed. 2003) (“For
purposes of the Act, local taxes have uniformly been held to be
collected ‘under State law.’ ”).
Footnote 2
Section 301.6203–1 of the Treasury
Regulations states that an assessment is accomplished by the
“assessment officer signing the summary record of assessment,”
which, “through supporting records,” provides “identification of
the taxpayer, the character of the liability assessed, the taxable
period, if applicable, and the amount of the assessment.” 26 CFR
§301.6203–1 (2003).
Footnote 3
The term “assessment” is used in a variety of
ways in tax law. In the property-tax setting, the word usually
refers to the process by which the taxing authority assigns a
taxable value to real or personal property. See,
e.g., F.
Schoettle, State and Local Taxation: The Law and Policy of
Multi-Jurisdictional Taxation 799 (2003) (“ASSESSMENT—The process
of putting a value on real or personal property for purposes of a
tax to be measured as a percentage of property values. The
valuation is ordinarily done by a government official, the
‘assessor’ or ‘tax assessor,’ who will sometimes hire a private
professional to do the actual valuations.”); Black’s Law Dictionary
112 (7th ed. 1999) (defining “assessment” as,
inter alia:
“Official valuation of property for purposes of taxation .—Also
termed
tax assessment. Cf. appraisal.”). See also 5 R.
Powell, Real Property §39.02 (M. Wolf ed. 2000). To calculate the
amount of property taxes owed, the tax assessor multiplies the
assessed value by the appropriate tax rate. See,
e.g., R.
Werner, Real Estate Law 534 (11th ed. 2002). Income taxes, by
contrast, are typically self-assessed in the United States. As
anyone who has filed a tax return is unlikely to forget, the
taxpayer, not the taxing authority, is the first party to make the
relevant calculation of income taxes owed. The word
“self-assessment,” however, is not a technical term; as IRC
§6201(a) indicates, the Internal Revenue Service executes the
formal act of income-tax assessment.
Footnote 4
The dissent is of two minds in this regard.
On the one hand, it twice suggests that a proper definition of the
term “assessment,” for §1341 purposes, is “the entire plan or
scheme fixed upon for charging or taxing.”
Post, at 5–6.
On the other hand, the dissent would disconnect the word from the
enforcement process (“levy or collection”) that “assessment” sets
in motion. See
post, at 6.
Footnote 5
That Congress had in mind challenges to
assessments triggering collections,
i.e., attempts to
prevent the collection of revenue, is borne out by the final clause
of 26 U. S. C. §7421(a), added in 1966: “whether or not such
person is the person
against whom such tax was assessed”
(emphasis added).
Footnote 6
The dissent incorrectly ranks
South
Carolina v.
Regan, 465 U. S. 367 (1984),
with
McGlotten and
Tax Analysts and Advocates.
Post, at 8–9. See also
post, at 11. The latter
decisions, as the text notes, did not seek to stop the collection
of taxes. In contrast, in
South Carolina v.
Regan, the State’s suit aimed to reduce federal revenue
receipts: South Carolina sought to enjoin as a violation of its
Tenth Amendment rights not “a federal tax exemption,”
post, at 8, but federal income taxation of the interest on
certain state-issued bonds. The Court held in that unique suit that
§7421(a) did not bar this Court’s exercise of original jurisdiction
over the case. 465 U. S., at 381.
Footnote 7
The language of the TIA differs significantly
from that of the Johnson Act, which provides in part: “The district
courts shall not enjoin, suspend or restrain
the operation of,
or compliance with,” public-utility rate orders made by state
regulatory bodies. 28 U. S. C. §1342 (emphasis added). The TIA
does not prohibit interference with “the operation of, or
compliance with” state tax laws; rather, §1341 proscribes
interference only with those aspects of state tax regimes that are
needed to produce revenue—
i.e., assessment, levy, and
collection.
Footnote 8
Petitioner urges, and the dissent
agrees, that the TIA safeguards another vital state interest: the
authority of state courts to determine what state law means. Brief
for Petitioner 21;
post, at 13–14. Respondents, however,
have not asked the District Court to interpret any state law—there
is no disagreement as to the meaning of Ariz. Rev. Stat. Ann.
§43–1089 (West Supp. 2003), only about whether, as applied, the
State’s law violates the Federal Constitution. See
supra,
at 3–4. That is a question federal courts are no doubt equipped to
adjudicate.
Footnote 9
We note, furthermore, that this Court has
relied upon “principles of comity,” Brief for Petitioner 26, to
preclude original federal-court jurisdiction only when plaintiffs
have sought district-court aid in order to arrest or countermand
state tax collection. See
Fair Assessment in Real Estate Assn.,
Inc. v.
McNary, 454 U. S. 100, 107–108 (1981)
(Missouri taxpayers sought damages for increased taxes caused by
alleged overassessments);
Great Lakes Dredge & Dock
Co. v.
