Sullivan v. United States

Background

The United States sued Connecticut on behalf of military members who were stationed in Connecticut but officially domiciled in other States. The servicemen had been charged Connecticut sales or use taxes on purchases like cars and boats. A federal district court and the Court of Appeals had held that a federal law (section 514 of the Soldiers’ and Sailors’ Civil Relief Act) barred those state taxes.

Reasoning

The Court asked whether section 514 was meant to exempt servicemen from state sales and use taxes. It examined the statute’s language and history and concluded Congress intended to prevent double annual property taxation (ad valorem taxes) and certain motor vehicle registration fees, not ordinary sales or use taxes. The opinion emphasized that sales and use taxes are excise or privilege taxes, that states commonly give credits for taxes paid elsewhere, and that Congress had dealt with sales and use taxes separately in earlier laws.

Real world impact

The Court reversed the lower courts and held that section 514 does not bar Connecticut from collecting its sales and use taxes from nonresident servicemen stationed there. Practically, servicemen who buy goods or vehicles in the host State can be required to pay the State’s retail or use tax, though credits for taxes paid to another State may reduce double payment. The decision resolves this dispute in favor of the host State’s taxing power.