Fourteenth Amendment, Section 1:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

The Due Process Clause imposes some limits on states’ assessment and collection of taxes, which vary based on the type of tax at issue. With respect to imposition of special taxes (taxes collected from property owners to fund local government plans such as infrastructure projects), the Court has held that “notice to the owner at some stage of the proceedings, as well as an opportunity to defend, is essential.” 1 By contrast, it has ruled that laws for assessment and collection of general taxes stand upon a different footing and are to be “construed with the utmost liberality,” and that no notice is necessary.2

As applied to taxation, due process does not require judicial process.3 Nor does due process in tax proceedings require the same kind of notice as is required in a suit at law or in proceedings for taking private property under the power of eminent domain.4 Due process is satisfied if a taxpayer is given an opportunity to test the validity of a tax at any time before it is final, whether before a board having a quasi-judicial character, or before a tribunal provided by the state for such purpose.5

When no other remedy is available, a judgment of a state court withholding a decree in equity to enjoin collection of a discriminatory tax violates due process.6 The Court has also found due process violations in a statute that limited a taxpayer’s right to challenge an assessment to cases of fraud or corruption,7 and when a state tribunal prevented the recovery of unlawful taxes under a state law that allowed suits to recover taxes alleged to have been assessed illegally only if the taxes had been paid at the time and in the manner provided.8 In a case involving a tax held unconstitutional as a discrimination against interstate commerce and not invalidated in its entirety, Court held that the state had several alternatives for equalizing incidence of the tax: it could pay a refund equal to the difference between the tax paid and the tax that would have been due under rates afforded to in-state competitors, assess and collect back taxes from those competitors, or combine the two approaches.9

Under the doctrine of laches, persons who fail to exercise an opportunity to object and be heard cannot thereafter complain that a tax assessment is arbitrary and unconstitutional.10 Likewise, a company that failed to report its gross receipts, as required by statute, had no further right to contest the state comptroller’s estimate of those receipts and his adding to his estimate the 10% penalty permitted by law.11

Due process and state taxation issues include due process requirements for the assessment,12 notice,13 and collection14 of state taxes.

Footnotes

1

Turpin v. Lemon, 187 U.S. 51, 58 (1902).

2

Glidden v. Harrington, 189 U.S. 255 (1903).

3

McMillen v. Anderson, 95 U.S. 37, 42 (1877).

4

Bell’s Gap R.R. v. Pennsylvania, 134 U.S. 232, 239 (1890).

5

Hodge v. Muscatine County, 196 U.S. 276 (1905).

6

Brinkerhoff-Faris Co. v. Hill, 281 U.S. 673 (1930).

7

Central of Georgia Ry. v. Wright, 207 U.S. 127 (1907).

8

Carpenter v. Shaw, 280 U.S. 363 (1930). See also Ward v. Love County, 253 U.S. 17 (1920). As in other areas, the state must provide procedural safeguards against imposition of an unconstitutional tax. These procedures need not apply pre-deprivation, but a state that denies a pre-deprivation remedy by requiring that tax payments be made before objections are heard must provide a post-deprivation remedy. McKesson Corp. v. Fla. Alcohol & Tobacco Div., 496 U.S. 18 (1990). See also Reich v. Collins, 513 U.S. 106 (1994) (violation of due process to hold out a post-deprivation remedy for unconstitutional taxation and then, after the disputed taxes had been paid, to declare that no such remedy exists); Newsweek, Inc. v. Fla. Dep’t of Revenue, 522 U.S. 442 (1998) (per curiam) (violation of due process to limit remedy to one who pursued pre-payment of tax, where litigant reasonably relied on apparent availability of post-payment remedy).

9

Carpenter, 280 U.S. 363.

10

Farncomb v. Denver, 252 U.S. 7 (1920).

11

Pullman Co. v. Knott, 235 U.S. 23 (1914).

12

See Amdt14.S1.5.7.2 Assessment of State Taxes and Due Process.

13

See Amdt14.S1.5.7.3 Notice of State Taxes and Due Process.

14

See Amdt14.S1.5.7.4 Collection of State Taxes and Due Process.