Arizona Department of Revenue v. Blaze Construction Company

PETITIONER: Arizona Department of Revenue
RESPONDENT: Blaze Construction Company
LOCATION: Elizabeth Township, Allegheny County

DOCKET NO.: 97-1536
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: Arizona Supreme Court

CITATION: 526 US 32 (1999)
ARGUED: Dec 08, 1998
DECIDED: Mar 02, 1999

ADVOCATES:
Beth S. Brinkmann - Argued the cause for the United States, as amicus curiae, by special leave of court, supporting the petitioner
Bruce C. Smith - Argued the cause for the respondent
Patrick Irvine - Argued the cause for the petitioner

Facts of the case

Over several years, the Federal Bureau of Indian Affairs contracted with Blaze Construction Company to build, repair, and improve roads on several Indian reservations located in Arizona. When the various contracts expired, the Arizona Department of Revenue issued a tax deficiency assessment against Blaze for its failure to pay Arizona's transaction privilege tax, the tax levied on the gross receipts of companies doing business in the state, on the proceeds from its contracts with the Bureau. Blaze protested the assessment and prevailed in administrative proceedings. On review, the Arizona Tax Court granted summary judgment for the Department. In reversing, the Arizona Court of Appeals held that federal law pre-empted the tax's application to Blaze. The Supreme Court of Arizona denied review.

Question

May a state impose a nondiscriminatory tax upon a private company's proceeds from contracts with the Federal Government when the federal contractor renders its services on an Indian reservation?

Media for Arizona Department of Revenue v. Blaze Construction Company

Audio Transcription for Oral Argument - December 08, 1998 in Arizona Department of Revenue v. Blaze Construction Company

Audio Transcription for Opinion Announcement - March 02, 1999 in Arizona Department of Revenue v. Blaze Construction Company

William H. Rehnquist:

The opinion of the Court in No. 97-1536, Arizona Department of Revenue versus Blaze Construction Company will be announced by Justice Thomas.

Clarence Thomas:

This case comes to us on a writ of certiorari to the Arizona Court of Appeals.

Respondent is a construction company incorporated under the laws of Blackfeet Tribe of Montana.

Bureau of Indian Affairs contracted with respondent to perform work on several Indian reservation roads in Arizona.

Because none of the work occurred on it’s own reservation, respondent is treated as a non-Indian private company for purposes of this case.

Arizona imposes a tax on the gross receipts of the companies doing business in that state.

Respondent failed to pay this tax on the proceeds from its contract with the Bureau.

Arizona issued a tax deficiency assessment and respondent protested, arguing that the federal law preempted Arizona’s tax and hence it owed no taxes to Arizona.

The Arizona Tax Court rejected the protest, but the Arizona Court of Appeals reversed.

Employing a test which balanced the Federal, State and Tribal interest the Court of Appeals held that a congressional intent to preempt Arizona’s tax could be inferred from the federal laws regulating the welfare of Indian Tribes.

The Arizona’s Supreme Court denied a petition for review.

In an opinion filed with the clerk today, we reverse.

A state generally may impose a nondiscriminatory tax on a private company’s proceeds from its contracts with the Federal Government.

Congress may displace its authority by expressly exempting the contracts from such taxation.

In this case Congress has not expressly exempted respondent’s contract from Arizona’s gross receipt tax.

And the incidence of that tax falls on respondent not the United States.

The Court of Appeals was mistaken in its efforts to balance the federal, state and tribal interest while that balancing test has been applied to state taxation of on reservation transactions between tribes and private parties.

It does not apply to taxation of transactions between Federal Government and its private contractors even when those transactions happen to take place on Indian reservations.

The opinion of the Court is unanimous.