Allen v. Regents of the University System

Background\n\nA state agency that runs the University of Georgia and Georgia Tech sold football tickets through their athletic associations. Federal law imposed a small admissions tax on ticket buyers and required ticket sellers to collect and remit the tax. The schools printed the tax on tickets but kept the disputed amounts in separate accounts and refused to turn them over. The Collector assessed the associations, levied on the accounts, and the schools sued to stop collection, claiming state immunity. The lower courts had issued an injunction against the Collector, and the case reached the high court.\n\nReasoning\n\nThe key question was whether charging the federal admissions tax unconstitutionally burdened a state governmental function. The Court assumed the schools’ athletics were governmental but said that when a State operates a businesslike activity that looks like private enterprise to raise funds, it does not gain immunity from nondiscriminatory federal taxation. The majority relied on prior decisions holding that States cannot withdraw ordinary revenue sources from the federal taxing power simply by conducting the activity themselves. The Court therefore held the tax valid and that the university associations were obligated to collect, report, and pay it.\n\nReal world impact\n\nState colleges and their athletic organizations that run ticketed events must treat the federal admissions tax like other sellers: collect, report, and remit the tax to the Treasury. The ruling limits the ability of States to avoid federal taxes when they run enterprises comparable to private businesses. The judgment reversed the injunction that had blocked federal collection.\n\nDissents or concurrances\n\nSome Justices agreed with the result but thought the suit itself should have been dismissed as an improper effort to stop collection; one Justice would have upheld the universities’ immunity and affirmed the injunction.\n\n