![Supreme Court rules in tax cases](https://www.jurist.org/wp-content/uploads/2021/12/jurist-white-text.png)
[JURIST] The US Supreme Court [official website; JURIST news archive] handed down decisions in two tax cases Tuesday, including MeadWestvaco Corp. v. Illinois Department of Revenue [LII case backgrounder; JURIST report], where the Court overturned an Illinois state court decision allowing the state to tax a portion of the $1 billion capital gain realized by MeadWestvaco's predecessor when it sold its interest in Lexis/Nexis. The Court wrote:
The Due Process and Commerce Clauses forbid the States to tax "'extraterritorial values.'" … A State may, however, tax an apportioned share of the value generated by the intrastate and extrastate activities of a multistate enterprise if those activities form part of a "'unitary business.'" We have been asked in this case to decide whether the State of Illinois constitutionally taxed an apportioned share of the capital gain realized by an out-of-state corporation on the sale of one of its business divisions. The Appellate Court of Illinois upheld the tax and affirmed a judgment in the State's favor. Because we conclude that the state courts misapprehended the principles that we have developed for determining whether a multistate business is unitary, we vacate the decision of the Appellate Court of Illinois.
Read the Court's opinion [text] per Justice Alito, along with a concurrence [text] from Justice Thomas.
In US v. Clintwood Elkhorn Mining Co. [Duke Law case backgrounder; JURIST report], the Court held that a taxpayer seeking to bring an action in federal court to obtain a tax refund must first exhaust the administrative refund claim procedure outlined in the Internal Revenue Code [text]. Clintwood Elkhorn Mining paid coal export taxes, later found to be unconstitutional, and filed a claim agianst the government under the Tucker Act [text] to recover a portion of the export taxes paid. The US Court of Federal Claims [official website] allowed the Tucker Act lawsuit, as did the US Court of Appeals for the Federal Circuit, but the Supreme Court reversed the appeals court, writing:
The Internal Revenue Code provides that taxpayers seeking a refund of taxes unlawfully assessed must comply with tax refund procedures set forth in the Code. Under those procedures, a taxpayer must file an administrative claim with the Internal Revenue Service before filing suit against the Government. Such a claim must be filed within three years of the filing of a return or two years of payment of the tax, whichever is later. The Tucker Act, in contrast, is more forgiving, allowing claims to be brought against the United States within six years of the challenged conduct. The question in this case is whether a taxpayer suing for a refund of taxes collected in violation of the Export Clause of the Constitution may proceed under the Tucker Act, when his suit does not meet the time limits for refund actions in the Internal Revenue Code. The answer is no. …
We therefore hold that the plain language of 26 U. S. C. §§7422(a) and 6511 requires a taxpayer seeking a refund for a tax assessed in violation of the Export Clause, just as for any other unlawfully assessed tax, to file a timely administrative refund claim before bringing suit against the Government.
Read the Court's opinion [text] per Chief Justice Roberts. SCOTUSblog has more on both decisions.