Franchise Tax Board of California v. United States Postal Service

PETITIONER: Franchise Tax Board of California
RESPONDENT: United States Postal Service
LOCATION: Grove City College

DOCKET NO.: 83-372
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 467 US 512 (1984)
ARGUED: Apr 17, 1984
DECIDED: Jun 11, 1984

David A. Strauss - on behalf of the Appellee
Patti S. Kitching - on behalf of the Appellant

Facts of the case


Media for Franchise Tax Board of California v. United States Postal Service

Audio Transcription for Oral Argument - April 17, 1984 in Franchise Tax Board of California v. United States Postal Service

Warren E. Burger:

Mrs. Kitching.

Patti S. Kitching:

Mr. Chief Justice, and may it please the Court:

We are here today because the Ninth Circuit has created an anomaly.

It has allowed one California taxing agency to garnish property held by the Postal Service on behalf of a third party, but has prohibited another state taxing agency from using a similar garnishment.

This is even though both agencies use analogous tax collection procedures.

In addition, seven circuits have found, and the Postal Service concedes, that garnishment by ordinary judgment creditors should be honored.

It must be emphasized that none of these garnishments were on property belonging to the Postal Service.

The garnishments were on property held by the Postal Service as a mere stakeholder.

The issue in this case, then, is whether the Ninth Circuit should have allowed the Franchise Tax Board to garnish the wages of Postal Service employees who did not pay their California income tax.

California submits that there are two controlling propositions in this case.

The first is that the sovereign immunity of the Postal Service has been waived, at least to the extent that it must honor a garnishment for delinquent taxes on wages of employees.

The second proposition is that the Ninth Circuit erred when it found that an unrelated federal statute dealing only with wage withholding preempted the Franchise Tax Board statute and garnishment.

This case arose because various Postal Service employees did not pay their California income tax.

These taxes are not in dispute.

They were either self-assessed or became final by assessment of the Franchise Tax Board.

In order to collect these taxes, the Franchise Tax Board attempted to garnish the wages of these employees, but the Postal Service refused to honor the garnishment.

William H. Rehnquist:

Ms. Kitching, is that the standard procedure in California whereby the state collects delinquent taxes?

It doesn't go to court to get a garnishment, but it just kind of has an assessment like the IRS?

Patti S. Kitching:

Yes, Your Honor.

Our statutes are very similar to those of the IRS.

And in our state, once an assessment has become final, the assessment has the force of a judgment.

William H. Rehnquist:

It's not just true of government employees, but it's true of everybody.

Patti S. Kitching:

This is true.

As I will discuss a little later in more detail, before our tax assessment becomes final, the taxpayer is given a multitude of remedies.

The taxpayer can go through several levels of administrative review before the taxpayer has to pay the tax and before it comes final.

Once it--

William J. Brennan, Jr.:

Mrs. Kitching, what do you mean when you say... or did you say that it's the same thing as judicial judgment, that it's treated likewise?

Patti S. Kitching:


William J. Brennan, Jr.:

The administrative--

Patti S. Kitching:

Absolutely, Your Honor.