Annotation 9 - Fourteenth Amendment

Procedure in Taxation

Generally .--Exactly what due process requires in the assessment and collection of general taxes has never been decided by the Supreme Court. While it was held that ''notice to the owner at some stage of the proceedings, as well as an opportunity to defend, is essential'' for imposition of special taxes, it has also ruled that laws for assessment and collection of general taxes stand upon a different footing and are to be construed with the utmost liberality, even to the extent of acknowledging that no notice whatever is necessary. 132 Due process of law as applied to taxation does not mean judicial process; 133 neither does it require the same kind of notice as is required in a suit at law, or even in proceedings for taking private property under the power of eminent domain. 134 If a taxpayer is given an opportunity to test the validity of a tax at any time before it is final, whether the proceedings for review take place before a board having a quasi-judicial character, or before a tribunal provided by the State for the propose of determining such questions, due process of law is not denied. 135  

Notice and Hearing in Relation to Taxes .--''Of the different kinds of taxes which the State may impose, there is a vast number of which, from their nature, no notice can be given to the taxpayer, nor would notice be of any possible advantage to him, such as poll taxes, license taxes (not dependent upon the extent of his business), and generally, specific taxes on things, or persons, or occupations. In such cases the legislature, in authorizing the tax, fixes its amount, and that is the end of the matter. If the tax be not paid, the property of the delinquent may be sold, and he be thus deprived of his property. Yet there can be no question that the proceeding is due process of law, as there is no inquiry into the weight of evidence, or other element of a judicial nature, and nothing could be changed by hearing the taxpayer. No right of his is, therefore, invaded. Thus, if the tax on animals be a fixed sum per head, or on articles a fixed sum per yard, or bushel, or gallon, there is nothing the owner can do which can affect the amount to be collected from him. So, if a person wishes a license to do business of a particular kind, or at a particular place, such as keeping a hotel or a restaurant, or selling liquors, or cigars, or clothes, he has only to pay the amount required by law and go into the business. There is no need in such cases for notice or hearing. So, also, if taxes are imposed in the shape of licenses for privileges, such as those on foreign corporations for doing business in the State, or on domestic corporations for franchises, if the parties desire the privilege, they have only to pay the amount required. In such cases there is no necessity for notice or hearing. The amount of the tax would not be changed by it.'' 136  

Notice and Hearing in Relation to Assessments .--''But where a tax is levied on property not specifically, but according to its value, to be ascertained by assessors appointed for that purpose upon such evidence as they may obtain, a different principle comes in. The officers in estimating the value act judicially; and in most of the States provision is made for the correction of errors committed by them, through boards of revision or equalization, sitting at designated periods provided by law to hear complaints respecting the justice of the assessments. The law in prescribing the time when such complaints will be heard, gives all the notice required, and the proceedings by which the valuation is determined, though it may be followed, if the tax be not paid, by a sale of the delinquent's property, is due process of law.'' 137  

Nevertheless, it has never been considered necessary to the validity of a tax that the party charged shall have been present, or had an opportunity to be present, in some tribunal when he was assessed. 138 Where a tax board has its time of sitting fixed by law and where its sessions are not secret, no obstacle prevents the appearance of any one before it to assert a right or redress a wrong and in the business of assessing taxes, this is all that can be reasonably asked. 139 Nor is there any constitutional command that notice of an assessment as well as an opportunity to contest it be given in advance of the assesment. It is enough that all available defenses may be presented to a competent tribunal during a suit to collect the tax and before the demand of the State for remittance becomes final. 140 A hearing before judgment, with full opportunity to submit evidence and arguments being all that can be adjudged vital, it follows that rehearings and new trials are not essential to due process of law. 141 One hearing is sufficient to constitute due process, 142 and the requirements of due process are also met if a taxpayer, who had no notice of a hearing, does receive notice of the decision reached there and is privileged to appeal it and, on appeal, to present evidence and be heard on the valuation of his property. 143  

However, when special assessments are made by a political subdivision, a taxing board or court, according to special benefits, the property owner is entitled to be heard as to the amount of his assessments and upon all questions properly entering into that determination. 144 The hearing need not amount to a judicial inquiry, 145 but a mere opportunity to submit objections in writing, without the right of personal appearance, is not sufficient. 146 If an assessment for a local improvement is made in accordance with a fixed rule prescribed by legislative act, the property owner is not entitled to be heard in advance on the question of benefits. 147 On the other hand, if the area of the assessment district was not determined by the legislature, a landowner does have the right to be heard respecting benefits to his property before it can be included in the improvement district and assessed, but due process is not denied if, in the absence of actual fraud or bad faith, the decision of the agency vested with the initial determination of benefits is made final. 148 The owner has no constitutional right to be heard in opposition to the launching of a project which may end in assessment, and once his land has been duly included within a benefit district, the only privilege which he thereafter enjoys is to a hearing upon the apportionment, that is, the amount of the tax which he has to pay. 149 Nor can he rightfully complain because the statute renders conclusive, after a hearing, the determination as to apportionment by the same body which levied the assessment. 150  

