Supreme Court Rules in Two Tax Cases

U.S. Supreme Court

Posted Apr 15, 2008, 09:32 am CDT
By Debra Cassens Weiss

Upated: The U.S. Supreme Court has ruled in two tax cases, favoring a company that challenged a tax by Illinois and ruling against a taxpayer who sued for refund of an invalid tax.

In MeadWestvaco Corp. v. Illinois Department of Revenue, the Supreme Court vacated an Illinois ruling that held a company must pay the state a share of its gain from the sale of Lexis-Nexis, SCOTUSblog reports. The ruling restricts a state's power to tax a share of the proceeds when a company based in another state sells a division that does business within its borders.

More information on the issues is available in this Medill Journalism summary and at TaxProf Blog.

In U.S. v. Clintwood Elkhorn Mining Co., the court said taxpayers seeking refunds for an invalid tax under the export clause must seek refunds before filing suit, the blog says.

The Internal Revenue Service procedures for a refund provide a more limited remedy, SCOTUSblog reported in a preview of the Clintwood Elkhorn case.

The Internal Revenue Code gives taxpayers three years from the time they file a tax return to seek a refund, while the Tucker Act allows hearings on disputes reaching back six years, the Associated Press reports. The court said the companies could not file under the Tucker Act.

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