Curry v. United States

Background

A state tax commissioner and two contractors were involved in a suit after the contractors paid an Alabama use tax on roofing. The contractors bought the roofing outside Alabama, shipped it to a government camp-site inside the State, and used it while performing a cost-plus construction contract with the United States. Alabama law imposed a two percent tax on tangible personal property purchased at retail and used in the State. The contractors and the United States sued for a refund, arguing the tax was barred by federal immunity.

Reasoning

The Court examined whether the contractors were constitutionally immune from the state use tax because they were carrying out a federal contract. The Alabama Supreme Court had held the tax infringed federal immunity. The United States Supreme Court reversed that ruling, finding the contractors were not agents or instrumentalities of the Government when they purchased and used the materials. The Court explained that if the statute would apply to similar contractors contracting with private parties, the contractors doing the same work for the Government are not immune merely because the Government is the contracting party; the fact that contractual costs may be passed on to the Government does not create constitutional immunity.

Real world impact

The decision allows states to collect use taxes from contractors who buy and use materials for federal construction contracts when the tax is generally applied to contractors. The Court did not decide whether the tax applies to transactions occurring on a government reservation, leaving that specific question open.