More specifically, where the mode of assessment resolves itself into a mere mathematical calculation, there is no necessity for a hearing. 151 Statutes and ordinances providing for the paving and grading of streets, the cost thereof to be assessed on the front foot rule, do not, by their failure to provide for a hearing or review of assessments, generally deprive a complaining owner of property without due process of law. 152 In contrast, when an attempt is made to cast upon particular property a certain proportion of the construction cost of a sewer not calculated by any mathematical formula, the taxpayer has a right to be heard. 153  

Collection of Taxes .--To reach property which has escaped taxation, a State may tax estates of decedents for a period prior to death and grant proportionate deductions for all prior taxes which the personal representative can prove to have been paid. 154 Collection of an inheritance tax also may be expedited by a statute requiring the sealing of safe deposit boxes for at least ten days after the death of the renter and obliging the lessor to retain assets found therein sufficient to pay the tax that may be due the State. 155 Moreover, with a view to achieving a like result in the case of gasoline taxes, a State may compel retailers to collect such taxes from consumers and, under penalty of a fine for delinquency, to remit monthly the amounts thus collected. 156 Likewise, a tax on the tangible personal property of a nonresident owner may be collected from the custodian or possessor of such property, and the latter, as an assurance of reimbursement, may be granted a lien on such property. 157 In collecting personal income taxes, however, most States require employers to deduct and withhold the tax from the wages of employees, but the duty thereby imposed on the employer has never been viewed as depriving him of property without due process of law, nor has the adjustment of his system of accounting and paying salaries which withholding entails been viewed as an unreasonable regulation of the conduct of his business. 158  

Moreover, no unconstitutional deprivation of the property rights of vendors of trucks, sold under conditional sales contract to a carrier, results when a State asserts against such trucks a prior lien for highway use taxes levied against the carrier and (1) accruing from the operation by the carrier of trucks, other than those sold by the vendors, either before or during the time the carrier operated the vendors' trucks, or (2) arising from assessments against the carrier, after vendors repossessed their trucks, and based upon the carrier's operations preceding such repossession. A vendor is not privileged to contend that the lien asserted must be limited to taxes attributable solely to operation of its own trucks; for the wear on the highways occasioned by the carrier's operation is in no way altered by the vendor's retention of title. 159  

As a State may provide in advance that taxes shall bear interest from the time they become due, it may with equal validity stipulate that taxes which have become delinquent shall bear interest from the time the delinquency commenced. A State may adopt new remedies for the collection of taxes and apply these remedies to taxes already delinquent. 160 After liability of a taxpayer has been fixed by appropriate procedure, collection of a tax by distress and seizure of his person does not deprive him of liberty without due process of law. 161 Nor is a foreign insurance company denied due process of law when its personal property is distrained to satisfy unpaid taxes. 162  

The requirements of due process are fulfilled by a statute which, in conjunction with affording an opportunity to be heard, provides for the forfeiture of titles to land for failure to list and pay taxes thereon for certain specified years. 163 No less constitutional, as a means of facilitating collection, is an in rem proceeding, to which the land alone is made a party, whereby tax liens on land are foreclosed and all preexisting rights or liens are eliminated by a sale under a decree. 164 On the other hand, while the conversion of an unpaid special assessment into both a personal judgment against the owner as well as a charge on the land is consistent with the Fourteenth Amendment, 165 a judgment imposing personal liability against a nonresident taxpayer over whom the state court acquired no jurisdiction is void. 166 Apart from such restraints, however, a State is free to adopt new remedies for the collection of taxes and even to apply new remedies to taxes already delinquent. 167  

Sufficiency and Manner of Giving Notice .--Notice, insofar as it is required, may be either personal, or by publication, or by statute fixing the time and place of hearing. 168 A state statute, consistent with due process, may designate a corporation as the agent of a nonresident stockholder to receive notice and to represent him in proceedings for correcting assessment. 169 Also ''where the State . . . [desires] to sell land for taxes upon proceedings to enforce a lien for the payment thereof, it may proceed directly against the land within the jurisdiction of the court, and a notice which permits all interested, who are 'so minded,' to ascertain that it is to be subjected to sale to answer for taxes, and to appear and be heard, whether to be found within the jurisdiction or not, is due process of law within the Fourteenth Amendment. . .'' 170 A description, even though it not be technically correct, which identifies the land will sustain an assessment for taxes and a notice of sale therefor when delinquent. If the owner knows that the property so described is his, he is not, by reason of the insufficient description, deprived of his property without due process. Where tax proceedings are in rem, owners are bound to take notice thereof, and to pay taxes on their property, even if assessed to unknown or other persons, and if an owner stands by and sees his property sold for delinquent taxes, he is not thereby wrongfully deprived of his property. 171  

