Wainer v. United States

Background

A group of people were convicted under a federal indictment. The second count charged them with running a wholesale liquor business without paying a special federal tax required by revenue laws. The convictions were affirmed by the Court of Appeals, and the Supreme Court agreed to decide only whether the tax law behind that count was repealed by the National Prohibition Act or had been reenacted by later law.

Reasoning

The Court examined whether revenue statutes were revived after prohibition began. It explained that §5 of the Willis‑Campbell Act reenacted revenue laws that were not in direct conflict with the National Prohibition Act or the Willis‑Campbell Act. The statutes that taxed wholesale liquor businesses and imposed penalties for not paying that tax were not in direct conflict and thus were reenacted. The Court rejected the petitioners’ claim that it was a contradiction to prohibit a business while taxing it, saying the United States had not licensed the liquor trade but lawfully imposed an excise on doing the business whether lawful or unlawful. Based on that view, the Court affirmed the convictions.

Real world impact

The decision means people who run wholesale liquor businesses can be required to pay federal excise taxes and can face penalties for nonpayment even though the business itself was prohibited under the Prohibition Act. The ruling leaves in place the government’s ability to enforce tax and penalty provisions in the revenue statutes that were reenacted. Mr. Justice Stone did not take part in considering or deciding the case.