The Tax Injunction Act, 28 U.S.C. $ 1341, which prohibits
federal district courts from enjoining the assessment, levy, or
collection of state taxes where "a plain, speedy and efficient
remedy may be had in the courts of such State," held to bar
appellee Vermont furniture store's suit in Federal District Court
for injunctive relief against allegedly unconstitutional assessment
of New York sales taxes on appellee's sales to New York customers,
since New York provides a "plain, speedy and efficient" means for
redress of appellee's constitutional claims while preserving the
right to challenge the amount of taxes due. Despite New York
statutes providing that judicial review of an administrative
determination shall be a taxpayer's only remedy, other procedures,
including a declaratory judgment action, may be used in New York
courts when the claim is that the tax is unconstitutional,
Ammex Warehouse Co. v. Gallman, 414 U.S. 802. Moreover,
appellee need not accept as binding the amount of the assessment as
a price of challenging the constitutionality of the tax, but can
obtain a preliminary injunction in state court that will toll the
running of the 90-day period within which appellee may challenge
such amount at an administrative hearing. Pp.
429 U. S.
73-77.
404 F.
Supp. 738, vacated and remanded.
STEWART, J., delivered the opinion for a unanimous Court.
MR. JUSTICE STEWART delivered the opinion of the Court.
The question in this case is whether New York provides a "plain,
speedy and efficient" remedy to an out-of-state
Page 429 U. S. 69
corporation that seeks to challenge New York's assessment of
sales taxes against it. The United States District Court for the
District of Vermont held that New York does not provide such a
remedy, and issued a preliminary injunction restraining the
collection of the New York taxes.
404 F.
Supp. 738. We noted probable jurisdiction of the appeal, 424
U.S. 907.
I
The appellee, Griffin, Inc., is a Vermont corporation that
operates a furniture store in Arlington, Vt., six miles from the
New York-Vermont border. It advertises on radio and television and
in newspapers that serve the Albany-Schenectady-Troy area of New
York, and makes substantial sales at its place of business to
customers from that State. It regularly delivers furniture to the
New York buyers in its own trucks, and its employees also enter New
York on occasion to repair furniture it has sold.
In February, 1973, the New York Department of Taxation and
Finance determined that Griffin was "doing business" in New York,
and thus was required to collect state and local sales taxes from
its New York customers. The Department sent a tax examiner to
Vermont to audit Griffin's records, but Griffin refused its
consent. Little more happened until March, 1975, when the
Department reaffirmed its position and advised Griffin that another
tax examiner would soon be dispatched for an audit. Griffin
responded by filing suit in the United States District Court for
the District of Vermont, alleging generally that any assessment,
levy, or collection of sales taxes against it would violate the
Commerce, Due Process, and Equal Protection Clauses of the United
States Constitution, and asking for injunctive relief. A
three-judge court was convened.
After Griffin again denied the tax examiner access to its
records, the Department issued a "Notice of Determination and
Demand for Payment of Sales and Use Taxes Due."
Page 429 U. S. 70
This assessment, by necessity only an estimate, demanded that
Griffin pay $218,085.37 in back taxes, interest, and penalties.
[
Footnote 1] Griffin moved in
the federal court for a preliminary injunction to prevent steps
from being taken to collect the taxes and to stay the running of
the 90-day period in which it could contest the amount shown in the
Notice of Determination. [
Footnote
2] The defendant New York tax officials filed a cross-motion to
dismiss the action for lack of jurisdiction, claiming that suit was
barred by the Tax Injunction Act, 28 U.S.C. § 1341, which provides:
.
"The district courts shall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where a
plain, speedy and efficient remedy may be had in the courts of such
State."
The District Court rejected this defense, ruling that New York
law does not provide Griffin "a plain, speedy and efficient
remedy."
In reaching this conclusion, the federal court considered first
the availability under New York law of direct review of the Notice
of Determination. Under New York Tax Law § 1138(a), a taxpayer has
90 days from the receipt of a notice of determination to apply for
a hearing before the Tax Commission. [
Footnote 3] The Tax Commission's decision after the
Page 429 U. S. 71
hearing is judicially reviewable "for error, illegality or
unconstitutionality or any other reason whatsoever" in a proceeding
under Art. 78 of New York's Civil Practice Law and Rules. [
Footnote 4] Before a taxpayer may seek
Art. 78 review, however, he must either prepay or post a bond for
the amount of the assessment. The court found that Griffin lacked
the means to do this. Although the assessment was only a gross
estimate, the court assumed that the amount would not be changed
unless Griffin submitted to an audit. It ruled that Griffin should
not be required to "tur[n] over its books and records to a state
whose authority it claims is invalid," and
Page 429 U. S. 72
further questioned whether a New York court would entertain an
Art. 78 proceeding if Griffin refused to be audited. 404 F. Supp.
at 743-745.
