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Keywords

lawsuitstatutedue process

due process

Related Cases

Reich v. Collins, 513 U.S. 106, 115 S.Ct. 547, 130 L.Ed.2d 454, 74 A.F.T.R.2d 94-7071, 63 USLW 4032, 18 Employee Benefits Cas. 2377

Facts

Reich, a retired federal military officer, filed a lawsuit against Georgia seeking a refund for state income taxes paid on his federal retirement benefits from 1980 onwards. Georgia had previously exempted state retirement benefits from taxation but taxed federal retirement benefits until a 1989 Supreme Court ruling declared this tax scheme unconstitutional. After the ruling, Georgia repealed its exemption for state retirees but did not offer refunds to federal retirees for taxes paid before the ruling. Reich's claim was based on Georgia's tax refund statute, which mandates refunds for illegally assessed taxes.

Reich, a retired federal military officer, sued Georgia in Georgia state court, seeking a refund for the tax years 1980 and after.

Issue

Did the Georgia Supreme Court err in denying Reich's refund claim based on the state's predeprivation remedies, despite the existence of a postdeprivation remedy under the tax refund statute?

Did the Georgia Supreme Court err in relying on Georgia's predeprivation remedies to deny relief?

Rule

Due process requires that a state provide a 'clear and certain' remedy for taxes collected in violation of federal law, which can be offered either before or after the disputed taxes are paid.

Due process requires a 'clear and certain' remedy for taxes collected in violation of federal law.

Analysis

The U.S. Supreme Court found that the Georgia Supreme Court incorrectly relied on predeprivation remedies to deny Reich's claim. The Court emphasized that Georgia had previously held out a clear postdeprivation remedy through its tax refund statute, which was applicable to taxes assessed in violation of federal law. The Court concluded that it was unreasonable for Georgia to assert that no such remedy existed after taxpayers had already paid the disputed taxes.

The Georgia Supreme Court erred in relying on Georgia's predeprivation remedies to deny relief.

Conclusion

The U.S. Supreme Court reversed the Georgia Supreme Court's decision and remanded the case for the provision of meaningful backward-looking relief consistent with due process.

Held: The Georgia Supreme Court erred in relying on Georgia's predeprivation remedies to deny relief.

Who won?

Reich prevailed in the case because the U.S. Supreme Court determined that Georgia could not deny a postdeprivation remedy after taxpayers had paid the disputed taxes.

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