Huffman, 319 U. S. 293, 296–299
(1943) (plaintiffs challenged Louisiana’s unemployment compensation
tax).
Footnote 10
Far from “ignor[ing]” the “plain, speedy and
efficient remedy” proviso, as the dissent charges,
post,
at 10, we agree that this “codified exception” is key to a proper
understanding of the Act. The statute requires the State to provide
taxpayers with a swift and certain remedy when they resist
tax collections. An action dependent on a court’s discretion, for
example, would not qualify as a fitting taxpayer’s remedy. Cf.
supra, at 4.
Footnote 11
In conflict with sister Circuits, and at odds
with its own prior opinions, the Fifth Circuit, in
ACLU
Foundation v.
Bridges, 334 F. 3d 416 (2003),
recently construed the TIA in the way the Director does here.
Bridges involved a challenge to tax exemptions for
religious activities in several Louisiana statutes. The District
Court, in line with earlier Fifth Circuit decisions, held that the
TIA did not apply because the plaintiff was not seeking to restrain
the “assessment, levy or collection” of state taxes, but to
eliminate allegedly unconstitutional tax exemptions. Reversing, the
Fifth Circuit ruled that the TIA bars any federal suit seeking to
have any portion of a State’s tax system declared unconstitutional.
Id., at 421–423.
The Director and the United States refer to
four other federal-court decisions lending some support for their
view that, for §1341 purposes, no line should be drawn between
challenges that would reduce revenues and attacks that might
augment collections. See Reply Brief for Petitioner 8–9 (citing
Kraebel v.
New York City Dept. of Housing Preservation
and Development, 959 F. 2d 395 (CA2 1992);
Colonial
Pipeline Co. v.
Collins, 921 F. 2d 1237 (CA11
1991);
In re Gillis, 836 F. 2d 1001 (CA6 1988);
United States Brewers Assn., Inc. v.
Perez, 592
F. 2d 1212 (CA1 1979)). See also Brief for United States as
Amicus Curiae 14–15. In two of the cases, taxpayers were
seeking relief aimed at lightening their own tax burdens.
Kraebel held that §1341 barred a taxpayer’s constitutional
challenge to a property-tax exemption and abatement scheme. 959
F. 2d, at 400.
Colonial Pipeline held that a
taxpayer’s suit seeking a court-ordered redistribution of Georgia’s
ad valorem tax system, which might have reduced plaintiff’s
tax bill, implicated §1341’s jurisdictional bar. 921 F. 2d, at
1243. The court did observe, broadly: “[The] requested relief, if
granted, … would clearly conflict with the principle
underlying the [TIA] that the federal courts should generally avoid
interfering with the sensitive and peculiarly local concerns
surrounding state taxation schemes.”
Id., at 1242.
Gillis, unlike
Kraebel and
Colonial Pipeline, was a third-party action. The court
declined to decide “[w]hether the [TIA] actually does bar the
availability of such relief,” but noted that a suit seeking to
enhance state revenues may nonetheless fall within §1341’s bar
because “the Act is not, by its own language, limited to the
collection of taxes.” 836 F. 2d, at 1005 (emphasis in
original). Finally,
Perez concerned the Butler Act, 48 U.
S. C. §872, a TIA analog applicable to Puerto Rico. Ordering
dismissal of the case for want of jurisdiction, the court rested
its decision not on statutory construction, but on “underl[ying]”
comity concerns, stating: “[A]n order of a federal court requiring
Commonwealth officials to collect taxes which its legislature has
not seen fit to impose on its citizens strikes us as a particularly
inappropriate involvement in a state’s management of its fiscal
operations.” 592 F. 2d, at 1214–1215.
Footnote 12
In school desegregation cases, as a last
resort, federal courts have asserted authority to direct the
imposition of, or increase in, local tax levies, even in amounts
exceeding the ceiling set by state law. See
Missouri v.
Jenkins, 495 U. S. 33, 57 (1990);
Liddell v.
Missouri, 731 F. 2d 1294, 1320
(CA8 1984) (en banc); cf.
Griffin v.
School Bd. of
Prince Edward Cty., 377
U. S. 218, 233 (1964). Controversial as such a measure may be,
see
Jenkins, 495 U. S., at 65–81 (Kennedy, J., concurring
in part and concurring in judgment), it is noteworthy that §1341
was not raised in those cases by counsel, lower courts, or this
Court on its own motion.
Footnote 13
In confirming that cases of this order may be
brought in federal court, we do not suggest that “state courts are
second rate constitutional arbiters.”
Post, at 1. Instead,
we underscore that adjudications of great moment discerning no
§1341 barrier, see
supra, at 1–3, cannot be written off as
reflecting nothing more than “unexamined custom,”
post, at
2, or unthinking “habit,”
post, at 15.
Comments
Be the first to comment
Leave a Comment