The District Court then considered the availability of
declaratory relief under § 3001 of New York's Civil Practice Law
and Rules. [
Footnote 5] It
viewed this possible avenue of relief as insufficiently "plain,
speedy and efficient" because N.Y.Tax Law § 1140, on its face,
seems to limit review of sales tax liability to the Art. 78
procedure discussed above. [
Footnote 6] Although the court took note of substantial
federal and New York case law holding that New York's
administrative review proceedings are not, in fact, exclusive where
a plaintiff claims that a tax is unconstitutional, the court
concluded that the issue was "cloak[ed] . . . in some uncertainty."
Even if Griffin could get declaratory relief, the court held, its
contacts with New York were so "minimal" that "it seems unfair to
make Griffin litigate in an unfamiliar forum." Finally, the court
expressed "reservations" about Griffin's ability to get a
preliminary injunction pending a New York court's decision in a
declaratory judgment suit. 404 F. Supp. at 745-747. On the basis of
this reasoning, the District Court granted Griffin preliminary
injunctive relief.
Page 429 U. S. 73
II
A federal district court is under an equitable duty to refrain
from interfering with a State's collection of its revenue except in
cases where an asserted federal right might otherwise be lost.
See Hillsborough v. Cromwell, 326 U.
S. 620,
326 U. S.
622-623;
Great Lakes Dredge & Dock Co. v.
Huffman, 319 U. S. 293,
319 U. S.
297-299;
Matthews v. Rodgers, 284 U.
S. 521,
284 U. S.
525-526. This policy of restraint has long been
reflected and confirmed in the congressional command of 28 U.S.C. §
1341 that no injunction may issue against the collection of a state
tax where state law provides a "plain, speedy and efficient
remedy." As the Court has frequently had occasion to note, the
statute has its roots in equity practice, in principles of
federalism, and in recognition of the imperative need of a State to
administer its own fiscal operations.
"Interference with state internal economy and administration is
inseparable from assaults in the federal courts on the validity of
state taxation, and necessarily attends injunctions, interlocutory
or final, restraining collection of state taxes. These are the
considerations of moment which have persuaded federal courts of
equity to deny relief to the taxpayer especially when the state,
acting within its constitutional authority, has set up its own
adequate procedure for securing to the taxpayer the recovery of an
illegally exacted tax."
Great Lakes Dredge & Dock Co. v. Huffman, supra at
319 U. S. 298.
See also Moe v. Salish & Kootenai Tribes, 425 U.
S. 463;
Hillsborough v. Cromwell, supra at
326 U. S.
622-623;
Matthews v. Rodgers, supra at
284 U. S.
525-526.
These principles do not lose their force, and a State's remedy
does not become "inefficient," merely because a taxpayer must
travel across a state line in order to resist or challenge the
taxes sought to be imposed. If New York provides an otherwise
adequate remedy, the mere fact that Griffin must go to New York to
invoke it does not jeopardize its ability to assert its rights. To
accept the District Court's holding that it would be "unfair" to
make Griffin litigate in
Page 429 U. S. 74
New York would undermine much of the force of 28 U.S.C. §
1341.
We turn then to the basic inquiry -- whether under New York law
there is a "plain, speedy and efficient" way for Griffin to press
its constitutional claims while preserving the right to challenge
the amount of tax due. This Court answered the first part of that
question by its summary judgment of affirmance three years ago in
Ammex Warehouse Co. v. Gallman, 414 U.S. 802. In that
case, the New York Tax Commission had assessed state alcoholic
beverage, tobacco; and sales taxes against two New York companies
that sold cigarettes and liquor to persons about to leave the State
to enter Canada. The companies brought suit in Federal District
Court, claiming that the assessment of the taxes against them
violated the Commerce and Import-Export Clauses of the
Constitution. The three-judge District Court held that 28 U.S.C. §
1341 required dismissal of the action.
