Supreme Courtroom Guidelines That States Are Not Entitled to Windfalls in Tax Disputes


The Supreme Courtroom unanimously ruled on Thursday that states which seize and promote non-public property to recoup unpaid taxes violate the Structure’s takings clause if they keep greater than what the taxpayer owed.

The case involved a 94-year-old lady in Minnesota who had stopped paying property taxes on her condominium after transferring into an assisted-living heart.

By the point Hennepin County seized the property, the girl, Geraldine Tyler, owed about $2,000 in taxes and one other $13,000 in penalties and curiosity. The county offered the apartment at public sale for $40,000, and it saved not solely the $15,000 that each one agreed it was due but in addition the remaining $25,000.

Retaining the complete worth of a confiscated property, even when the money owed owed amounted to a small portion of it, is permitted by Minnesota legislation.

The county argued that the Minnesota legislation was rooted in historic observe and inspired householders to take steps to guard their property.

Writing for the court docket, Chief Justice John G. Roberts Jr. mentioned that “historical past and precedent say in any other case.”

“The county had the ability to promote Tyler’s residence to get better the unpaid property taxes,” he wrote, however, he added, “it couldn’t use the toehold of the tax debt to confiscate extra property than was due.”

The county’s motion, the chief justice wrote, was a basic violation of the takings clause, which says that property can’t “be taken for public use, with out simply compensation.”

Historical past supported that view, Chief Justice Roberts wrote.

“The precept {that a} authorities might not take extra from a taxpayer than she owes,” he wrote, “can hint its origins at the very least way back to Runnymeade in 1215, the place King John swore within the Magna Carta that when his sheriff or bailiff got here to gather any money owed owed him from a lifeless man, they may take away property ‘till the debt which is clear shall be absolutely paid to us; and the residue shall be left to the executors to meet the need of the deceased.’”

The chief justice added that “our precedents have additionally acknowledged the precept {that a} taxpayer is entitled to the excess in extra of the debt owed.”

Minnesota’s method is a relative outlier, he wrote. “Thirty-six states and the federal authorities require that the surplus worth be returned to the taxpayer,” he wrote.

The Structure forbids the practices within the different states, Chief Justice Roberts wrote in his opinion within the case, Tyler v. Hennepin County, No. 22-166.

“The takings clause,” he wrote, quoting an earlier determination, “‘was designed to bar authorities from forcing some folks alone to bear public burdens which, in all equity and justice, ought to be borne by the general public as an entire.’ A taxpayer who loses her $40,000 home to the state to meet a $15,000 tax debt has made a far higher contribution to the general public fisc than she owed. The taxpayer should render unto Caesar what’s Caesar’s, however no extra.”

Christina Martin, a lawyer with the Pacific Authorized Basis, which represents Ms. Tyler, known as the choice “a significant victory for property rights in the USA.”

“The court docket’s ruling,” she mentioned in an announcement, “makes clear that residence fairness theft isn’t solely unjust, however unconstitutional.”

Justice Neil M. Gorsuch, joined by Justice Ketanji Brown Jackson, issued a concurring opinion that explored one other doable floor for ruling in Ms. Tyler’s favor: the Eighth Modification’s prohibition of “extreme fines.”

“Financial penalties imposed to discourage willful noncompliance with the legislation are fines by every other title,” Justice Gorsuch wrote. “And the Structure has one thing to say about them: They can’t be extreme.”


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