However, due process was deemed not to have been accorded an incompetent taxpayer, for whom a guardian had not yet been appointed, but who was well known to town officials to be financially responsible, when, in accordance with statutory procedure, notice of a real property tax delinquency was mailed to her and published in local papers as well as posted in the town post office, and thereafter, without appearance on her part, the property was foreclosed and deeded to the town. 172 On the other hand, due process was not denied to appellants when, through dereliction of their bookkeeper, they were not apprised of the receipt of mailed notices, and thus were unable to avert foreclosure of liens for unpaid water charges outstanding against two parcels of land held by them in trust; this conclusion is unaffected by the disparity between the value of the land taken and the amount owed nor by the fact that the city, in one instance, retained the proceeds of sale after lapse of time to redeem. Having issued appropriate notices, the city cannot be held responsible for the negligence of the bookkeeper and the managing trustee in overlooking arrearages on tax bills, nor is it obligated to inquire why appellants regularly paid real estate taxes on their property. 173  

Sufficiency of Remedy .--When no other remedy is available, due process is denied by a judgment of a state court withholding a decree in equity to enjoin collection of a discriminatory tax. 174 Requirements of due process are similarly violated by a statute which limits a taxpayer's right to challenge an assessment to cases of fraud or corruption, 175 and by a state tribunal which prevents a recovery of taxes imposed in violation of the Constitution and laws of the United States by invoking a state law limiting suits to recover taxes alleged to have been assessed illegally to taxes paid at the time and in the manner provided by said law. 176 In this as in other areas, the state must provide procedural safeguards against imposition of an unconstitutional tax. These procedures need not apply predeprivation, but a state that denies predeprivation remedy by requiring that tax payments be made before objections are heard must provide a postdeprivation remedy. 177 In the case of a tax held unconstitutional as a discrimination against interstate commerce and not invalidated in its entirety, the state has several alternatives for equalizing incidence of the tax: it may 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; it may assess and collect back taxes from those competitors; or it may combine the two approaches. 178  

Laches .--Persons failing to avail themselves of an opportunity to object and be heard cannot thereafter complain of assessments as arbitrary and unconstitutional. 179 Likewise a car company, which failed to report its gross receipts as required by statute, has no further right to contest the state comptroller's estimate of those receipts and his adding thereto the 10 percent penalty permitted by law. 180  


[Footnote 132] Turpin v. Lemon, 187 U.S. 51, 58 (1902); Glidden v. Harrington, 189 U.S. 255 (1903).

[Footnote 133] McMillen v. Anderson, 95 U.S. 37, 42 (1877).

[Footnote 134] Bell's Gap R.R. v. Pennsylvania, 134 U.S. 232, 239 (1890).

[Footnote 135] Hodge v. Muscatine County, 196 U.S. 276 (1905).

[Footnote 136] Hagar v. Reclamation Dist., 111 U.S. 701, 709 -10 (1884).

[Footnote 137] Id. at 710.

[Footnote 138] McMillen v. Anderson, 95 U.S. 37, 42 (1877).

[Footnote 139] State Railroad Tax Cases, 92 U.S. 575, 610 (1876).

[Footnote 140] Nickey v. Mississippi, 292 U.S. 393, 396 (1934). See also Clement Nat'l Bank v. Vermont, 231 U.S. 120 (1913).

[Footnote 141] Pittsburgh C. C. & St. L. Ry. v. Backus, 154 U.S. 421 (1894).

[Footnote 142] Michigan Central R.R. v. Powers, 201 U.S. 245, 302 (1906).

[Footnote 143] Pittsburgh C. C. & St. L. Ry. v. Board of Pub. Works, 172 U.S. 32, 45 (1898).

[Footnote 144] St. Louis Land Co. v. Kansas City, 241 U.S. 419, 430 (1916); Paulsen v. Portland, 149 U.S. 30, 41 (1893); Bauman v. Ross, 167 U.S. 548, 590 (1897).

[Footnote 145] Tonawanda v. Lyon, 181 U.S. 389, 391 (1901).

[Footnote 146] Londoner v. Denver, 210 U.S. 373 (1908).