Ammex-Champlain Corp. v.
Callman, 72 Civ. 306 (NDNY, Mar. 15, 1973) (unreported). The
court held that
"[t]here is ample authority that a declaratory judgment action
may be employed to challenge imposition of a tax. . . .
Accordingly, Ammex may present its arguments in the state supreme
court and seek a declaratory judgment from that court that
application of these taxes to Ammex's export operations is
unconstitutional."
The correctness of that holding was placed squarely before us by
the Jurisdictional Statement that the appellants filed in this
Court in the Ammex case. This Court's affirmance of the District
Court's judgment is therefore a controlling precedent, unless and
until reexamined by this Court.
Hicks v. Miranda,
422 U. S. 332,
422 U. S.
343-345. Since, however, it was a summary affirmance, it
is not here "of the same precedential value as would be an opinion
of this Court treating the question on the merits."
Edelman v.
Jordan, 415 U. S. 651,
415 U. S. 671.
But having now had
Page 429 U. S. 75
a full opportunity to consider the issue after briefing and
argument, we adhere to our judgment in the
Ammex case.
The District Court's ruling in that case was fully supported by
New York decisional law. Despite the provisions of its taxing
statutes that provide that judicial review of an administrative
determination shall be a taxpayer's only remedy, the New York
courts have consistently held that other procedures, including an
action for a declaratory judgment, may be used when the claim is
that the tax is unconstitutional.
Slater v. Gallman, 38
N.Y.2d 1, 4, 339 N.E.2d 863, 864 (1975);
In re First Nat. City
Bank v. City of New York Finance Admin., 36 N.Y.2d 87, 92-93,
324 N.E.2d 861, 864 (1975);
Richfield Oil Corp. v. City of
Syracuse, 287 N.Y. 234, 239, 39 N.E.2d 219, 221 (1942);
Dun Bradstreet, Inc. v. City of New York, 276 N.Y. 198,
206, 11 N.E.2d 728, 731-732 (1937);
Hospital TV Sys., Inc. v.
State Tax Comm'n, 41 App.Div.2d 576, 339 N.Y.S.2d 603 (1973).
Thus, we remain fully persuaded that the District Court's holding
in
Ammex was correct, announced as it was by three New
York federal judges "who are familiar with the intricacies and
trends of local law and practice,"
Bishop v. Wood,
426 U. S. 341,
426 U. S. 346
n. 10, quoting
Hillsborough v. Cromwell, supra at
326 U. S. 630,
quoting
Huddleston v. Dwyer, 322 U.
S. 232,
322 U. S.
237.
It also seems clear that, under New York law, Griffin can fully
preserve its right to challenge the amount of tax due while
litigating its constitutional claim that no tax at all can validly
be assessed against it. Griffin, in other words, need not accept as
binding the Tax Commission's rough estimate of its sales tax
liability as a price of challenging the constitutionality of the
tax.
The New York Attorney General in his brief and in oral argument
has represented to this Court that Griffin can obtain a preliminary
injunction in state court that will toll the running of the 90-day
period within which Griffin may challenge the amount of the
assessment at an administrative
Page 429 U. S. 76
hearing. [
Footnote 7]
Moreover, we have no reason to believe that a New York court,
acting
sua sponte, would question its ability to award
preliminary relief in a proper case.
The District Court cited no New York authority for its
"reservations" on this score, and we have found none. To the
contrary, a New York statute speaks of the availability of a
preliminary injunction "in any action" where certain conditions are
met. N.Y. Civ. Prac. § 6301 (McKinney 1963). There are New York
cases suggesting that courts may award preliminary relief in
declaratory judgment actions in general,
see, e.g., In re
Public Serv. Comm'n v. Norton, 304 N.Y. 522, 529, 109 N.E.2d
705, 708 (1952);
Opoliner v. Joint Queensview Housing Enterp.,
Inc., 11 App.Div.2d 1076, 206 N.Y.S.2d 681 (1960), and several
New York courts have done so in cases involving the collection of
taxes.
See, e.g., Stacy v. State, 82 Misc.2d 181, 368
N.Y.S.2d 448 (Sup.Ct.1975) (sales tax);
Glen Cove Theatres,
Inc. v. City of Glen Cove, 231 N.Y.S.2d 747 (Sup.Ct.1962).
