United States v. Tax Comm’n of Mississippi, 421 U.S. 599 (1975)

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF MISSISSIPPI

Syllabus

A Mississippi Tax Commission regulation requires out-of-state liquor distillers and suppliers to collect from military installations within Mississippi, and remit to the Commission, a tax in the form of a wholesale markup on liquor sold to the installations. The United States has four military installations in Mississippi, exercising exclusive jurisdiction over two and concurrent jurisdiction over the other two. The United States paid under protest the markup on liquor purchased from out-of-state distillers by the various nonappropriated fund activities at these installations, and brought action to have the regulation declared unconstitutional and for other relief. After this Court’s reversal of a three-judge District Court’s opinion denying relief, United States v. Mississippi Tax Comm’n, 412 U.S. 363, that court on remand again denied relief.

Held: Viewing the markup as a sales tax, the legal incidence of the tax rests upon instrumentalities of the United States as the purchasers, First Agricultural Nat. Bank v. Tax Comm’n, 392 U.S. 339, and hence the markup is unconstitutional as a tax imposed upon the United States and its instrumentalities, McCulloch v. Maryland, 4 Wheat. 316. Pp. 604-614.

(a) Since the legal incidence of the tax is upon the United States, in view of the requirement of the regulation that the tax be passed on to the purchaser, the federal immunity with respect to sales of liquor to the two exclusively federal enclaves is preserved by § 107(a) of the Buck Act. Under that provision § 105(a) of the Act, which precludes any person from being relieved of any state sales or use tax on the ground that the sale or use occurred in whole or in part within a federal area, "shall not be deemed to authorize the levy or collection of any tax on or from the United States or any instrumentality thereof." Pp. 611-613.

(b) The Twenty-first Amendment did not abolish federal immunity with respect to taxes on the sales of liquor to the concurrent jurisdiction bases. Cf. United States v. Mississippi Tax Comm’n, supra. pp. 613-614.

378 F.Supp. 558, reversed.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, MARSHALL, BLACKMUN, and POWELL, JJ., joined. DOUGLAS and REHNQUIST, JJ., filed a dissenting statement, post, p. 615.