[Footnote 147] Withnell v. Ruecking Constr. Co., 249 U.S. 63, 68 (1919); Browning v. Hooper, 269 U.S. 396, 405 (1926). Likewise, the committing to a board of county supervisors of authority to determine, without notice or hearing, when repairs to an existing drainage system are necessary cannot be said to deny due process of law to landowners in the district, who, by statutory requirement, are assessed for the cost thereof in proportion to the original assessment. Breiholz v. Board of Supervisors, 257 U.S. 118 (1921).

[Footnote 148] Fallbrook Irrigation Dist. v. Bradley, 164 U.S. 112, 168 , 175 (1896); Browning v. Hooper, 269 U.S. 396, 405 (1926).

[Footnote 149] Utley v. Petersburg, 292 U.S. 106, 109 (1934); French v. Barber Asphalt Paving Co., 181 U.S. 324, 341 (1901). See also Soliah v. Heskin, 222 U.S. 522 (1912).

[Footnote 150] Hibben v. Smith, 191 U.S. 310, 321 (1903).

[Footnote 151] Hancock v. Muskogee, 250 U.S. 454, 458 (1919). Likewise, a taxpayer does not have a right to a hearing before a state board of equalization preliminary to issuance by it of an order increasing the valuation of all property in a city by 40%. Bi-Metallic Co. v. Colorado, 239 U.S. 441 (1915).

[Footnote 152] City of Detroit v. Parker, 181 U.S. 399 (1901).

[Footnote 153] Paulsen v. Portland, 149 U.S. 30, 38 (1893).

[Footnote 154] Bankers Trust Co. v. Blodgett, 260 U.S. 647 (1923).

[Footnote 155] National Safe Deposit Co. v. Stead, 232 U.S. 58 (1914).

[Footnote 156] Pierce Oil Corp. v. Hopkins, 264 U.S. 137 (1924).

[Footnote 157] Carstairs v. Cochran, 193 U.S. 10 (1904); Hannis Distilling Co. v. Baltimore, 216 U.S. 285 (1910).

[Footnote 158] Travis v. Yale & Towne Mfg. Co., 252 U.S. 60, 75 , 76 (1920).

[Footnote 159] International Harvester Corp. v. Goodrich, 350 U.S. 537 (1956).

[Footnote 160] League v. Texas, 184 U.S. 156 (1902).

[Footnote 161] Palmer v. McMahon, 133 U.S. 660, 669 (1890).

[Footnote 162] Scottish Union & Nat'l Ins. Co. v. Bowland, 196 U.S. 611 (1905).

[Footnote 163] King v. Mullins, 171 U.S. 404 (1898); Chapman v. Zobelein, 237 U.S. 135 (1915).

[Footnote 164] Leigh v. Green, 193 U.S. 79 (1904).

[Footnote 165] Davidson v. City of New Orleans, 96 U.S. 97, 107 (1878).

[Footnote 166] Dewey v. Des Moines, 173 U.S. 193 (1899).

[Footnote 167] League v. Texas, 184 U.S. 156, 158 (1902). See also Straus v. Foxworth, 231 U.S. 162 (1913).

[Footnote 168] Londoner v. Denver, 210 U.S. 373 (1908). See also Kentucky Railroad Tax Cases, 115 U.S. 321, 331 (1885); Winona & St. Peter Land Co. v. Minnesota, 159 U.S. 526, 537 (1895); Merchants Bank v. Pennsylvania, 167 U.S. 461, 466 (1897); Glidden v. Harrington, 189 U.S. 255 (1903).

[Footnote 169] Corry v. Baltimore, 196 U.S. 466, 478 (1905).

[Footnote 170] Leigh v. Green, 193 U.S. 79, 92 -93 (1904).

[Footnote 171] Ontario Land Co. v. Yordy, 212 U.S. 152 (1909). See also Longyear v. Toolan, 209 U.S. 414 (1908).

[Footnote 172] Covey v. Town of Somers, 351 U.S. 141 (1956).

[Footnote 173] Nelson v. New York City, 352 U.S. 103 (1956).

[Footnote 174] Brinkerhoff-Faris Co. v. Hill, 281 U.S. 673 (1930).

[Footnote 175] Central of Georgia Ry. v. Wright, 207 U.S. 127 (1907).

[Footnote 176] Carpenter v. Shaw, 280 U.S. 363 (1930). See also Ward v. Love County, 253 U.S. 17 (1920).

[Footnote 177] McKesson Corp. v. Florida Alcohol & Tobacco Div., 496 U.S. 18 (1990). See also Reich v. Collins, 115 S. Ct. 547 (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).

[Footnote 178] Id.

[Footnote 179] Farncomb v. Denver, 252 U.S. 7 (1920).

[Footnote 180] Pullman Co. v. Knott, 235 U.S. 23 (1914).

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