See also Dun & Bradstreet, Inc. v. City of New York,
supra at 206, 11 N.E.2d at 731-732 (permanent injunction
approved in declaratory judgment action challenging imposition of
sales tax). Although we have held that uncertainty concerning a
State's remedy may make it less than "plain" under 28 U.S.C. §
1341,
see Hillsborough v. Cromwell, 326 U.S. at
326 U. S. 625,
these New York precedents convincingly demonstrate that Griffin's
fears about the availability of such preliminary relief are
unfounded. [
Footnote 8]
Since New York provides a "plain, speedy and efficient" means
for the redress of Griffin's constitutional claims, the
Page 429 U. S. 77
District Court should not have granted injunctive relief. Its
judgment granting Griffin's motion for a preliminary injunction is
vacated, and the case is remanded to that court with instructions
to dismiss the complaint.
It is so ordered.
[
Footnote 1]
The Department later withdrew this initial Notice of
Determination and issued another demanding payment of
$298,580.59.
[
Footnote 2]
See N.Y.Tax Law § 1138(a) (McKinney 1975).
[
Footnote 3]
New York Tax Law § 1138(a) (McKinney 1975) provides:
"(a) If a return required by this article is not filed, or if a
return when filed is incorrect or insufficient, the amount of tax
due shall be determined by the tax commission from such information
as may be available. If necessary, the tax may be estimated on the
basis of external indices, such as stock on hand, purchases, rental
paid, number of rooms, location, scale of rents or charges,
comparable rents or charges, type of accommodations and service,
number of employees or other factors. Notice of such determination
shall be given to the person liable for the collection or payment
of the tax. Such determination shall finally and irrevocably fix
the tax unless the person against whom it is assessed, within
ninety days after giving of notice of such determination, shall
apply to the tax commission for a hearing, or unless the tax
commission of its own motion shall redetermine the same. After such
hearing the tax commission shall give notice of its determination
to the person against whom the tax is assessed. The determination
of the tax commission shall be reviewable for error, illegality or
unconstitutionality or any other reason whatsoever by a proceeding
under article seventy-eight of the civil practice law and rules if
application therefor is made to the supreme court within four
months after the giving of the notice of such determination. A
proceeding under article seventy-eight of the civil practice law
and rules shall not be instituted unless the amount of any tax
sought to be reviewed, with penalties and interest thereon, if any,
shall be first deposited with the tax commission and there shall be
filed with the tax commission an undertaking, issued by a surety
company authorized to transact business in this state and approved
by the superintendent of insurance of this state as to solvency and
responsibility, in such amount as a justice of the supreme court
shall approve to the effect that, if such proceeding be dismissed
or the tax confirmed the petitioner will pay all costs and charges
which may accrue in the prosecution of the proceeding, or at the
option of the applicant such undertaking filed with the tax
commission may be in a sum sufficient to cover the taxes, penalties
and interest thereon stated in such determination plus the costs
and charges which may accrue against it in the prosecution of the
proceeding, in which event the applicant shall not be required to
deposit such taxes, penalties and interest as a condition precedent
to the application."
[
Footnote 4]
N.Y.Civ.Prac.Law, Art. 78, § 7801
et seq. (McKinney
1963).
[
Footnote 5]
New York Civ. Prac. Law § 3001 (McKinney 1974) provides:
"The supreme court may render a declaratory judgment having the
effect of a final judgment as to the rights and other legal
relations of the parties to a justiciable controversy whether or
not further relief is or could be claimed. . . ."
[
Footnote 6]
New York Law § 1140 (McKinney 1975) provides:
"The remedies provided by sections eleven hundred thirty-eight
and eleven hundred thirty-nine shall be exclusive remedies
available to any person for the review of tax liability imposed by
this article; and no determination or proposed determination of tax
or determination on any application for refund shall be enjoined or
reviewed by any action for declaratory judgment, an action for
money had and received, or by any action or proceeding other than a
proceeding under article seventy-eight of the civil practice law
and rules."
[
Footnote 7]
Although acknowledging a New York court's power to issue a
preliminary injunction in these circumstances, the Attorney General
remains free, of course, to oppose the granting of such relief in
any particular case.
[
Footnote 8]
As we conclude that Griffin has an adequate remedy in a suit for
a declaratory judgment, we need not decide whether judicial review
under N.Y.Civ.Prac. Art. 78 would also be "plain, speedy and
efficient."