United States v. County of Fresno

Background

A group of Forest Service employees lived in houses owned by the Forest Service in national forests in Fresno and Tuolumne Counties, California. The agency required or allowed employees to live there and treated occupancy as part of pay, deducting an amount based on the fair rental value of similar private homes adjusted for remoteness and fewer amenities. California law permits counties to tax a person’s possessory interest in improvements on tax‑exempt public land. Fresno and Tuolumne Counties assessed that tax on these employees, who paid under protest and sued; trial courts sided with them, the Court of Appeal reversed, and the Supreme Court reviewed the case.

Reasoning

The Court asked whether the Supremacy Clause bars the tax because the housing serves federal functions. It explained that States may tax a private person’s use of federal property so long as the tax’s legal burden falls on the private user, is applied equally, and does not discriminate. Relying on earlier cases, the Court said economic effects on federal operations do not automatically invalidate a nondiscriminatory tax. Because this tax is charged to the employees, measured to reflect their personal possessory interest, and not discriminatory, the Court affirmed the tax.

Real world impact

Counties may collect possessory‑interest taxes from federal employees who live in government housing when the tax targets the employee’s private use and treats similar residents alike. Affected employees will owe property‑style taxes on the value of their occupancy, though counties must account for use limitations when valuing the interest. The Government may reimburse employees or lose a hiring advantage; the Court said different facts could lead to a different result.

Dissents or concurrances

Justice Stevens dissented, arguing the tax discriminates against federal employees, creates state‑federal friction, and imposes heavy administrative burdens; he would invalidate the tax.