United States v. Tax Commission of Mississippi

PETITIONER: United States
RESPONDENT: Mississippi Tax Commission, et al.
LOCATION: Mississippi Tax Commission, Alcohol and Beverage Commission

DOCKET NO.: 74-548
DECIDED BY: Burger Court (1972-1975)
LOWER COURT:

CITATION: 421 US 599 (1975)
ARGUED: Apr 22, 1975
DECIDED: Jun 02, 1975
GRANTED: Jan 13, 1975

ADVOCATES:
Robert L. Wright - for appellees
Stuart A. Smith - for appellant

Facts of the case

The Mississippi Tax Commission (MTC) passed a regulation requiring out-of-state liquor distributors to collect a tax for liquor sold on Mississippi military installations. The tax resulted in a price mark-up for liquor sold on military installations. The MTC sent a letter to liquor distributors advising that if the tax was not collected directly from the military, the distributors could face criminal charges. The United States paid the tax and sought summary judgment in the U.S. District Court for the Southern District of Mississippi. The United States argued that the mark-up was an unconstitutional tax on the federal government. The district court upheld the regulation, ruling that the Twenty-First Amendment allowed the tax. The Supreme Court reversed the district court and remanded. On remand, the district court held that the tax was a permissible sales tax on the liquor distributors and not a tax on the federal government. Two of the military installments had concurrent jurisdiction with both the federal and Mississippi government.

Question

Was the MTC tax an unconstitutional tax on an instrumentality of the federal government?

Media for United States v. Tax Commission of Mississippi

Audio Transcription for Oral Argument - April 22, 1975 in United States v. Tax Commission of Mississippi

Audio Transcription for Opinion Announcement - June 02, 1975 in United States v. Tax Commission of Mississippi

William J. Brennan, Jr.:

I also have for announcement, No. 74-548, the United States v. State Tax Commission of Mississippi.

Regulation 25 of the Mississippi State Tax Commission requires out-of-state liquor distillers and suppliers to collect from military installations within Mississippi, there are four of such installations in Mississippi, and remit to the Commission, a tax in the form of a wholesale markup of 17% to 20% on liquor sold to the military at those installations.

A three-judge District Court for the Southern District of Mississippi held that the legal incidence of the tax is upon the out-state-liquor dealers and suppliers and therefore rejected the argument of the United States that the tax is unconstitutional under the doctrine of McCulloch and Maryland as a state upon instrumentalities of the United States.

We reverse.

We hold that since Mississippi law requires that the out-of-state sellers collect the tax from the military, the legal incidence of the tax as a matter of law is upon the military and therefore that the tax is an unconstitutional state levy upon instrumentalities of the United States.

Mr. Justice Douglas and Mr. Justice Rehnquist dissents and have filed a dissenting statement.