Discriminatory Taxation Action Must Proceed in State Court
Levin v. Commerce Energy, Inc., No. 09-223, involved an action against the Ohio Tax Commissioner (Commissioner) by independent natural gas marketers (IMs) who offered to sell natural gas to Ohio consumers, alleging discriminatory taxation of IMs and their patrons in violation of the Commerce and Equal Protection Clauses. The Supreme Court reversed the Sixth Circuit's reversal of the district court's dismissal of the action, holding that, under the comity doctrine, a taxpayer's complaint of allegedly discriminatory state taxation, even when framed as a request to increase a competitor's tax burden, must proceed originally in state court.
As the Court wrote: "This case presents the question whether a federal district court may entertain a complaint of allegedly discriminatory state taxation, framed as a request to increase a commercial competitor's tax burden. Relevant to our inquiry is the Tax Injunction Act (TIA or Act), 28 U.S.C. § 1341, which prohibits lower federal courts from restraining "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." More embracive than the TIA, the comity doctrine applicable in state taxation cases restrains federal courts from entertaining claims for relief that risk disrupting state tax administration. See Fair Assessment in Real Estate Assn., Inc. v. McNary, 454 U.S. 100 (1981). The comity doctrine, we hold, requires that a claim of the kind here presented proceed originally in state court. In so ruling, we distinguish Hibbs v. Winn, 542 U. S. 88 (2004), in which the Court held that neither the TIA nor the comity doctrine barred a federal district court from adjudicating an Establishment Clause challenge to a state tax credit that allegedly funneled public funds to parochial schools."
Related Resources
- Full Text of Levin v. Commerce Energy, Inc., No. 09-223